How to File a Class Action Lawsuit: Rule 23 and Certification

To file a class action lawsuit, you identify a harm that a company or entity caused to a large group of people in the same way, collect evidence tying your experience to that pattern, hire an attorney who handles class litigation, and have that attorney file a complaint on behalf of a proposed class. The case then has to be certified by the court under Federal Rule of Civil Procedure 23 before it can proceed as a class action. The full process commonly takes years and has specific requirements at every stage.

Confirm Your Situation Fits a Class Action

Class actions exist for harms where each person’s individual loss is too small to justify a solo lawsuit, but the combined damage across many people is substantial. Common categories include consumer fraud (false advertising, deceptive labeling, hidden fees), defective products, data breaches, wage-and-hour or discrimination claims against an employer, defective drugs and medical devices, and securities fraud against publicly traded companies.

The common thread is a shared injury from the same conduct. If your complaint is unique to you, or the facts vary heavily from person to person, a class action is unlikely to be the right vehicle. If thousands of other customers, employees, patients, or investors were affected by the same practice in the same way, it may be.

Gather Your Evidence First

Before you contact a lawyer, pull together everything that documents your own harm and connects it to the defendant. Useful records include:

Purchase records: receipts, order confirmations, billing statements, or contracts.
Medical records: bills, treatment notes, or diagnostic reports if the claim involves physical injury.
Communications: emails, letters, text messages, and notes from phone calls with the defendant, especially any attempts to resolve the problem.
The product itself. If keeping it isn’t possible, take detailed photographs.
A written timeline of events: when you first noticed the problem, when you contacted the defendant, and what happened next.

Look beyond your own file too. Consumer complaint databases, product review sites, and social media discussions can show whether other people report the same problem. That pattern helps your attorney estimate the size of the potential class and the total damages at stake.

Hire a Class Action Attorney

Courts almost never let someone represent a class without a licensed attorney, because the lead plaintiff owes a duty to potentially thousands of absent class members. Look for firms that specialize in class action or multi-district litigation and have handled the type of claim you are bringing.

Most class action lawyers work on contingency: no upfront charge, and a fee only if the case produces a settlement or judgment. Under Rule 23(h), the court must approve the fee as reasonable, and awards commonly land in the range of roughly 20% to 33% of the total recovery depending on the size and complexity of the case.¹ Litigation costs (expert witnesses, filing charges, document management) are typically deducted from the gross settlement before class members are paid.

Bring your documentation to the initial consultation so the attorney can evaluate the strength of the claim. If the firm takes the case, you sign a retainer agreement and the legal team drives the litigation from there.

File the Complaint

The case formally begins when your attorney files a complaint in federal or state court. The complaint names the defendant, describes the wrongdoing, identifies the laws violated, and states that the suit is brought on behalf of a proposed class of similarly harmed people. Federal court filing fees are currently $405; state court fees vary.

After filing, the defendant must be served with a summons and a copy of the complaint. In federal court the defendant then has 21 days to respond.² State court deadlines can differ.

Watch the Statute of Limitations

Every claim has a filing deadline, and the window depends on the type of claim. Consumer fraud, product liability, and employment claims each carry their own limits, typically somewhere between two and six years. Missing the deadline can permanently bar the claim, so talk to an attorney early.

One protection worth knowing: under American Pipe tolling, filing a class action complaint pauses the statute of limitations for all potential class members from the filing date until the court rules on certification.³ If certification is later denied, class members still have time to file their own individual suits.

Meet the Rule 23 Requirements

Before a court will let a lawsuit proceed as a class action, it has to satisfy four requirements under Federal Rule of Civil Procedure 23(a):

Numerosity: the group is large enough that joining each person individually would be impractical. Courts generally presume this is met at 40 or more class members.
Commonality: legal or factual questions apply equally to every class member, such as whether a product contained a specific defect.
Typicality: the lead plaintiff’s claims and injuries closely mirror those of the rest of the group.
Adequacy: the lead plaintiff and their attorney can fairly protect the interests of the whole class, without conflicts.

The court evaluates all four before certifying the class.¹

Federal Court and CAFA Jurisdiction

The Class Action Fairness Act of 2005 gives federal courts jurisdiction over class actions when the total amount in controversy exceeds $5,000,000 and at least one class member lives in a different state than at least one defendant.⁴ This minimal-diversity test is easier to meet than the complete diversity federal cases usually require, which is why large class actions frequently land in federal court. If the total claims fall under $5 million or every party is from the same state, the case usually stays in state court.

Move for Class Certification

After the complaint is filed, the case enters a discovery phase focused on class issues: how many people were affected, what injuries they suffered, and whether the claims share enough in common. Your attorney then files a formal motion asking the judge to certify the case as a class action, and the court is required to rule at an early practicable time.¹ Three outcomes are possible:

Full certification. The class is recognized as defined, and the case moves toward trial or settlement.
Narrowed certification. The judge certifies a smaller class, for example limiting it to certain states or purchases within a specific window.
Denial. The court finds the case doesn’t meet the requirements. The lead plaintiff can still pursue an individual suit, but the class action is over.

Appealing the Certification Ruling

Either side can ask the appeals court to review a certification order. Under Rule 23(f), the petition must be filed within 14 days of the ruling.⁵ The appeals court decides at its discretion whether to hear it, and filing the petition does not automatically pause proceedings in the trial court.

What Happens for Class Members After Certification

Once a class is certified, the court orders notice to all identifiable members. Rule 23(c)(2)(B) requires the “best notice that is practicable under the circumstances,” which can include mail, email, or other appropriate methods. The notice must explain the nature of the suit and the class definition, the claims and defenses, the right to hire your own attorney, how and by when to opt out, and the binding effect of the judgment on anyone who stays in.¹

Federal class actions use an opt-out model. If you are identified as a class member, you are automatically in unless you request exclusion by the deadline in the notice. Opting out preserves your right to sue individually. Staying in means you’re bound by whatever the court approves, whether that’s a settlement or a verdict, and you give up the right to sue the defendant separately over the same issue.

Settlement, Approval, and Payment

Most certified class actions end in settlement. Under Rule 23(e), a settlement that would bind class members can only be approved after a hearing where the judge finds the deal fair, reasonable, and adequate.¹ The court looks at whether the class representatives and counsel adequately represented the class during negotiations, whether the deal was reached at arm’s length, whether the relief is reasonable given trial risks, whether class members are treated equitably relative to each other, and how the requested attorney fee compares with the total recovery.

Class members get a second notice describing the proposed terms and a chance to object before the judge rules. If the settlement is approved, a claims administrator distributes the money, and each class member typically has to submit a claim form by a stated deadline to receive their share. Unclaimed funds may go to a related charitable organization under the “cy pres” doctrine, or revert to the defendant, depending on the settlement terms.

Taxes on Any Recovery

How your payment is taxed depends on what it compensates. The default rule is that income is taxable unless a specific provision of the tax code excludes it.

Damages for personal physical injuries or physical sickness are excluded from taxable income, except punitive damages.⁶
Damages for emotional distress are taxable unless the distress was caused by a physical injury. Emotional distress from non-physical claims, such as employment discrimination, is fully taxable.⁷
Lost wages are taxable unless the wage loss came directly from a physical injury.
Punitive damages are always taxable, with a narrow exception for wrongful death cases in states where punitive damages are the only available remedy.⁷

If your payment is $600 or more, the settlement administrator will generally issue a Form 1099-MISC reporting it to you and to the IRS.⁸ Smaller payments can still be taxable even if you don’t receive a form. Keep your settlement documents and check with a tax professional if you aren’t sure how to report the payment.

1
LII / Legal Information Institute. Federal Rules of Civil Procedure Rule 23
2
LII / Legal Information Institute. Federal Rules of Civil Procedure Rule 12
3
Justia Law. American Pipe and Construction Co. v. Utah, 414 U.S. 538 (1974)
4
Office of the Law Revision Counsel. 28 U.S. Code 1332 – Diversity of Citizenship; Amount in Controversy; Costs
5
Fourth Circuit Court of Appeals. Appellate Deadlines
6
Office of the Law Revision Counsel. 26 U.S. Code 104 – Compensation for Injuries or Sickness
7
Internal Revenue Service. Tax Implications of Settlements and Judgments
8
Internal Revenue Service. Instructions for Forms 1099-MISC and 1099-NEC