It's not only the number of gang members and your hardware that determines the outcome of a fight. When you upgrade your character you might have seen the two stats "Attack" and "Defence". These two add to your strength but they are hidden to your opponent so they are a secret resource. Now, when you are attacked or attack someone and you get the message "You were outclassed" it means that, depending on which one you did, one of them were lower than your opponent and hence you lost the fight. This is regardless to if you "outclassed" him or her in all the other stats.