A class action is a civil lawsuit brought by a single individual or a small number of individuals acting on behalf of themselves as well as seeking to represent a group of others who have suffered a similar harm. Class actions are sometimes brought seeking to represent a nationwide class, where the class members seek to represent other individuals throughout the country who have been similarly harmed. Other times, class actions may be limited to representing the residents of the particular state in which the class action is brought. If the lawsuit is brought based on a violation of a law that is particular to an individual state, then often times the class action will be limited to the residents of that particular state.
Class actions are often brought where a large number of people have been harmed in a similar way by a particular product or service. Lawsuits may commonly be filed seeking class action status where the amount of harm suffered by any individual is relatively small in comparison to the time and expense required to pursue a lawsuit for that harm. Class actions are often related to harm caused by a product that turns out to have been unsafe or not of the quality that was represented, such as drugs, medical devices, automobiles, or many other products. The harm may also be in a financial matter, such as securities class actions, where the value of stocks are fraudulently inflated by misrepresentations by corporate management, or against insurance companies that misrepresent in a common fashion the nature of the insurance products they are selling.
In an effort to bring more class actions within the federal court system rather than state courts, Congress enacted the Class Action Fairness Act of 2005 ("CAFA"). CAFA provides that where at least one plaintiff and one defendant reside in different states, and the lawsuit could potentially result in a recovery of more than $5,000,000, the defendants can remove the proposed class action filed in state court, to federal court.
Each state has rules of civil procedure that govern how its courts will determine whether a suit brought in that state's court system, will be certified as a class action. Similarly, the Federal Rules of Civil Procedures govern lawsuits that are class actions in federal court. The criteria for determining whether a suit will proceed as a class action are similar across states and with the Federal Rules. The typical criteria are: