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Posts Tagged ‘class action lawsuits’

A class action lawsuit is filed on the part of a number of individuals who happen to have been in some way damaged by the activities of a company. It is common to find class action lawsuits filed by employees of the corporation if hiring or even wages procedures appear to have been illegitimate. Another variety is the class action lawsuit filed against a drug company for making illegal claims about their product, or even for resulting in fatalities or bodily damage to individuals taking the substance.

Whenever one subscribes a class action suit, one usually has to sign documents declaring that he or she then forfeits the right to claim damages to the corporation as a particular person. A good class action law suit honours damages to the plaintiffs, who are all those suing the firm, in accordance to biggest cause damage. In most all cases not all members of the litigation are entitled to equal compensation. Usually the lawyers operate on a contingency basis, which means that they are going to get a portion from the designation. On the other hand, they won’t charge their clients any fees if the suit isn’t successful. That percentage could be substantial, between 30 to 50 per cent from the total award.

Awards from a class action lawsuit are split directly into 2 amounts: punitive and compensatory damages. Compensatory damages are meant to tackle the defendants (those being sued), and direct injury. These funds are going to be used to tackle actual damages inflicted by the defendants, such as illness, loss of life, or pain and suffering. Punitive losses from the class action lawsuit are a form of penalisation for the corporation committing illegal behaviours, or inflicting damage. Punitive damages in large class action lawsuits can be particularly high, whenever it is demonstrated the corporation has demonstrated great disregard for the wellness, safety or emotional wellbeing of the victims.

Class actions may become jury trials, or perhaps may be resolved prior to a trial. A suit can be tried in directed mediation. Settlements and negotiation mean that injuries are agreed upon by the defendant/s. Jury trial class action lawsuits can create problems because a corporation levelled with heavy punitive and compensatory damages can appeal the decision. The appeal process may go on for several years, so plaintiffs might have to hold on a long time prior to seeing any money. Corporations can also declare insolvency, which means the plaintiffs may never be awarded anything.

One of the most well-known class action lawsuit is explored in the film Erin Brockovich. The film is a biopic detailing the class action suit on behalf of the residents of Hinkley, California. They sued Pacific Gas and Electric (PG&E) for lying about using the chemical hexavalent chromium, which then seeped into the ground water and contaminated the water supply. Many residents of Hinkley then became ill with cancer, or had fertility problems. As well, animals living in the small town died quickly.

The suit’s lawyer Ed Masry was able to establish that PG&E knew about the situation and deliberately risked the lives of those living near the power plants by failing to warn the residents. Erin Brockovich, played by Julia Roberts in the film, extensively researched and documented the damages caused to Hinkley residents. Her dedication helped secure the successful verdict against PG&E. Ed Masry chose directed mediation for the class action lawsuit, meaning those severely affected by exposure to chromium were given immediate monetary relief.

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A class action typically arises when a large number of people believe they have been caused harm, or have been negatively affected by a corporation. If the defendant is well-known, the case becomes high profile in the media.

Here, we take a look at the five biggest class actions in terms of damages sought.

5. Exxon-Mobil

$5 billion (later reduced to $500 million)

In 2001, a federal judge ordered Exxon-Mobil to pay $5 billion to the thousands of people affected by the Exxon Valdez oil spill. The spill occurred in Prince Williams Sound, Alaska in March 1989 when an oil tanker struck a reef. It spilled up to the highest estimate of 750, 000 barrels of crude oil.

Billed as a considerable environmental disaster, it affected over 1,300 miles of coastline.

The $5 billion paid punitive damages and interest to workers and natives of Alaska.

4. World Com

$6.2 billion

In 2005, investors in Word Com launched a class action lawsuit. The lawsuits were aimed at the company, and employees Bernard Ebbers (CEO), Scott Sullivan (CFO), David Myers (Controller) and Buford Yates (Accounting Director).

The charges brought up were for fraud, with World Com having discrepancies in their books of over $11 billion, according to the Securities and Exchange Commission. In particular, they were seen to have inflated revenue by inputting false statements.

3. Enron

$7.2 billion

Arguably the most famous class action suit, the energy-trader collapsed at the same time as World Com, also amidst charges of fraud. Investors filed under federal and state securities laws, targeting the company and directors Jeffrey Skilling and Ken Lay.

The class action settlement was a huge $7.2 billion, the largest pay out so far in a shareholder securities action. The money was used to compensate shareholders whose stock became worthless during the company’s collapse.

2. Wal-Mart

Seeking $11 billion

Filed in 2000, this pending case involves a female employee of Wal-mart suing them under Title VII of the Civil Rights Act of 1964 for sexual discrimination. The woman claims she was denied promotion because of her gender.

Changing to a class action case, it now represents every female employee of Wal-Mart from 1998, involving tens of thousands of people.

It is the largest class action involving sexual discrimination in history,

1. Master Tabacco Settlement

$206 billion over 25 years

The largest class action settlement by far was agreed in 1998. Involving six Tabacco giants – Brown & Williamson Tobacco Corporation, Lorillard Tobacco Company, Philip Morris Incorporates, R.J. Reynolds Tobacco Company, Commonwealth Tobacco, and Liggett & Myers, the huge sum releases the companies from further litigation in state courts.

The lawsuits were filed under consumer protection and anti-trust laws and the money will go towards the recovery of smoking-related health care costs, and to enforce laws to reduce smoking rates in people under the age of eighteen.

This was seen as a moral victory by many, which could have long term benefits for class action settlements.

It is important to note, when a case is settled, the defendant agrees to pay damages but does not admit wrongdoing.

 

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Hong-KongGoal Group understands that the Hong Kong securities regulator this month proposed introducing civil liability for banks working on initial share sale prospectuses may also allow class-action lawsuits to help investors seek damages.

Currently Hong Kong allows multiparty proceedings under rules the city’s then-chief justice Andrew Li criticized as restrictive and inadequate in 2004. Losing parties must pay all or part of their opponent’s legal fees under Hong Kong law, a deterrent for individual investors seeking damages.

As a result of this, according to Jeff Maddox, a lawyer who had advised on capital raising in Hong Kong, New York and Singapore stock exchanges, litigation risk for bankers and companies selling shares in Hong Kong has been relatively low to date.

“There’s less than a three percent chance of getting sued after a listing here compared to a 20 to 25 percent chance in the U.S.,” said Maddox, a Hong Kong-based partner at Cadwalader, Wickersham & Taft LLP, citing industry statistics.

In 2009 a sub-committee of the law commission recommended allowing class actions, following losses by thousands of investors on notes guaranteed by failed Lehman Brothers Holdings.

The need for class actions “most typically arises where a large number of persons have been adversely affected by another’s conduct, but each person’s loss is too small” to make individual litigation viable, the commission said today.

The sub-committee’s final recommendation comes two weeks after the Securities and Futures Commission (SFC), Hong Kong’s market regulator, proposed extending criminal and civil liability laws to initial share sale arrangers who sign off on misleading or inaccurate forecasts.

Buyers of products sold by consumer banks or brokerages will be allowed to seek permission to sue as a class under the proposed new regime, the law commission’s Anthony Neoh said.

Neoh also said that the proposals would have to be acted on by the government and declined to speculate on when class actions would actually be allowed or on when they would be extended to cover shareholders of publicly-listed companies.

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