Mark Pestronk
Q: Our agency operates tours in the summer and fall, and, of course, we had to cancel all of our 2020 trips due to the pandemic. Unfortunately, we don't have enough money to provide refunds for all trip participants.
We have tried to offer them a future trip credit, and most have accepted our offer, but several are still threatening lawsuits if we don't provide a refund. One client's attorney is threatening a "class action." Can you refresh my memory about what a class action is, and can you tell me what the likelihood is that the attorney will actually file one?
A: Unless the attorney specializes in representing plaintiffs in class actions, it is highly unlikely that he will file a class action. It is much more likely that he will file suit on behalf of his client only.
Successful class actions take years to prosecute to conclusion and often require attorneys to expend many thousands of dollars or more in expert witness fees, deposition costs and other case costs before they receive any compensation. The suits require court approval to proceed, and one of the requirements for approval is difficult for a nonspecialist to meet.
In a class action, one or a few plaintiffs file suit on their own behalf as well as on behalf of all unnamed individuals who are similarly situated. The named plaintiffs then ask the judge to approve their representation of those who are unnamed. The named and unnamed plaintiffs are called the "class." The word "action" just means lawsuit.
The judge will approve only if four requirements have been met:
- There must be so many people or companies in the class that separate cases would be unwieldy.
- There must be a question of law or fact that is common to all class members.
- The named plaintiffs must be typical of the class.
- Above all, the named plaintiffs' attorneys must be able to represent the interests of the class adequately and skillfully.
Defendants' attorneys always oppose the plaintiffs' request that a judge approve a class action. The judge then usually takes a long time to decide whether to approve. In your case, if only a small number of clients refused your future credit offer, it is unlikely that the court would agree that the first requirement has been met; i.e., that there are so many people with claims that a separate cases would be unwieldy.
Further, if the plaintiffs' attorney is not skilled in handling such suits, the judge may find that the fourth requirement has not been met, either, resulting in dismissal of the entire case.
If the judge approves, one of the parties has to notify all class members, who then get a chance to opt out of the case for any reason. All of these steps take months or years before a trial can take place, and cases are usually settled for less than what the plaintiffs' attorney hoped for.
So, the chances are high that the class action threat is a bluff.