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

To file a class action lawsuit, you confirm that no arbitration clause blocks you, gather documentation of a harm that affected a large group in essentially the same way, retain experienced class counsel on contingency, and then file a complaint in the appropriate court that defines the proposed class and states the legal claims. The case does not actually become a class action at filing. It becomes one only if a federal judge later grants class certification under Rule 23 of the Federal Rules of Civil Procedure, which is the most contested step in the process and often takes a year or more.

Check Your Contracts for an Arbitration Clause First

Before anything else, read every agreement you have with the potential defendant. Account terms, employment paperwork, software licenses, and purchase agreements routinely contain mandatory arbitration clauses paired with class action waivers. In Epic Systems Corp. v. Lewis, the Supreme Court held that the Federal Arbitration Act requires courts to enforce agreements mandating individualized arbitration, even when the effect is to prevent employees or consumers from banding together.¹

If such a clause exists, the defendant will move to compel individual arbitration and almost certainly win. Narrow exceptions survive. Courts have occasionally refused to enforce waivers when the cost of pursuing an individual claim would effectively grant the defendant immunity, and state unconscionability doctrines can apply to extreme take-it-or-leave-it contracts. These arguments fail far more often than they succeed. This is where most potential class actions quietly die, and an experienced class action attorney can tell you quickly whether a viable challenge exists.

Gather Evidence and Define the Group Who Was Harmed

A class action requires a harm that hit a large group in essentially the same way, from the same conduct, under the same legal theory. Before meeting with an attorney, assemble whatever documents you have that establish your relationship with the defendant: purchase receipts, signed contracts, service agreements, billing statements, and account records. If the case involves a defective product or health hazard, pull your medical records and diagnostic reports. Save correspondence with the company, including emails, letters, and chat logs.

Organize everything chronologically. Each document should tie to a specific moment in the story: when you entered the relationship, when the harm occurred, when you complained, how the company responded. For overcharge cases, bank statements with the disputed line items highlighted carry real weight. Walking into a consultation with this material already in order signals that your claim rests on verifiable facts, and it saves billable hours.

Think also about who else was affected and how. A class action works when the group can be described by objective criteria such as “everyone who was charged this fee between these dates” or “everyone who bought this model of device.” Vague groupings like “everyone harmed by the company” will not survive certification.

Retain Class Counsel

You do not file a class action yourself. Class actions are complex, multi-year lawsuits against well-funded defendants, and the court will not certify a class unless the proposed counsel has the resources and experience to see it through.

Most class action attorneys work on contingency. They advance the litigation costs and collect a fee only if the case recovers money. Attorney fees in common-fund settlements typically range from roughly 25% to 40% of the total recovery, subject to court approval. You should not pay out of pocket to file.

The court itself formally appoints class counsel under Rule 23(g) once the case is on file, evaluating the firm’s track record in similar litigation, its resources, and its ability to represent absent class members loyally.² If the court later finds counsel is not acting in the class’s best interest, it can replace them. Ask candidate firms directly how many class actions they have taken through certification and what results they obtained.

File the Complaint in the Right Court

The case formally begins when your attorney files a summons and complaint with the clerk of the appropriate court. In federal court, the filing fee totals $405 for civil cases, consisting of a $350 statutory fee and a $55 administrative fee.³ The complaint identifies the defendants, defines the proposed class with precision, lays out the legal theories, and states the relief sought. The defendant must then be served and given time to respond.

Choice of court matters. Many class actions begin in state court but end up removed to federal court under the Class Action Fairness Act. CAFA gives federal courts jurisdiction when the aggregated claims exceed $5 million and at least one class member is a citizen of a different state than at least one defendant.⁴ That minimal-diversity threshold is far easier to clear than the complete diversity required in ordinary federal cases, and defendants frequently prefer federal court. If your case meets CAFA’s thresholds, expect a removal motion almost immediately after filing in state court.

Win Class Certification Under Rule 23

Filing a complaint that calls itself a class action does not make it one. After initial pleadings and a limited discovery period focused on class issues, your attorney files a motion asking the judge to certify the case as a class action. This is the fight that defines whether your lawsuit lives or dies in collective form, and defendants fight it hard because certification dramatically increases their exposure and settlement pressure.

The judge does not decide liability at this stage. The question is whether the case can proceed on behalf of the group at all. To certify, the court must find that the proposed class satisfies all four requirements of Rule 23(a) and fits within one of the categories under Rule 23(b).

The Four Rule 23(a) Requirements

Numerosity. The class must be large enough that joining everyone as individual plaintiffs would be impractical. No hard statutory minimum exists, but courts routinely treat about 40 members as a working benchmark. A group of 15 can just file together without the class mechanism.

Commonality. Every class member must share at least one legal or factual question whose answer drives the outcome for the whole group. The Supreme Court clarified in Wal-Mart Stores, Inc. v. Dukes that alleging the same type of violation is not enough. The class needs a common contention whose resolution determines a central issue for every member’s claim in one stroke. Whether a standard contract contained a deceptive fee provision is a common question. Whether individual managers treated individual employees differently is probably not.⁵

Typicality. The lead plaintiff’s claims must arise from the same conduct and legal theory as everyone else’s. A representative who bought a different product or signed a different contract will not satisfy this requirement.²

Adequacy of representation. The lead plaintiff and the lawyers must be capable of fairly protecting the entire class, with no conflicts of interest and the resources to litigate against a well-funded defendant for years.²

The Rule 23(b) Category

Meeting the four threshold requirements is necessary but not sufficient. The class also has to fit one of three categories under Rule 23(b), and the category determines whether members can opt out.

Rule 23(b)(1) applies when separate individual lawsuits would create a risk of inconsistent rulings or would practically impair other members’ ability to protect their interests. Members generally cannot opt out.
Rule 23(b)(2) applies when the defendant acted on grounds that apply to the entire class and injunctive or declaratory relief is appropriate for the group as a whole. Civil rights and workplace discrimination cases often fall here. Members typically cannot opt out.
Rule 23(b)(3) is the most common category for money-damages cases. The court must find that common questions predominate over individual ones and that a class action is the superior method of resolving the dispute. This is the only category where members have an automatic right to opt out.²

If your case is primarily about money, you will almost certainly need (b)(3) certification, which requires the strongest showing that common issues dominate the litigation.

What You Sign Up For as the Lead Plaintiff

The lead plaintiff, also called the class representative, is not a figurehead. You participate in discovery, sit for depositions, produce personal documents, and make strategic decisions that bind everyone in the class. The commitment can last several years, and the court expects you to stay engaged throughout. If you lose interest or develop a conflict of interest with the class, the court can replace you, which creates delay and uncertainty.

Lead plaintiffs sometimes receive incentive or service awards to compensate for the extra work beyond what ordinary members contribute. These are typically modest, often under $10,000, and must be approved by the court. Availability depends on jurisdiction: the First and Ninth Circuits allow them, while the Eleventh Circuit has held they are prohibited under older Supreme Court precedent.

After Certification: Notice, Settlement, and Payment

Once a class is certified, the court requires that potential members be told about the lawsuit. For classes certified under Rule 23(b)(3), the court must direct “the best notice that is practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort.”² In practice that means direct mail or email to anyone identifiable through the defendant’s records, with publication, websites, or targeted digital ads filling the gap. The notice explains the case in plain language and spells out each member’s right to opt out. Members who opt out keep their right to sue individually. Those who stay in are bound by whatever the court approves.

Most certified class actions settle rather than go to trial. A class action settlement cannot take effect without court approval. Under Rule 23(e), a judge holds a fairness hearing to decide whether the deal is fair, reasonable, and adequate for the class as a whole, considering the strength of representation, whether negotiations were at arm’s length, the size of recovery against the risks of trial, the method of distribution, and the attorney fee terms. Any class member can file a written objection, and the court must consider objections before granting final approval.²

After approval, class members typically submit a claim form by a court-set deadline to collect their share. Unclaimed funds may be redistributed to participating members, returned to the defendant, or directed to a related charity under the cy pres doctrine.

Taxes on Any Money You Recover

Settlement money is not always tax-free. Under Section 104 of the Internal Revenue Code, compensatory damages for physical injuries or physical sickness are generally excluded from gross income. Everything else, including recoveries for consumer fraud, wage theft, contract disputes, and non-physical employment claims, is generally taxable as ordinary income.

The part that catches people: under the Supreme Court’s ruling in Commissioner v. Banks, you may owe tax on the entire settlement amount, including the portion paid to your attorney. If a lawyer takes a 33% contingency fee from a taxable settlement, you can receive an IRS Form 1099 for the full amount even though a third went directly to the firm. The miscellaneous itemized deduction that once let plaintiffs offset legal fees was suspended in 2017 and later made permanent. Certain employment discrimination and whistleblower claims have a separate above-the-line deduction, but ordinary consumer and contract cases do not. Talk to a tax professional before you accept any settlement.

1
Supreme Court of the United States. Epic Systems Corp. v. Lewis
2
Cornell Law School Legal Information Institute. Rule 23. Class Actions
3
Office of the Law Revision Counsel. 28 USC Chapter 123 – Fees and Costs
4
Office of the Law Revision Counsel. 28 USC 1332 – Diversity of Citizenship; Amount in Controversy; Costs
5
U.S. Reports. Wal-Mart Stores, Inc. v. Dukes et al.