Class Action Lawsuits
WBCA Podcasts
Discovering The Law
(upbeat music) - Welcome to Discovering the Law. My name is Lucy Rivera. Today, we are going to discuss class action lawsuits, and we have brought a very special guest from Pauli Ho. Attorney, you repeat this, Del Manieras. He is a partner at Pauli Ho. Welcome to the show. - Thank you very much, great to be here. - Attorney Del Manieras. Please talk to us about class actions. What is a class action? - Well, basically, a class action is a civil lawsuit, which involves many potentially injured persons, usually people that have suffered a financial injury. But instead of having each person bring their own individual case, which can number into the thousands, a class action is brought by representatives of the entire group of potentially injured parties in a single case or two or three cases. And it's few to be more efficient to decide all the issues involving the entire class in one case as opposed to potentially hundreds or thousands of individual suits. - And could you give us some examples as to what kinds of cases can be brought as class actions? - Sure, there's potentially no limit on the types of cases, but typical class action cases involve what it's called securities fraud when a company's stock price drops significantly over a short period of time. Products liability cases, so cases involving defective products that are bought by consumers. Financial fraud on consumers. May recall several years ago, Wells Fargo got in trouble because it was charging illegal fees to its bank customers, and they were sued in various class actions. A new, but a very hot area of class action law is liability relating to privacy breaches and data breaches. So for example, if a business is hacked by outsiders and the business's customer's information is stolen by the hackers, the customers by a class action have turned around and sued the businesses for not taking adequate steps to safeguard their information from hackers. That can be a class action. Also, cases involving unpaid wages, unpaid overtime, unpaid employee benefits, if they deal with employers that have many employees and they haven't been following the wage and hour laws, those kind of cases can also be brought potentially as class actions. - Great. And for our viewers, we're having a conversation with attorney Oripita Del Maniros from Fully Hoag and we are going to discuss class actions. Attorney Del Maniros, why would these type of cases become class actions? - So, you know, originally the class action came about about 150 years ago and it was invented in order to minimize the amount of lawsuits brought in court by people that had basically the same kind of injuries or complaints. So it was conceived because it was to be more efficient. Now, that only works if the members of the class, if the injured parties have basically the same kind of complaints and injuries. If they have different kind of losses or different injuries, then the class action doesn't work because the parties have separate issues. Another reason that the class action has taken on a big role in civil litigation is because oftentimes the amount of damages that a single person has suffered, for example, in financial fraud might not be enough to cause that person to file a lawsuit on their own. So for example, let's go back to the Wells Fargo case. You know, if they were overcharging their bank customers 10 or $15 a month for certain fees, you know, a customer that only been there for half a year or a year, only lost between $100 and $200. That's not, it may not be enough money for an individual to want to file a lawsuit 'cause oftentimes the cost of the lawsuit is more than the amount of damages. But if you can group together hundreds, if not thousands of people that, you know, suffered allegedly a small dollar of losses, then the overall amount of damages would be worthwhile pursuing in a class action. - I'm turning down my nearest. When you talk about damages, what kind of damages are we talking about? - Money losses. - Financial losses. - Correct. - Correct. - And sometimes I hear about a class action on the media. I get something in the mail to join one where I see something on TV about a class action. Tell us about that and why do we get this on the mail and the media? - So one of the first steps in a class action is to actually establish who is a member of the class. So before you even get to the issue of, you know, was the defendant actually liable where they negligent or did they commit the fraud? One of the first things you need to determine is who are all the potentially injured parties? And, you know, sometimes it could be, you know, finite number 40, 50, 60, and they're easy to identify. But in other contexts, for example, the data breach, context, if you have like a national retailer with a database of customers throughout the country, it's hard to identify who all they are and whether or not they actually want to join the class. So one way to reach out to these people is through the media. You'll see, you know, commercials, identifying that there's been a class action lawsuit and asking people if they were harmed during a certain period of time and asking them to either go to a website or call a law firm to join the class. Another way to do it is by mailing anybody who potentially might be part of the class and asking them in writing if they want to join. And once the class has been certified, well, we say certified, which is a legal term, but once the class has been established and you know how many people are in it and you know what the potential exposure is to what the potential damages are, then the case can move forward. - We can come back to the certification after, but tell us how our class action's brought into court. - Well, simply, in the first instance, a class action is just a lawsuit. So one or two or three individual plaintiffs, retain a lawyer and they file a complaint in a court and they tell the court that they're suing not only because they were personally injured, but they believe that other people in a similar situation also suffered the same kind of injuries and they want to be able to represent not only themselves but everybody else basically in the same basket as them. And so that's the first step, the filing of a lawsuit. Then the next step is to try to convince the court that the issues and the disputes are worthy of a class action and that these specific individuals are adequate representatives of the entire class. Now getting too technical, a lot of class action litigation is done at the front end over these issues. Like whether or not the class should be created in the first place before you even get to the issue of whether or not somebody committed wrongdoing and what the damages are. Because once a class is created and you have a lot of potential injured parties, the plaintiffs have a lot more power and leverage in court because they're not just representing themselves but they're representing a huge group. Before class certification, they're just representing themselves. - So once it's a class action, how does a representative get selected or why would you select a representative and what is the purpose of that? - So because the, well, every group needs a representative basically and the court needs to be satisfied that a person who wants to be a representative is not only gonna look after their own interests or the interests of their individual lawyers but they're gonna look after the best interests of every potentially injured party, every member of the class and they have the burden. They need to show the judge or the court that they satisfy all the necessary requirements and they will act in the best interests of everybody as they litigate the case. - And it's very interesting that they would represent the interests of everybody and we can delve into that a little more if you wanna talk about that. How does an individual join a class action? - So the procedures differ a little bit from state to state but usually you must be notified, you must actually receive notice often in the mail but it can be electronic or both. And you're gonna be asked, the case will be explained and then you'll be asked, do you wanna join this class? If you agree to join the class then you're essentially gonna be stuck with the result of the lawsuit. So if there's a settlement or if the defendant wins and the plaintiff loses then you'll get nothing. Now a person always has the opportunity and the right to what's called opt out of the class. Say, I don't wanna join this class. I wanna pursue my own rights and remedies on my own separately. So nobody can ever be forced to join a class. But if you do join the class then you're gonna have to live with the result of what happens in court. - So just following up on your opting out, talk to us about the opt out notices. - Well, I get them all the time. I'm sure your viewers do as well. These days become small cards, very fine print and they usually refer the recipient to a website where they can find out more information. Generally speaking, the court has to approve the notice as having adequate information so that the recipient can decide do I wanna join or not. Like I said, these days a lot of the information is online so the card or whatever kind of noise you get in the mail will jam some information into a small piece of paper but it puts effectively the burden on the recipient to go online, educate themselves based on the information online. Usually a website is set up. You can also look up court documents and then you decide, do I wanna be part of this class or not? And speaking about paying up, if there is a settlement and pay up, how does the member get paid through this? - Yeah, so that's an excellent question. So a couple things. So the settlement is usually negotiated, almost always negotiated for the class by the representatives and their lawyers. And the class representative lawyers are going to get a large fee from a settlement and that needs to be disclosed to everybody. So pick a settlement number. You can just pick one in your mind. You can be rest assured that a large chunk of that is gonna go to the attorneys. The rest should be distributed to the members of the class. Sometimes it's done by the defendant who's just paying out the money directly or sometimes a fund is set up. Sort of like a settlement fund and the defendant puts the money into the fund and the fund is then led by an administrator or a trustee who sends out the checks. - We have about 10 minutes left for our audience here. Today we're talking about class action lawsuits and how we bring them to court. And to explain to us this very important topic, it's attorney, you repeat as Del Maneras from Foley, Hoag. Okay, attorney Del Maneras, what? How do lawyers get paid once this class action finished? - So the lawyers usually get paid by the defendant. Now the court needs to approve the settlement. So the court must also approve the legal fees to the lawyers. And oftentimes lawyers will ask for a lot of money and they'll ask that a settlement be approved with a large fee. And sometimes class members object to the amount of fees going to the lawyers for the representative because they think the lawyers are getting too much of the pie, so to speak. And ultimately the court needs to assess, okay, how difficult was the case? How much work did the lawyers do? Were they efficient or did they waste a lot of time? How good is the result for the class? Like are the class members gonna get real money? Or are they just gonna get a token recovery? And ultimately the court needs to conclude whether or not the legal fees to the lawyers are fair in light of the result to the class. Now there have been cases where defendants try to cut deals with class representatives by agreeing to pay the lawyers a lot of money and less money for the class members to make the case go away. That has been attempted. Courts are attuned to that possibility and it's disfavored and policed. I will say this, I mean, there are a lot of excellent class actual law firms across the country who have gotten excellent results for their firms and for their clients and for their classes and have been paid handsomely. But every payment is ultimately approved by the court. - Interesting. Speaking of the class action, certification, how does one achieve a certification status and what's the process? - So, again, it's an excellent question 'cause these days, most class action litigation, the actual fight is whether the class can be created or as you say, certified. Certified just means a judge has said, okay, I find there's a class of so many people that were harmed in certain ways. So there are four basic factors. The plaintiff needs to show that there are a lot of people potentially affected, that it doesn't make sense to bring individual lawsuits. There needs to be a class to deal with all these cases efficiently. Two, each member of the class has to have pretty much the same injury, the same financial injury. 'Cause if there are different injuries, then you can't really decide everyone's case across the board. So those are two important factors. The third factor is, do the class plaintiffs, the people that wanna represent the entire class, do they, one, do they have the best interests of the class in mind? And I'll get to that. And the last factor is, do they have the same financial injuries as everybody in the class? Now, there are cases where you have professional class plaintiffs, where the same people are attempting to bring class actions in different kind of cases over years. This is disfavored, courts are on to this, and they look down on it because it seems that these types of people are only looking to enrich themselves as opposed to get a recovery for the entire class. - And we can talk about that in a little later on, if you'd like to discuss it. But in the five minutes that we have left, would you talk to us about how do share class actions work or stock class action work? - Yeah, so that's a complicated question. But generally, we call them securities class actions arise when a particular company's stock drops significantly in a short period of time. So pick a stock, apple, for example. If it drops 10% in a day, anybody who owns a share of apple is suffering the same loss in the vote. So now, there might be perfectly good reasons why the stock dropped. It doesn't mean there was any fraud involved. However, you can be rest assured, and it happens every day. Whenever, if you're watching CNBC or Bloomberg and you're here a stock that's falling a lot in a certain day, within a week, somebody is going to file a class action on behalf of the shareholders alleging that management did something to cause the stock to fall that quickly. It's almost automatic. And there are firms in class action playing us out there that look for these opportunities. - And if I am a member of a class action say not so prominently like the securities class, but a product. - Yes. - That fails. And I want to sue because the product is just lost money on this product. How do I know there are other people in this class action? - Well. - Or have the same financial injury that I am, that I have. It may be on my benefit to have a class rather than my home. - It might be. If you bought a product that you can get, that's readily available. So any toy, any commodity, and it breaks, there's a defect. You can be pretty confident that somebody, say you bought it on Amazon. You can be pretty confident that somebody else bought it. And if it was defective for you, it was probably defective for somebody else. Now, if you buy something, if you go to a carpenter and then you ask them to build you a piece of furniture and it falls apart, that's not class action material 'cause that was done specifically for you. But toys, cars, mass-made furniture that falls apart. Any product that is mass-produced and readily available that has a defect, and it breaks on you, you can be sure it's broken on somebody else. So if this is something you'd wanna pursue illegally, you would have to try to identify a lawyer who with expertise in this area to advise us to whether or not it makes sense to not only sue on behalf of yourself, but potentially pursue a class action. - And talk to us a little bit about the class action when it comes to data breaches. And we have, oh, actually we have one minute. So maybe talk to us about any takeaways that we would like to discuss or anything, any conclusion, thoughts to conclude this interview? - Again, we'll just say class action cases are filed all the time. I think they're gonna continue to be filed. And if you're a part of a class, potentially, and you're given an opportunity to join the class, the question you need to ask yourself is, okay, if I don't join the class, am I gonna do anything else? Am I gonna sue on my own? If the answer is no, that's not worth your time to sue on your own, and it may well be worth your time to join a class, 'cause it's not really gonna cost you anything. It's not gonna take up much of your time. If, however, you think you can represent your legal interests better individually by suing on your own than joining a class, then you should decide to go on your own.