The Legal Framework for Business
A class action suit groups a number of small plaintiffs, as many as hundreds of
thousands of them, to allow for efficient processing under one lawsuit.
Class Action Fairness Act of 2005
Before the reform, many companies facing such an action, whether it
involved a family medication or a defective TV, complained that
plaintiffs’ lawyers shopped around for sympathetic courts. The Class
Action fairness act of 2005 imposes certain restrictions on such suits.
First, it automatically moves the most large, multi-state class actions—
those with potential damages exceeding $5 million and in which more
than two-thirds of the plaintiffs are geographically dispersed—from state
courts into federal courts. This restriction prevents “shopping around” in
different states for sympathetic courts but lets cases that belong within a
particular state remain there.
Second, judges must consider the actual monetary value of any damage
done so that plaintiffs receive true compensation for injury instead of large
—and perhaps arbitrary—awards.
A third major provision of the law affects the way attorneys receive
payment for their legal representation. Under the old system, an attorney
would usually receive a percentage of the cross settlement amount,
regardless of whether all plaintiffs bothered to collect. Now judges can
require that any uncollected rewards be given to charities or government
organizations, and attorneys may not include those rewards in calculating
their fees. Also, if the attorney’s fee was not based on a percentage, then it
must be based on time actually spent working on the case. Finally, the act
ensures that plaintiffs’ interests are protected equally with their lawyers’.
Legal System and Administrative Agencies
The judiciary, or court system, is the branch of government responsible for
settling disputes among parties by applying laws. This branch consists of several
types and levels of courts each with a specific jurisdiction. Court systems are
organized at the federal, state, and local levels. Administrative agencies also
perform some limited judicial functions, but these agencies are more properly
regarded as belonging to the executive or legislative branches of government.
Trial courts- courts of general jurisdiction
At both the federal and state levels, federal courts hear a range of cases. Unless
law to another court or to an administrative agency assigns a case, a court of
general jurisdiction will hear it.
Majority of cases, both criminal and civil, pass through this court
Within the federal system, trial courts are known as US district courts, and
at least one of these courts operates in each state.
In the state court systems, the general jurisdiction courts are often called circuit