The US Class Action Landscape: A Guide to Top Cases & Your Legal Recourse

A class action allows multiple parties who are harmed by the similar conduct of 1 or more defendants to combine their causes of action under one umbrella.

What is a class action?

A class action is a type of lawsuit where a group of people, usually a sizable segment of the population, is harmed by the same misconduct of 1 or a few defendants. The group is collectively represented by a member or members of that group.

Class actions became recognized in the American injustice system in a Supreme Court case in 1820. The practice became prevalent with the adoption of Rule 23 of the Federal Rules of Civil Procedure (FRCP) in 1966.

The representative class member files and prosecutes the class action lawsuit on behalf of all of the class members. The representative member pays for all litigation costs and is responsible for assembling all eligible members and certification of the class.

Class action statistics

From 1996 to date, the following statistics have been reported for class action lawsuits.

Do class actions serve any public interests?

A class action is a lawsuit unique to American law.

In England, from which the U.S. derives much of its common law, a form of class action known as “group litigation” was common in medieval times. But, it fell into disfavor after 1850.

In the United States, the public policy justification for class actions is subject to debate.

Proponents of class actions argue that they are more efficient than separate lawsuits in providing compensation for harm to large groups of plaintiffs. It also enables some plaintiffs to seek compensation that might be too insignificant to justify litigation costs.

On the other hand, critics argue that class actions are often abused. They lend themselves to what are, in effect and practice, frivolous lawsuits that serve to line the pockets of the class representatives while providing minimal benefits to other class members or the public.

Often, the defendants of a large class action claim will opt to settle an otherwise frivolous case simply to avoid the costs and risk of litigation. That is often true even where the settlements are extremely large sums.

Tort law

Class actions usually involve 1 or more subdivisions of tort law. A tort offense is an act or omission that is the proximate cause of harm to another person. It is a civil wrong for which a court can find civil liability and order compensation for the injured party.

Class actions generally involve personal, property or economic harm to the public at large or at least a large segment of the population. The most common torts involved in class actions are personal injury (e.g., product liability), environmental harm and securities fraud.

Burden of proof

A plaintiff in a tort action has a burden to prove, by a preponderance of the evidence, that:

• The defendant had a certain duty that they failed to meet.
• Their failure to meet their duty was the proximate cause of harm to the plaintiffs.
• Their failure was either negligent or willful.
• Alternatively, the defendant’s action might be one for which strict liability is imposed without regard to negligence or willfulness. Defective product cases are prime examples.
• The plaintiff suffered measurable damages.

Damages

Damages typically awarded in a tort case include:

• Compensatory damages for the plaintiff’s injury or loss are economic or non-economic damages. Economic damages are those that can be monetarily measured. Non-economic damages are those that cannot be readily measured by reference to a recognized dollar value or price. Compensation for pain and suffering is an example.
• Punitive damages are awarded as punishment or a deterrent against repeat behavior. They are rarely awarded except where the defendant’s behavior was egregious. They are typically awarded in class actions because the defendant’s actions habitually harm a large group of plaintiffs while knowing the risks.
• Injunctive relief. Sometimes compensatory damages are not suitable or sufficient compensation. A court might order further redress in the form of an injunction that orders the defendant to cease and desist from acting further or face penalties.

How does a class action work?

When a defendant’s action hurts many persons, the original plaintiff will organize a group of plaintiffs to seek compensation from 1 or a few defendants for the same tort.

Some otherwise eligible class members can opt out of the class and pursue their claims individually. If your injuries substantially exceed those of the other class members, then you might consider going it alone, even though it might cost you on the front end.

A class can also consist of multiple defendants who share defenses that are typical for all members of the class of defendants.

The organizers must persuade a court to certify the class. The certification process is meant to be a safeguard against frivolous lawsuits. Unfortunately, that objective is not always achieved.

Under Rule 23 (FRCP), the requirements for class certification are:

• The class is so numerous that it is impracticable to join all of them as plaintiffs.
• All members of the class have the same questions of law or facts.
• The claims or defenses of the class representative are typical of the rest of the class.
• The class representative will fairly and adequately protect the interests of the class.

Furthermore, the class representative must convince the court regarding other issues generally aimed at ensuring the most efficient process to protect the interests of the class members.

When compensatory damages are awarded in a class action they are not shared proportionately by the class members.

• The first to get paid are the class representative’s attorneys.
• Next to be paid is the class representative, who usually takes a disproportionate share as provided in the class certification.
• Finally, the other class members get paid what’s left.

Class actions lawsuits that made headlines

Below are some of the top class action lawsuits in recent history.

Hinkley groundwater contamination

For more than 20 years, from 1951 to 1972, Pacific Gas & Electric (PG&E) dumped more than 370 million gallons of wastewater tainted with hexavalent chromium into ponds around the small town of Hinkley, California.

Chromium is a rust inhibitor that PG&E used in the cooling towers of their compressor stations situated at points along their gas transmission lines. Chromium is a genotoxic carcinogen. When it leaks into the soil and groundwater, it contaminates the community’s drinking water and causes cancer.

The residents of Hinkley were not aware that, for more than 20 years, their drinking water was being contaminated with the toxic cancer-causing chemical. Although there was evidence that PG&E knew of the cancer risk of chromium, it failed to inform Hinkley water authority until 1987. By then, Hinkley residents had been experiencing an abnormally high incidence of cancer.

In 1993, 650 Hinkley residents filed a class action suit against PG&E. The case was the subject of the Oscar-winning movie Erin Brockovich.

The case was referred to arbitration, but before a resolution was reached, PG&G decided in 1996 to settle for $333 million. At the time, that was the largest class action settlement in U.S. history. By an injunction order, PG&E was also required to clean up the contamination and stop using chromium.

Unfortunately, the record-breaking settlement in 1996 has not thwarted Hinkley’s demise. An expanding toxic plume still exists beneath the town. PG&E continues the clean-up efforts ordered under the 1996 settlement. Monitoring wells drilled have only expanded the boundaries of the plume.

The clean-up process injects ethanol that releases arsenic and manganese, which can further contaminate local water wells.

Residents are moving out. They closed their only school, and the county assessor’s office recently sent out reappraisal notices that wiped out many homeowners’ equity.

The tobacco industry In the 1990s

Over $300 billion in damages

In 1988, the U.S. Surgeon General issued a report that nicotine is as addictive as heroin or cocaine. Earlier, in 1984, Congress passed legislation requiring a rotating series of labels on cigarette packaging that warn of the many health risks of smoking. Despite those warning labels, people continue to smoke, albeit at a reduced rate.

Since the 1950s, smokers have been suing tobacco companies on one theory or another. They had little or no success in the beginning.

The companies usually successfully defended arguing that:

• Cigarettes don’t cause cancer.
• Smokers assume the risk.
• Cancer is caused by other factors.

In the 1990s, smokers started having some success when tobacco company internal memos were leaked showing that the companies had conducted research that proved that tobacco is addictive.

Noticing the private party settlements, 40 state attorneys general filed a class action lawsuit on behalf of thousands of victims harmed by tobacco addiction. They argued that Big Tobacco was harming smokers and that the states were bearing the public costs of smokers’ health issues.

Hollywood again dramatized a class action case in the movie The Insider. The film showed the draconian measures that Big Tobacco took to prevent a whistleblower, a Brown and Williamson scientist, from testifying as to what the tobacco companies knew from their own concealed internal research.

In 1994, all 7 major oil company CEOs falsely testified before Congress that there was no evidence that cigarettes were addictive or that they caused cancer, while their own research proved otherwise.

In 1998, the tobacco companies and 46 states signed a Master Settlement Agreement (MSA) that settled numerous lawsuits filed in state courts. In part, the MSA called for Big Tobacco to pay $206 billion to afflicted smokers over 20 years.

Under the MSA, more than 45 tobacco companies settled with class member states. Florida, Minnesota, Mississippi and Texas were not parties to the MSA, but they have their own individual settlements.

The states’ success broke the logjam and provoked many successful individual class actions. In 2006, the Florida Supreme Court dismissed a class action representing 700,000 smokers. They found that the tobacco companies sold cigarettes knowing that they caused cancer, but the Court ruled that the plaintiff’s class could not be certified. Then, 8,000 plaintiffs filed separate claims that, so far, have recovered more than $300 billion in damage awards.

Enron

$7.2 billion to shareholders

In 2001, after Enron went bankrupt, its shareholders filed a class against the company for fraud and violation of securities laws. Several other parties were joined as defendants, including banks, accounting firms and law firms that allegedly aided Enron’s efforts to defraud investors. Arthur Anderson, then one of the Big Five accounting firms, was forced to dissolve as a result of the settlement.

Enron’s executives perpetrated the fraud by setting up several fake affiliate companies to facilitate the removal of substantial debt from Enron’s financial statements. They also employed a controversial mark-to-market accounting method that misrepresented the company’s income from long-term contracts.

As a result, Enron’s balance sheet was inflated, resulting in unrealistic stock prices. Enron agreed to pay $7.2 billion to its shareholders, which was the largest securities litigation settlement ever in the U.S.

NFL concussions

$765 million to football players

The concussion event is comparable to injuries to passengers in a car accident. You can drive a tank and still suffer injury from a collision. Your vehicle’s inertia will suddenly stop with a collision, but your passengers’ inertia will continue as they are thrown through the windshield. Seat belts stop the passengers’ inertia.

Your brain’s inertia doesn’t stop with a collision, even when seat belts are secured. It keeps on moving until it is violently stopped by your rigid skull bone.

The same thing happens in a football collision. You can wear the best helmet ever made, but it will not stop your brain from violently slamming against your skull bone. That secondary collision causes brain hemorrhage, which, in turn, causes brain swelling and deprives your brain tissue of nutrients and oxygen. Some of your brain cells will die and will never regenerate.

If a player suffers repeated blows to the head over an average pro-football player’s career, the long-term damage can be catastrophic. Many retired players suffer from dementia as they age. Some have committed suicide.

Junior Seau played for 20 years in the NFL and, in that time, suffered multiple concussions. After retirement, he experienced numerous extreme symptoms, including dementia and suicide at age 42. It was later determined from autopsy examination that he had advanced CTE from repetitive head injuries.

The NFL settled the class action lawsuit for $765 million paid to the class of players. The league has since adopted new rules to prevent helmet-to-helmet collisions.

It has also implemented a new protocol intended to prevent repeated injuries following a concussion. The protocol keeps a player off the field until they complete a post-concussion screening. However, it is not clear that a mere delay will prevent another concussion as soon as the player is back on the field.

Volkswagen “dieselgate”

$14.7 billion

Volkswagen was sued in a United States class action for a class comprised of VW car owners and lessees. VW settled in 2016 for $14.7 billion.

Goldman Sachs mortgage-backed securities

$5.06 billion paid to investors and consumers

Under a 2015 settlement of 1 of those class actions, Goldman paid $272 million to defrauded investors. The class representative was NECA-IBEW Health and Welfare Fund, an electrical workers’ pension fund.

Between 2007 and 2010, Wall Street bankers concocted a product called “subprime home mortgages.” They packaged the mortgages as so-called “mortgage-backed securities” (MBS). The securities were given unrealistically high credit risk ratings by rating agencies like Moody’s and Standard and Poor’s. They received unconscionable fees for simply endorsing the product.

Goldman and other mortgage packagers encouraged lenders to grant very risky mortgage loans to feed the program. They immediately sold to mortgage brokers, thereby laying off the risk of default. Usually, the mortgage loans were out the door on the day they were written. The lenders and brokers made handsome profits without bearing the risks of borrower defaults.

The brokers laid off the risky loans to bankers like Goldman Sachs, who packaged them into securities that they sold to investors carrying the unrealistic AAA credit rating.

The industry assumed that the inflation of home values, brought about by the loose credit practices, would never end. But it did with a loud thud. Investors were stuck with debt instruments grossly under-secured by defaulting mortgages.

The damage didn’t end there. The bankers invented yet another product called “credit default swaps” (CDS), which were derivative contracts. Essentially, they were insurance policies covering mortgage defaults.

Facebook data privacy

$725 million in damages

The Google privacy policy

$600 million to settle lawsuits

The proceeds of the $391 million settlement will be paid into the general funds of the respective states. The attorneys general’s action is not a class action lawsuit. It is not clear whether the 40 state attorneys general will, respectively, set up a fund to make cash distributions to their harmed residents.

Another portion of the $600 million settlement will be allocated to other state actions or various private class actions. For example, under an agreement signed in January 2023, Google will pay $23 million to settle a class action filed by Arizona Google users for selling their personal data to marketers.

Wells Fargo fake accounts

$2.7 billion in damages

Chipotle food poisoning

$6.5 million to settle the case

Most processed foods contain ingredients that are taken from canola, soy, corn and sugar beet. More than 90% of those products in the United States are GMOs. GMOs are also common in animal feed. Therefore, products such as meat, seafood, eggs, milk, and honey contain GMOs.

The health risks of GMOs are unknown and subject to much debate. In any case, the debate has stirred public consternation. Chipotle advertised that its food was GMO-free.

The debatable effects of GMOs are environmental hazards, not human health threats. Anyway, a class was formed among Chipotle customers to file a class action against Chipotle for false advertisement.

The Chipotle case is a good example of the abuse of class actions. There is no evidence that any Chipotle customers were harmed by Chipotle food, even if it was laced with GMOs. The jury is out on whether GMOs actually harm the environment.

Nevertheless, Chipotle settled the case for $6.5 million to avoid the costs and risks of litigation.

How much did Chipotle customers get? Up to $2 (yes, 2, maybe less) per meal. The class lawyers received a fee of 30% or $1.95 million. Unknown is the share of the settlement received by the class representative that organized the class.

Equifax data breach

$425 million

Johnson & Johnson and the opioid crisis

$572 million

Contact a South Carolina personal injury attorney

In general, class actions can serve the public interest. Usually, they involve complex issues. Preparation and prosecuting a claim require resources that a single plaintiff does not possess. As a result, many valid injuries are never redressed. Class actions can provide redress and compensation that would not otherwise be afforded to injured parties.

At Chappell, Chappell and Newman., our experienced personal injury attorneys are committed to getting justice and compensation for those injured because of someone else’s negligence. Our firm has recovered millions of dollars for injured workers across the state of South Carolina, and we’d love the opportunity to help you, too.