As we discussed in our last blog post, class action lawsuits are a vital part of our legal system, which allow ordinary people to seek justice on behalf of a large group of people and hold powerful defendants responsible for their wrongdoing—no matter how large or small the harm. Most aspects of a class action lawsuit proceed like any other lawsuit. However, there are some differences. In this article, we will discuss the various stages of a typical class action lawsuit, from the start of the lawsuit through the successful resolution of our clients’ and class members’ claims. While we are always prepared to go to trial, class action trials are rare. For instance, when it comes to class actions concerning securities fraud, less than 0.4% of all class actions reach a trial. Instead, most successful class actions are brought about through settlements. Accordingly, while each class action lawsuit presents its own challenges, class actions typically include the following stages:
Stage 1: Filing the Lawsuit
After we conduct our pre-lawsuit investigation and determine that the case is suitable for class action treatment, we file the complaint. The complaint is the document that details the underlying facts and alleged wrongdoing, names the defendant(s), describes the individuals that the plaintiff seeks to represent (referred to as the class definition), and states the legal claims that the plaintiffs seek to pursue on behalf of themselves and the class. The complaint is also the document that starts the lawsuit.
- In our case against TikTok, the complaint alleged that the defendants violated several data and privacy protection statutes, including the Illinois’ Biometric Information Privacy Act. The complaint in this case sought to certify two classes, a nationwide class comprised of all persons who used the TikTok app in the United States and an Illinois class for Illinois residents that used the app. Based on our experience litigating similar data privacy lawsuits, we determined that an Illinois class was necessary to take advantage of the state’s strong, pro-consumer privacy laws. Finally, the complaint sought injunctive relief and damages for defendants’ wrongdoing.
Stage 2: Motion To Dismiss
Once the complaint is filed, defendants will typically file a motion to dismiss within 2-4 months. This motion must assume that the alleged facts are correct, but will argue that there is no legal basis for a claim if the court denies the motion, the parties will then move on to the discovery or investigative phase of the.
Stage 3: Discovery
Discovery is another name for the investigative phase of the case where all parties exchange requests for evidence relating to their claims and defenses. Discovery in class actions is most often very complex and could take several years to complete. Among the tools available to us in discovery are document requests, interrogatories (which are written questions that a party must answer), and depositions (interviews under oath).
Stage 4: Motion for Class Certification
Each class action is subject to the court approving plaintiffs’ motion for class certification. In a class certification motion, plaintiffs need to present facts and evidence showing that their claims are suitable for class treatment. This requires plaintiffs to show that, among other things, the plaintiffs and their attorneys adequately represent the interests of all class members, the class contains enough people to justify a class action, and that there are no issues unique to individual members of the class that predominate over common issues to the class.
Stage 5: Motion for Summary Judgment and Trial
Once the parties have conducted discovery, the parties will frequently file competing motions for summary judgment. A motion for summary judgment asks the court to decide whether a plaintiff has presented enough evidence to prove their claim or a part of their claim or if defendants have presented sufficient evidence to defeat a required element of plaintiffs’ claim at trial. Summary judgment is not an all or nothing proposition. For instance, class plaintiffs can move for summary judgment regarding the damages that the class suffered, but may still need to prove a defendant’s knowledge of wrongdoing at trial.
After summary judgment motions comes the trial. Trials in class actions are extremely rare. Less than 1% of class actions reach the trial stage. Like all aspects of class action litigation, class trials are complex and time consuming. Trials can take a couple of weeks or up to several months. Depending on the nature of the claims, the trial will either be held before a jury or the judge will be the decider of facts. In class actions, trials pose significant risks for each party.
Stage 6: Settlement: Preliminary Approval
As noted above, class action trials are extremely rare. Typically, after the parties have conducted some amount of discovery and plaintiffs succeed in motion practice, the parties may engage in settlement discussions to see if there is a path to resolution and compromise. Settlements avoid the exorbitant cost and risk of further litigation, including a potential trial, and allow class members to receive compensation sometimes years before they would see a penny through trial.
Settlement negotiations of class actions are complex and sometimes take months or years, depending on the complexity of the case. Very often, the parties will use experienced mediators to help guide the negotiation process. Quite often, settlement negotiations will proceed on a parallel track to the litigation of the class action.
Following successful negotiations, the parties involved in a class action lawsuit will submit their proposed settlement to the court overseeing the case, asking the court to determine whether the settlement is fair, adequate, and reasonable. If deemed fair, adequate, and reasonable, the court will grant preliminary approval of the settlement.
- In the TikTok case, the court granted preliminary approval of a historic $92 million settlement in October 2021. In addition to creating a monetary fund for TikTok users who had their private data unlawfully stolen, the settlement required that TikTok initiate a new privacy compliance program and take other steps to protect its users’ privacy going forward. Had a settlement not been reached, trial was not expected to take place for at least a year and a half.
Stage 7: Class Notice
Once the court grants preliminary approval, notice of the settlement is sent out to all class members, sometimes via direct mail, sometimes via publication in the media, and sometimes a combination of both. The notice outlines details of the settlement, and the legal rights and options available to class members.
- Because our case against TikTok was filed in Illinois, one of a few states in the U.S. that has enacted strong, pro-consumer privacy laws, the court certified two settlement classes – a nationwide class and an Illinois subclass for all members who resided in the State of Illinois. In recognition of Illinois’ strong privacy laws, members of the Illinois subclass received six shares of the settlement while members of the nationwide class received one share. The value of those shares, or the amount of compensation to each class member, was determined by the number of those who submitted claims.
Class notice is designed to advise class members of their options to participate or not in the settlement. For example, in the class notice in the TikTok case, class members were presented with the following rights and options:
Class members were also directed to a settlement website to submit claims and access more information about the settlement and deadlines. Members were able to submit claims as well as statements in support of or in opposition to the settlement, up to the specified deadlines.
Step 8: Final Approval
If the court grants preliminary approval, a date and time for a Final Fairness Hearing is set. The time between preliminary and final approval can range from as little as 90 days to more than a year, depending on the particular facts and circumstances in the litigation. At the Final Fairness Hearing, the court considers the number of objections to the settlement and number of class members who requested exclusion from the settlement, along with statements in support of the settlement.
If the judge still deems the settlement fair, adequate, and reasonable, the court will grant the settlement final approval. Once a settlement receives final approval, benefits are distributed to class members.
- In August 2022, a federal court judge in Illinois granted final approval of our settlement between TikTok, ByteDance, Inc., and consumers of the app, meaning benefits could be distributed to class members. Based on early estimates, each member of the nationwide class was set to receive $27, and each member of the Illinois subclass was set to receive $163 from the settlement.