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How Businesses Should Respond to a Class Action

By Cynthia Hsu, Esq. | Last updated on

What is a class action? What are some class action defenses for businesses? Class actions are something that small business owners should be concerned about, as they can cost business owners thousands of dollars.

Class action lawsuits can come from two places - employers should be concerned about the possibility of class action lawsuits brought on by employees, or by customers.

Class actions are most often used when there are a number of plaintiffs, each with a similar injury. The injury suffered by the plaintiffs in a class action may be minor if you look at them individually, but when you aggregate all the injuries from all the plaintiffs, the case can become huge.

As a result, class actions may seem daunting for businesses. There are so many plaintiffs, and so many injuries, and when you add them all up... it seems monumental. But, remember that in most class actions, there is usually only one lead plaintiff who has filed the case. That will be the "named" plaintiff, who is representing all others who are similarly situated in the class.

One first step that businesses should try to take is to try to resolve the issues with the lead plaintiff. In some cases, people are in the class are simply because it's convenient for them to opt into the case. The real grievance lies with the originator of the lawsuit. If you can settle with that individual, you might avoid a lot of headaches in the long run.

And, of course, if the plaintiff's case turns out to be based on something that has merit, you should stop whatever practice or custom you're doing that is causing the problem.

Prevention of class action settlements may also be key. Keep an open communication line between your employees and yourself, so you can be aware of any possible problems. And, make sure you maintain good relations with customers, since many class action lawsuits arise out of customer service issues. If customers are satisfied, they will be less likely to sue.

So now that we've answered the initial question, "what is a class action" and gone into some options for class action defenses, if legal problems do arise it is probably a good idea to consult a class action lawyer so you can better understand your legal options.

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