In 2010, the BP Deepwater Horizon oil rig exploded, killing 11 workers and spilling over 4 million barrels of oil into the Gulf of Mexico. The spill devastated marine life and coastal communities and led to one of America's largest class action suits. BP was hit with hundreds of lawsuits. The company has since paid out over $18 billion in damages. However, BP's settlement was not the largest. Another one resulted in damages that took 25 years to settle.
The 1998 Tobacco Settlements is arguably the largest class action settlement in United States history. Mr. Mike Moore, then Mississippi State Attorney General, brought a damages lawsuit against all the major tobacco companies in the United States. Past cases brought by smokers and their families failed because smokers had chosen to smoke. But, Mr. Moore argued that they shouldn't have to meet the costs of tobacco-related illnesses. In the end, tobacco companies agreed to pay $206 billion over 25 years.
In 2015, Volkswagen (VW) admitted to falsifying emission tests of its diesel-fuelled cars to make them appear cleaner than they were. Their vehicles were found to emit up to 40 times the legally permissible levels. A year later, a San Francisco judge found VW guilty and fined the company $14.7 billion.
Class action lawsuits are not always just about the money. In some cases, criminal charges are brought against the defendants. This was the case following the conclusion of the Enron Securities fraud class action in 2008 when former Enron executives Jeffrey Skilling and Kenneth Lay were convicted of conspiracy to commit fraud.
A federal judge ordered Enron to pay $7.2 billion in settlement and sentenced Skilling to 24 years in prison for defrauding investors before filing for bankruptcy. Citigroup, JP Morgan Chase, and the Canadian Imperial Bank of Commerce picked up the tab, meeting 90 percent of the settlement cost.
Another class action suit that involved banking fraud and resulted in the conviction and sentencing of top executives was the WorldCom accounting case. In 2002, WorldCom admitted to cooking the books by inflating and misreporting assets between 1999 and 2002. Because of it, a New York Federal judge approved a $6.1 billion settlement distributed to over 800,000 individuals and a dozen institutional investors.
Like the banking sector, the pharmaceutical space is all too familiar with class action suits. Some of the major settlements against big pharma are GlaxoSmithKline (2012), Pfizer (2009), and Johnson & Johnson (J&J) (2013).
J&J will reportedly pull all talc-based powder products off the market by 2023. The move comes amid over 9,000 lawsuits facing J&J for selling talc-based body powered despite knowing that the products contained cancer-causing asbestos. So far, J&J has paid out $4 billion in settlements to 22 women who claimed they developed ovarian cancer after using J&J baby powder.
Class action gives class members collective power, something individual cases lack. By filing a class action suit, each individual has a shot at something they’d otherwise not achieve due to the prohibitive cost of individual cases compared to the potential damages.
