A class action lawsuit is a type of legal action in which a group of plaintiffs who suffered similar damages for the same reason sues the defendant together. Class action lawsuits are intended for cases in which there are so many people affected by the defendant’s actions, often with relatively nominal damages for each person, that individual lawsuits would be impractical or cost prohibitive. For instance, if a dog food manufacturer put out a pet treat that caused dogs to become ill, resulting in thousands of consumers incurring vet bills for the treatment of their pets due to illness, the affected customers might get together and file a class action lawsuit against the manufacturer.
How Does a Class Action Lawsuit Work?
In most class action lawsuits, a single member of the group serves as the “class representative.” This person, also known as the “lead plaintiff,” serves as the primary spokesperson and representative and is typically the only plaintiff required to meet with attorneys or appear in court.
However, the court’s decisions in the lawsuit apply to every member of the class, whether they actually spent a day in court or not. Class members who are not the class representatives do not have approval rights over any action or settlement in the case. Participation in a class action lawsuit also bars the plaintiff from subsequently filing an individual claim against the defendant for the same transgression.
Why Take Part in a Class Action Lawsuit?
If you are eligible to take part in a class action lawsuit, there are several reasons why you might want to do so.
One, the effort required on your behalf is minimal. It typically requires filling out a few forms and not much else.
Two, class action lawsuits make sense when you suffered minor damages that probably do not warrant filing legal action on your own.
Three, you do not incur legal costs when taking part in a class action lawsuit, so there is no financial risk if your side does not prevail.
How to Opt Into a Class Action Lawsuit
If you were affected by a defendant’s alleged actions that gave rise to a class action lawsuit, you are entitled to notification of the lawsuit’s existence, which usually occurs after the class has been certified (the court has determined the case can move forward with a designated class). The class representative is responsible for informing eligible class members. This happens via mail, TV and newspaper advertisements, and flyers.
Once you receive notification, you can opt in or opt out. If you think your case is unique and that you might be eligible for a larger award suing on your own, you might want to opt out. Talk to a lawyer first.
In some class action lawsuits, individuals do not have the choice to opt out. If the lawsuit involves specific harm you suffered by a specific defendant, you are automatically added to the class and are thus bound by the outcome of the case.
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What Happened with Robinhood?
As of the posting of this content, users of the popular app Robinhood will find that the purchase of shares of Gamestop Corp. (NYSE: GME), AMC Entertainment Holdings Inc. (NYSE: AMC), and others are no longer supported.
Screen capture of Robinhood’s Twitter account announcing that it is “restricting transactions for certain securities to position closing only”.
When prices of these securities began to skyrocket, Robinhood began restricting the purchase of the aforementioned securities, only allowing the selling of shares.
As of 9:25 AM EST, Interactive Brokers also began putting option trading in these and other securities into liquidation due to the volatility in the markets.
Why is this Breaking News?
Restricting the trading of these securities to retail investors, excluding institutional investors and hedge funds goes against Robinhood’s mission statement that “…the financial system should be built to work for everyone…”.
Users of the app are taking to Twitter to express their frustration with the actions of Robinhood, stating that the platform is not performing to the interests of its users, creating an unfair advantage in the markets.
Have you been affected by Robinhood?
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