An overlapping, also known as competing, class action occur when more than one lawsuit is filed against one defendant for the same offense or subject matter. The existence of more than one claims causes competition and disagreements between the competing claims.
The common disagreements to overlapping or competing classes are related to how a case will be litigated, eligibility for joining a class, funding of a case, and more. Most people hire class action attorneys in Los Angeles to avoid the legal challenges presented by competing class actions.
PROBLEMS CAUSED BY COMPETING CLASS ACTIONS
Class actions are meant to resolve many similar claims against a common defendant because they promote judicial efficiency and have economic benefits to the accused person–the defendant. Overlapping class actions present several challenges for stakeholders in a lawsuit, such as defendants, plaintiffs, litigation financier, insurance company, and the judicial system. The specific challenges to overlapping class actions can include:
- Funding arrangements;
- Cost of litigation;
- Unavailability of resources
1. Challenges to Plaintiffs
Overlapping class actions pose challenges for plaintiffs and their legal teams because the existence of different actions with a similar theme reduces the members of a class–resulting in cost pressure on the available members. In other words, the members of a class will be many if only one class action is filed and the litigation cost to be paid by each member will be relatively lower than when competing class actions are filed. Also, the process of book-building can be strained or limited if the members of a class are few. Having few class members means there’ll be insufficient demands to sustain a class action.
2. Challenges to Defendant
Overlapping class actions can also present challenges for defendants. For instance, if the number of plaintiffs is unknown, risk exposure can be unlimited. Additionally, multiple class actions can increase defense costs significantly because the defendant might be forced to hire a different lawyer for each case. Research shows that courts recommend one class action when bringing similar claims against a common perpetrator.
3. Challenges to Litigation Funders
Competing class actions reduce the number of plaintiffs available to litigation financiers which translate to reduced proceeds and minimal management fees for financiers. Litigation financing (funding) refers to the litigating capital provided by a third-party, also called a litigation funder to plaintiffs. In return, litigation funders receive a share of the recoverable damages in a class action.
4. Challenges to Insurers
Insurance companies typically cover defendants or companies in class actions for premium. Consequently, uncertainty in future litigations can cause inaccurate risk costing. Overlapping class actions can further complicate risk costing because insurance companies cannot know the number of cases that will be filed in the future for the same claim. Uncertainties to risk costing result in high premiums or lack of insurance coverage in extreme cases.
5. Challenges to the Judicial System
Overlapping class actions result in multiple proceedings–meaning that the courts will take longer to resolve one legal issue thanks to the existence of different lawsuits with similar claims. However, courts do not allow more than one class action to be filed against the same defendant. Additionally, multiple proceedings go against what the Civil Procedure Act 2005 aims to achieve–facilitating just, fast, and affordable legal resolution.
Remedies for Competing Classes
Courts have different ways of managing overlapping class actions, such as:
- Allowing separate litigation of competing class actions;
- Joint litigation;
- Filing competing claims at different times; and
- Consolidation of competing class action into a single claim.
Prerequisites of Class Action Lawsuits
The prerequisites for class actions are:
1. Numerous Members
A class must have a minimum of 20 members when filing a class-action lawsuit. However, class actions must first be evaluated by courts and given clearance. Litigation via a class action can be declined if the court thinks that the matter can be resolved through an ordinary civil action. Factors considered when giving clearance include:
- The challenges of identifying class members;
- The likelihood of filing separate actions;
- The complexity of the subject matter;
- The complexity of individual actions.
2. Commonality
The principle of commonality states that claims should be based on a common question or fact of law. However, minor factual differences cannot be cited to defeat commonality. Class representatives are tasked with demonstrating that a common question of law applies to all claims of class members.
3. Typicality
This principle states that the claims of class representatives must be similar to those of other class members. In other words, a class representative must prove that their interests are similar to those of other class members.
4. Adequacy for Representation
According to this principle, class representatives must prove that they’ll be impartial by representing all members equally and fairly. Impartiality is evaluated by considering whether the interests of class members and the representative clash.
The disadvantages of filing overlapping class actions outweigh the benefits of filing a single class action. A class action attorney can advise you more on this subject.
