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Class actions, in which a few people represent dozens or hundreds of others who’ve been similarly injured, are designed to compensate large numbers of people. They’re most often effective when the amount of damages for each person is very low, or at least low enough that one person would not pursue a case alone. This type of lawsuit isn’t commonly used for people with serious or unusual injuries that can’t be lumped into a single category.
Business practices that harm consumers, such as overcharging for banking services or using misleading information to sell items, have generated class actions. Shareholders can bring class actions against companies for poor management or misleading investment literature. Employees can sue employers collectively for discrimination or for violating employment or benefit agreements.
Rule 23 of the Federal Rules of Civil Procedure usually governs class actions in federal courts. State courts have similar rules. Both state and federal courts set strict parameters to assure that a few people can adequately represent the interests of many.
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