What is a Class Action Suit? A class action suit, is a type of lawsuit where one of the parties is a group of people or entities who are “similarly situated” and are represented collectively by a member of that group. Each year, class actions suits are prosecuted by federal, state and various government agencies and hundreds of thousands of people or companies can be claimants under these lawsuits. Through the establishment of a common fund, plaintiffs and other injured parties can be compensated for their losses or wrong doings by defendants and thus become claimants to that class action settlement. Further, the adoption of Rule 23 of the Federal Rules of Civil Procedure in 1938 broadened the scope of the class action suit and is the basis of how final judgement is bound and settlements are formed.