Legal Definitions - spurious class action

The term "spurious class action" refers to a specific type of class action lawsuit that existed under the original Federal Rules of Civil Procedure, prior to significant amendments in 1966. While the term is no longer used in modern legal practice, understanding its historical context helps clarify the evolution of class action law.

A class action is a type of lawsuit where one or more individuals sue on behalf of a larger group of people who have similar legal claims. Instead of each person filing their own separate lawsuit, the class action allows a single case to resolve the claims of many individuals, promoting efficiency and consistency.

Historically, a spurious class action was characterized by:

• Several, Individual Rights: Each member of the class had their own distinct, individual legal claim, rather than a shared or common right with the entire group.
• Common Question of Law or Fact: Despite having individual claims, all class members' claims involved a common legal question or a common set of facts.
• Opt-In Requirement: Crucially, a judgment in a spurious class action only bound those individuals who affirmatively chose to join the lawsuit. It did not automatically include or bind all potential class members who did not actively participate. This is a key difference from many modern class actions, which often operate on an "opt-out" basis, where individuals are included unless they specifically choose to leave the class.

In essence, a spurious class action was primarily a procedural tool to allow many individuals with similar, but separate, claims to consolidate their cases for efficiency, but only for those who actively wished to participate.

Here are some examples illustrating what would have been considered a spurious class action:

• Example 1: Individual Investors Affected by Misleading Stock Information

  Imagine a scenario where a publicly traded company releases misleading financial statements, causing its stock price to drop significantly. Hundreds of individual investors, each owning different amounts of stock, suffer financial losses. Each investor has a separate claim for their individual losses, but the common issue is the company's misleading statements and their impact on the stock price.

  How this illustrates the term: Under the old rules, this situation could have led to a spurious class action. Each investor's right to recover damages is "several" (individual), based on their specific investment. However, there is a "common question of law or fact" concerning whether the company's statements were indeed misleading and caused the stock drop. Only those investors who actively decided to join the lawsuit would be included in the class and bound by any judgment or settlement.

• Example 2: Consumers with Defective Household Appliances

  Consider a manufacturer that sells a particular model of refrigerator with a design flaw that causes it to frequently break down shortly after the warranty expires. Thousands of consumers across the country purchase this model. Each consumer experiences a similar problem with their individual refrigerator, incurring repair costs or replacement expenses.

  How this illustrates the term: This scenario fits the characteristics of a spurious class action. Each consumer has a "several" (individual) claim for the cost of repairing or replacing their specific appliance. The "common question of law or fact" is the existence of the design flaw in that particular model and the manufacturer's responsibility. Only those consumers who affirmatively joined the lawsuit would be part of the class seeking compensation for their individual losses.