What is a Class
Action Suit?
Some
of you must have seen the movie, Erin Brokovich. In this movie, a lady realises
that a gas company is poisoning the ground water. She then files a case on
behalf of the entire community, and wins. This is a class action suit. In
short, when one person fights on behalf of
an entire group
(class) of people, it is called a class action suit.
Why do companies
not like Class Action Suits?
Let’s think
about why a company would not like class action suits. I have two guesses:
- A class
action suit means that the company hurt a LOT of people, not just one or
two.
- The penalty
is typically much, much higher in a class action suit. For instance, if
there are 300 people in a class, and the court gives damages of 1 million
each, that is 300 million for the company. In the real Erin Brokovich
case, the damages were $333 million for 634 people.
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