Tag Archives: class action lawsuits

FAQs About Business Litigation

What is involved when litigating a business issue?

This depends on the issue. The business owner would follow the same process for business litigation as he or she would for any civil lawsuit, including usually obtaining an attorney, pretrial matters such as motions, possible settlement negotiations, trial, and possibly appeal.

What are some alternatives to litigation?

Businesses often use Alternative Dispute Resolution (ADR) methods. The ADR process usually utilizes arbitration or mediation. These alternatives are attractive because they are often less expensive and more efficient than traditional litigation.

What is the difference between mediation and arbitration?

Mediation is a cooperative process and uses a neutral third party (a mediator) to facilitate consensus building and discussion, in order to reach a mutually satisfactory resolution. Arbitration also employs a neutral third party (an arbitrator), who listens to both sides and makes a decision, which is usually binding.

Is the result of mediation or arbitration binding?

The judgment in arbitration is usually binding on the parties. Often the parties decide prior to the arbitration proceeding that the findings of the arbitrator will be final and legally binding. This agreement is usually formalized by a contract signed by all parties involved. Much less commonly, parties may agree to nonbinding arbitration, viewed as a negotiation technique. Mediation is not binding and the parties, if dissatisfied with the result, can move on to a courtroom proceeding.

Can results from mediation or arbitration be appealed?

Because the result of mediation is nonbinding, the parties can still bring their issues before a judge, although this is not technically an appeal. In the case of binding arbitration, an appeals process may take place if the parties have agreed, before the arbitration begins, to allow one. Generally, the decision of the arbitrator is final and the appellate process is not available.

What is a class-action lawsuit?

A class action is a judicial proceeding where usually one or two named plaintiffs represent a much larger group of plaintiffs. Often, the issue is one where there has been an injury to a large enough group of people that individual litigation would be inefficient.

Can business entities participate in a class action?

Yes. If a business entity has an injury in common with a greater group of plaintiffs that have formed a class, then the business may qualify as a class member.

What is the legal fee arrangement for a class action?

Lawyers are normally paid on a contingency-fee basis in class actions. This means that the lawyer only collects a legal fee if a positive judgment for the plaintiffs is reached. Due to the high costs of class-action lawsuits, generally contingency-fee arrangements are the best option.


Class Action Lawsuits

Class action lawsuits are brought by named plaintiffs, usually one or two, whose alleged injuries are the same as those of a large number of other parties. The plaintiffs do not have to be individuals; businesses may also be class plaintiffs. The purpose of a class action is to combine many similar causes of action. The cause of the common injury could be from any number of sources, such as from violations of federal regulations, product defects, securities fraud, or environmental issues. When multiple plaintiffs with similar claims are involved, litigating each case individually would be expensive and time consuming. A class action suit allows for a combined effort, potentially saving litigation costs and time spent in preparation for and in court.

A class is initiated by the named plaintiffs and others in a similar situation. A public notification takes place to identify additional plaintiffs who may be eligible for inclusion in the class. The notification is usually accomplished via mailings, newspaper, and/or the Internet, and includes instructions on how to become a plaintiff. The class action itself begins like any other trial; there are initial proceedings, motion hearings, and pretrial conferences with the judge. However, the unique part of a class action is the motion to certify the class, usually filed either with the initial complaint or shortly thereafter.

A plaintiff eligible for membership in the class is not required to join, and may choose to opt out of the class and any future settlement or award. Occasionally, plaintiffs will opt out of a class in order to pursue the case on their own, believing that a better result could be obtained separately from the class action. Any judgment in the class action is binding on both the named plaintiff and all others included in the class.

Securities Class Actions

Although there is no specific business class action category (a business could be a plaintiff or defendant in a class action), securities class actions have gained prominence in recent years. A securities class action usually involves a lawsuit brought by investor-plaintiffs who have suffered economic loss from the devaluation of a stock or security. The loss in the stock or security’s value typically results from the artificial inflation of its value. If individuals purchased stock during a period when the value of the stock was fraudulently inflated, then they are likely eligible to be class plaintiffs.

Legal Fees

Class-action lawyers work on contingency, which means that they will not receive payment unless there is recovery from the defendant. Legal costs in class actions can be quite high, and under a contingency fee arrangement, the plaintiffs’ attorneys usually cover the costs until conclusion of the suit. The cost of class actions suits is higher because the amount of preparation, research, and investigation required is ordinarily much higher than in an individual lawsuit.

Southern California Class Action Lawsuit Attorneys

If your business is facing a legal issue that other similarly situated plaintiffs face, class action may be a more efficient route than individual litigation. Class actions are very complex matters and consultation with an attorney experienced in class action lawsuits is advisable. The attorneys of Stolpman, Krissman, Elber & Silver, LLP are experienced litigators offering legal services throughout California.  Contact our Long Beach law offices today for a free consultation.