One of the most common questions we receive from other attorneys is, “How do I spot a potential class action?” Th e answer is much simpler than you think; you just need to know what to look for. In the last issue, we spent some time explaining what a class action is and how it can be used as a tool to protect the interests of both consumers and small businesses alike. In this month’s class action article, we will take the subject a step further and help you to identify when you may have a potential class action case.
Every client that walks through your door or calls your office is also a consumer in their day-to-day lives. They purchase homes, are subjected to marketing representations by retailers, purchase products and contract with service providers. As such, they are constantly at risk of being a victim of unlawful activity. Th e crucial question in the context of a potential class action is whether the unlawful activity they were subjected to was done to them and a large number of other people in a uniform manner. In other words, did it happen to a large number of consumers the same exact way?
Identifying a potential class action is really no different than identifying any other potentially actionable behavior. Inevitably, the first step is to listen to your client, friend, or family member about what they have experienced and find out everything you can about how they believe they were harmed. For instance, they may have recently purchased a widget that promised to do a certain thing only to find out that the widget did not work. Or, they may have contracted with a service provider for one level of service, but came to find that the service provider unilaterally decided to charge them for a higher level of service without notice. Maybe they purchased a product they believed to be on sale, only to find out over time that the product is always marketed as being “on sale.”
While the exact scenario may appear complicated, it can undoubtedly be boiled down to a simple idea or theory of liability. The most common theories of liability in class actions are premised on standard causes of action found in every state: fraud, breach of contract, or unjust enrichment. However, state specific consumer protection statutes may also provide relief to consumers on a class wide basis. Among other things, these statues seek to protect consumers from deceptive or fraudulent practices by defendants. Additionally, federal statutes like the Telephone Consumer Protection Act may be used to provide class wide relief from a specific practice, such as randomly autodialed commercial text messages sent to individuals who have not consented to receiving such messages.
Once a potential issue has been identified, the next step is to have the potential class representative bring in any documentation they may have for your review. Th is may seem obvious, but this review is imperative for a few reasons. First, these documents will shed light on whether the practice at issue is happening uniformly to a large number of people or is something that operated as a one-time occurrence.
The documents should also help you more concretely identify the harm that the consumer has experienced. For instance, let’s assume that your potential class representative entered into a contract with a service provider for a certain service. Unbeknownst to your client, the service provider increased the level of service and upcharged your client with no notice and no opportunity to decline the increase. A review of the contract will help you identify what the client should have been charged, what the specific harm is and how to find others who may have been affected by the very same practice.
Finally, taking a look at the documents will also alert you to any potential barriers to accessing the class action mechanism. These would include either an arbitration clause or a class action waiver, both of which may limit the individual’s ability to seek relief in a court or use the class action mechanism. We will cover these and other class action barriers further in a future article.
While identifying a potential class action may seem foreign, just remember the simple purpose of the class action: to obtain remedy for a group when that group has been harmed in the same manner by the same wrongdoer. If you think you may have a potential class action, don’t be afraid to reach out to other attorneys in your community who may have experience handling such cases. Class actions are oft en premised on a simple theory of liability, but in practice can be fraught with various procedural pitfalls that require a seasoned hand to avoid.
Next month, we will focus in on some consumer class action archetypes that are being used across the country to protect the rights of consumers. Frank Bartela