2022 Was A Record-Breaking Year for Class Action Litigation
by Brian Eckert
Last year was a year like no other for class action litigation, with the most billion-dollar settlements against corporate America in history, according to a new report.
Opioid litigation loomed large and represented the lion’s share of cases that resolved for $1 billion or more, but class action settlements were up sharply year-over-year in areas that included securities fraud, employment, civil rights, privacy, and data breaches.
Key Class Action Trends
The top-level takeaway from the 2023 Class Action Review, a report issued by corporate defense firm Duane Morris, is that 2022 class action settlements “redistributed wealth at an unprecedented level.”
In 2022, there were a record 15 class actions that settled for $1 billion or more. These settlements totaled over $63 billion. Ten of the 15 highest settlements, and the top settlement overall, involved opioid litigation.
However, the most significant class action trend was the “value of settlement activity across all substantive areas,” Duane Morris told Forbes.
- Product liability and mass tort-related claims produced more than $50 billion in settlements, an increase of 267% compared to 2021.
- Consumer fraud class action settlements totaled nearly $8.6 billion, up 640% over 2021.
- Antitrust class actions had the third-highest settlement total at nearly $3.8 billion, 119% higher than 2021.
- Securities fraud class actions were up 80% from 2021 to $3.25 billion in 2022.
- Civil rights class action payouts increased 151% to $1.31 billion.
- Privacy class action settlements totaled $897 million, a 40.5% increase.
- Data breach settlements came in at $719 million, up 46%.
- Employment discrimination class actions produced $597 in settlements, a rise of 83%.
The number of class action filings has increased every year for the past decade, says Duane Morris, and is expected to grow again this year. Plaintiffs’ attorneys were successful at getting class actions certified in nearly 75% of cases.
“Given the massive class action settlement figures in 2022, coupled with the ever-developing law, corporations can expect more lawsuits, expansive class theories, and an aggressive plaintiffs’ bar in 2023,” Duane Morris predicted.
“The stakes at issue in class action litigation are often significant. A company’s market share and corporate reputation are typically implicated by a class action,” the report editors added.
Companies Spending More Than Ever to Defend Class Actions
A report from another corporate defense firm, Carlton Fields, shows that companies are facing more class actions and spending more on class action defense.
We don’t want them to be able to file class actions.
The 2023 edition of the annual Carlton Fields Class Action Survey found that companies spent a record $3.5 billion last year on class action defense. Defense spending on class actions grew for the eighth straight year, driven primarily by larger claims and more companies facing class actions.
Other key findings from the report include:
- Companies are expecting to face more class actions, and spend more to defend them, in 2023.
- Class action spending is on track to be one of the fastest-growing areas of legal spending in 2023.
- The number of companies that faced a class action increased in 2022 to 59.2%—the third-highest number on record.
- Companies view consumer fraud class claims as posing the biggest threat and expect these claims to have a “bottom-line impact.”
- In-house counsel is concerned that “more lenient” courts are leading to a growth in “baseless class actions.”
- Data privacy and cybersecurity class actions are anticipated to increase this year, but companies are less concerned about the risk of such actions because they believe they can “better predict outcomes.”
More than 40% of companies use class action waivers in their contracts as a risk management tool, the report found as well. The Director of Litigation at a Fortune 500 retail company told Carlton Fields that, “we don’t want them to be able to file class actions.”
Also of note, around three-quarters of companies with class action lawsuit settlements in 2022 required class members to submit a claim, a trend that “points to the continued effectiveness of that form of settlement.” Most companies agreed to changes in business practices as part of their settlement terms, while the number of firms using charitable contributions in their settlements plunged from 43% to 23.5%.
Around half of companies settled class actions in a manner that required class members to show actual injury. Lack of actual injury, typically raised at the class certification stage, was reported to be the second-most effective defense strategy, behind absence of commonality and predominance.
Milberg: A National Leader in Class Action Lawsuits
Viewing class action lawsuits through the eyes of corporate defense counsel provides a window into their effectiveness at holding big companies accountable for a range of bad behaviors. That corporations are concerned about the rise in class actions is a good sign for consumers seeking to assert their rights against powerful business interests.
Since 1965, Milberg has filed thousands of class action lawsuits, recovered billions of dollars for our clients, set groundbreaking legal precedents, and prompted meaningful changes in corporate governance.