The Most Infamous Class Action Lawsuits in Legal History
The largest class action settlements in U.S. history stemmed from two primary issues, product liability and investor fraud. The larger the corporation, the greater risk of liability. When people inside the organization decide to take shortcuts by stealing, offering bribes, or covering up shoddy products, the consequences can be monumental.
In this article, we’ll reveal some of the most famous class action cases in U.S. history, their cause, and the settlement.
The Master Tobacco Settlement
Complaint: To limit tobacco advertising and to recoup tobacco-related health care costs.
Plaintiff: The attorneys general of 46 states
Defendant: Six tobacco companies; Brown & Williamson Tobacco Corporation, Lorillard Tobacco Company, Philip Morris Incorporated, R.J. Reynolds Tobacco Company, Commonwealth Tobacco, and Liggett & Myers
Settlement: $206 billion paid over 25 years
The Master Tobacco Settlement is undoubtedly one of the most expensive civil lawsuits in U.S law history. 46 States Attorney Generals sued six top tobacco companies using each state’s individual consumer protection laws. They also sued the tobacco companies for the health care costs associated with tobacco smoking covered by each state’s Medicare/Medicaid programs.
General Motors Co.: Product Liability – Automobile Parts
Complaint: Dex-Cool Coolant Caused Leaks and Engine Damage.
Plaintiff: 35 million GM consumers
Defendant: General Motors Corporation
Settlement: $20 Billion
General Motors was named defendant in a product A class action suit filed in March 2008. The plaintiffs were approximately 35 million GM customers, each receiving between $400 and $800 as a settlement.
The BP Deep Water Horizon Environmental Disaster
Complaint: Environmental Oil Spill
Plaintiff: Individuals, businesses, the State of Louisiana, four other states, and local governments
Defendant: British Petroleum Company (BP)
Settlement: $18.7 billion
In 2010, a fire and explosion aboard the Deep Water Horizon oil platform killed 11 workers. The resulting uncontrolled oil spill leaked 210 million gallons of crude oil over beaches and fishing habitats. The spill destroyed fisheries and livelihoods along the gulf coast of Louisiana and other states.
Bank of America Mortgage Scandal
Complaint: Mortgage Financial Fraud
Plaintiff: Government-sponsored mortgage financiers Fannie Mae and Freddie Mac
Defendant: Bank of America
Settlement: $16.5 billion
The case focused on federal and state claims against Bank of America and its subsidiaries Countrywide Financial Corporation and Merrill Lynch for selling toxic mortgages to investors. Economists argue that this fraud was the beginning of the housing market implosion that led to the national and global economic collapse in 2008.
Enron Investor Fraud
Complaint: Financial Fraud
Plaintiff: Employees and investors
Defendant: Enron Corporation
Settlement: $7.2 billion
Between 1985 and 1992, Enron was a top producer of natural gas in the U.S. Audits revealed fraudulent and inflated balance sheets resulting in the collapse of the company. More than 20,000 employees lost their employment and life savings. Investors lost billions and filed a suit in 2001 for compensation.
The $7.2 billion settlement in 2006 is one of the largest payouts in a shareholder securities class action.
Complaint: Securities Fraud
Plaintiff: Stakeholders and Investors
Settlement: $6.1 billion
In 1997, Worldcom was a leading U.S. telecommunications company. However, the company’s management defrauded investors by inflating reported earnings by $11 billion and profits of $1.4 billion in 2002. At the time, the company had a net loss.
Alan Hevesi was the New York State Comptroller and lead plaintiff. He controlled the New York State Common Retirement Fund and represented it in the lawsuit.
Pacific Gas & Electric Co.
Complaint: Environmental Pollution
Plaintiff: The residents of the town of Hinkley, California
Defendant: Pacific Gas & Electric Co.
Settlement: $333 million
Although not the largest case or settlement, the Erin Brockovich Anderson, et al. v. Pacific Gas & Electric Company case is one of the most famous cases. It inspired the movie, “Erin Brockovich,” and her fight to see justice for over 600 residents in the small California town of Hinkley.
The case dates to 1951. Over 15 years, chromium, used in a gas cooling process, leached out of unlined wastewater settling ponds and into the groundwater that residents consumed. Illnesses included lung, breast, stomach, kidney and prostate cancers and host of other disorders.
Class Actions Continue
In most cases, once wrongdoing comes to light in a class action, it spurs other plaintiffs into action, suing the defendant and creating other class actions.
If unscrupulous people are willing to cheat the public to make a profit, we will continue to have class actions. It’s the only way of keeping corporate greed in check and protecting the consumer.