The past year has seen an explosion of class action settlements worth more than $1 billion, upping the stakes for an ever-burgeoning field of class action litigation, dealing with claims related to privacy, unpaid wages, consumer fraud, civil rights and more, in courts in Chicago and elsewhere.
That's the foremost finding from a report issued by Chicago class action defense law firm Duane Morris, discussing and analyzing trends and headlines from 2022 in the world of class action lawsuits. Attorneys Gerald Maatman and Jennifer Riley co-authored the report. Maatman is chair and Riley the vice chair of the Duane Morris firm’s Workplace Class Action Group.
Maatman said the document details 10 pervasive trends in class action litigation over the past year, headlined by an unprecedented number of settlements, as well as barrier-breaking dollar amounts linked to those agreements. Topping the list were three different settlements related to opioid manufacture and distribution, led by a $7.4 billion deal to end lawsuits implicating pharmaceutical distributor McKesson.
Overall the three largest class action settlements, and seven of the top 15 worth $1 billion or more, involved opioids.
“Class actions and government enforcement lawsuits against opioid manufactures, retailers and distributors garnered more than $50 billion in settlements,” according to the report. “Much like the era of Big Tobacco settlements that transformed that industry, the opioid settlements are transforming the pharmaceutical industry and its distribution chain. When the final tally is completed over the next several years, the aggregate settlements may top $100 billion.”
The report predicted plaintiffs’ attorneys will respond to 2022’s successes by being “equally if not more aggressive in their case filings and settlement positions in 2023.”
Coming in second on the trend list was U.S. Supreme Court opinions that Duane Morris said shifted and defined the class action playing field. Although the nation’s top court had appeared to expand the ability for defendants to rely on arbitration as a defense, the report said 2022 rulings had the effect of narrowing the use of that approach. Of perhaps equal significance was the court’s decision not to consider cases that concerned personal jurisdiction and the ability of a court to certify a class including members who don’t demonstrate a legal injury.
In Southwest Airlines v. Saxon, according to Duane Morris, the court expanded its “transportation worker exemption” by ruling in favor of a ramp supervisor who argued she and her colleagues were exempt from the Federal Arbitration Act because their handling of cargo that crossed state lines qualified them as workers engaged in foreign or interstate commerce.
In Morgan v. Sundance, the court agreed Sundance waived enforcement of its arbitration agreement by spending eight months directly litigating a class action from an hourly Taco Bell employee regarding overtime pay. In so doing, according to the report, the court established federal courts can’t invent procedural rules that favor arbitration.
The most significant pro-arbitration ruling came in Viking River Cruises v. Moriana. A California state court had denied Viking’s motion to compel arbitration on a former employee’s lawsuit alleging violations of the California Labor Code. But the U.S. Supreme Court ultimately decided the Federal Arbitration Act pre-empts California precedent of dividing Private Attorneys General Act lawsuits into individual and class claims through arbitration agreements, and said Viking should’ve been allowed to compel arbitration and should have won dismissal on all other claims not subject to that agreement.
Those decisions fed into the third trend identified in the report: Setbacks to the arbitration defense. Although defendants won 69 of 102 motions to compel arbitration, “Congress significantly limited the availability of arbitration for cases alleging sexual harassment or sexual assault when it passed the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act,” which President Biden signed March 3.
Duane Morris predicted more litigation over whether the law applies to any class action that included a sexual assault or harassment claim, or if those elements can be isolated from a broader complaint.
Trend four was the continued strength of class certification, with the report studying 360 motions to grant or deny certification yielding 268 victories for plaintiffs. Fair Labor Standards Act litigation yielded more certification than any other type of class action, which the report said contributes to the volume of related filings. The report further noted decertification rulings were split 50-50, in line with historic outcomes, but singled out Second and Ninth circuit courts, including California and New York, as remaining pro-plaintiff jurisdictions and said the Sixth Circuit outcomes also appeared to be pro-plaintiff.
In the fifth trend, Duane Morris said government enforcement actions were down in 2022 and said the Biden administration is working on “worker-friendly rules that could have a cascading impact on workplace class actions, including rules designed to wipe out the pro-business policies of the Trump Administration.”
Among the unresolved disputes are U.S. Department of Labor’s rules regarding definitions of independent contractors and regulation of tip credits, as related to employers’ minimum wage obligations. The report did note general stability in the Equal Employment Opportunity Commission’s legal activity.
The sixth trend had an Illinois focus, as the report noted privacy class actions are “the hottest area of growth.” The report singled out the Illinois Biometric Information Privacy Act as a leading driver. After seven years of such class actions being filed, the courts held the first trial in a BIPA-related case, when the case of Rogers v. BNSF Railway proceeded to a federal jury trial in 2022. That trial resulted in a $228 million verdict in favor of a group of about 45,000 truck drivers who provided fingerprint scans to verify their identity when access BNSF railyards in Illinois.
The verdict served to confirm the concerns of many in the business community over the potential for crippling damages in BIPA class action cases, should such cases go to trial, and likely will encourage even more litigation to continue to pile into courtrooms in Illinois and elsewhere under Illinois' stringent biometrics privacy law.
Another modern technology issue informed the seventh trend: Corporate defendants facing class actions over data security. Duane Morris said courts in 2022 increased scrutiny of claims rates for settlements, even those that didn’t reach “astronomical proportions,” such as Capital One’s $190 million data breach settlement and final approval of a $92 million agreement with TiKTok inked to a breach impacting nearly a billion users worldwide.
Returning to Supreme Court influence, the eighth trend was continued grappling with standing and uninjured class members. Though not complex in matters of individual litigation, Duane Morris said, the issue is complicated with regard to class certification. They pointed to pointing to the Supreme Court’s 2020 decision in TransUnion v. Ramirez. The report noted courts “disagree over whether to certify a class, a plaintiff must demonstrate that every putative class member has standing or, stated differently, must demonstrate that the class excludes those individuals who did not suffer harm.”
Trend nine was similar, as the report explored ongoing disagreements over application of a 2017 Supreme Court opinion, Bristol-Myers Squibb v. Superior Court of California, San Francisco County, specifically concerning the obligation of plaintiffs in a class action to demonstrate why a court must exercise personal jurisdiction over the subject of their claims. Defendants are using the ruling as a means of fracturing nationwide suits against them, and the report noted the Supreme Court denied two petitions to review cases addressing the question and is unlikely to take up a third outstanding petition in 2023.
The final trend identified in the report was expanded analysis of Viking River and the California Private Attorneys General Act. Duane Morris said lawsuits under that law — which allows employees to sue employers for alleged California Labor Code violations, on behalf of colleagues and the state — have essentially become a workaround for arbitration clauses.
“The U.S. Supreme Court eviscerated perhaps the most popular work-around to workplace arbitration,” the report said, “dealing a significant blow to the plaintiffs’ bar and its ability to pursue claims on a representative basis.”
In conclusion, the report turned to the future and predicted 2023 would continue a decade-long trend of yearly growth in the volume of class action filings.
“A company’s programs designed to ensure compliance with existing laws and strategies to mitigate class action litigation risks are corporate imperatives,” the report said. “The plaintiffs’ bar is nothing if not innovative and resourceful. 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. These conditions necessitate planning, preparation and decision-making to position corporations to withstand and defend class action exposures.”