It seems that at every opportunity, the Supreme Court sets the bar higher and higher for class action plaintiffs. Nevertheless, plaintiffs’ attorneys continue to file class action lawsuits at a record pace, even where the merits seem questionable.
Despite the continuing prevalence of class filings, being named as a class action defendant can be a momentous event for any company, particularly one that is not accustomed to litigation, in part because the costs required to gain dismissal of even groundless lawsuits can be substantial. A defendant’s inability to fund a vigorous defense can make it susceptible to agreeing to a quick settlement, thereby perpetuating the cycle of baseless lawsuits. For these reasons, immediately upon receipt of a class action complaint, defendants must remember to take a step back and examine whether they have insurance that might provide coverage for the lawsuit.