2023 was another banner year for plaintiffs' lawyers securing massive settlements and the accompanying fee awards through class action lawsuits, a new analysis says, generating the "the most extensive set of billion-dollar class action settlements and transfer of wealth in the history of the American court system."
And the growth in the number and reach of those settlement-generating lawsuits was fueled, in no small part, by lawyers using plaintiff-friendly courts in Chicago and elsewhere in Illinois to hammer employers and other businesses with a record number of class actions under Illinois' biometrics privacy law and other causes of action.
Those findings were among the trends and data from 2023 discussed in the 2024 edition of the annual Class Action Review from class action defense attorneys Gerald Maatman and Jennifer Riley, of the firm of Duane Morris, of Chicago.
According to the report, in 2023, the number and size, in dollars, of class action settlements "exceeded expectations for the second year in a row," totaling more than $51 billion nationwide. According to the report, class action lawsuits in U.S. courts generated 10 settlements worth $1 billion or more.
The top settlement was worth $12.5 billion, to resolve claims over so-called "forever chemicals" present in firefighting foam.
The next largest settlements were worth $6 billion and $5.6 billion each, respectively settling lawsuits vs 3M over allegedly defective earplugs used by members of the U.S. Armed Forces; and settling antitrust litigation accusing Visa and Mastercard of allegedly imposing excessive interchange fees on merchants who accept those cards as payment.
The remaining Top 7 settlements were each worth between $1 billion and $2.67 billion, according to the Duane Morris report.
When combined with record settlements from 2022 - when the courts logged 14 settlements worth at least $1 billion and more than $60 billion, collectively - the total settlements from the two-year period "eclipses any other two-year period in the history of American jurisprudence."
According to the report, the settlements worth hundreds of millions of dollars or more arose from all 14 major areas of class action law, including:
- $25.82 billion in settlements in product liability cases;
- $11.74 billion from antitrust class actions;
- $5.4 Billion – Securities fraud class actions;
- $3.29 Billion – Consumer fraud class actions;
- $1.32 Billion – Privacy class actions;
- $762.2 Million – Discrimination class actions;
- $742.5 Million – Wage & hour class and collective actions;
- $643.15 Million – Civil rights class actions;
- $580.5 Million – ERISA class actions;
- $515.75 Million – Data breach class actions;
- $263.58 Million – Government enforcement actions;
- $139.67 Million – Labor class actions;
- $103.45 Million – TCPA class actions; and
- $100.15 Million – Fair Credit Reporting Act class actions.
Plaintiffs' lawyers typically claim from 15% to one-third of those class action totals in fees.
Top Illinois Settlements 2023
Illinois courts did not log any settlements worth more than $1 billion, according to the report. However, there were still multiple settlements worth $14 million or more in 2023, including:
- $450 million to settle an investor class action against Kraft Heinz over alleged stock impairment following the food companies' merger;
- $408 million to settle claims accusing medical device sterilization company Sterigenics and other defendants of releasing ethylene oxide (ETO) gas into the atmosphere, allegedly causing cancer and other illnesses in those living near the now-closed Sterigenics facility in suburban Willowbrook;
- $173 million to settle a securities fraud class action against electrical utility Exelon, accusing the company of misleading investors concerning the extent of actions against the company related to the alleged bribery of indicted former Illinois House Speaker Michael Madigan;
- $80 million for Chicago Transit Authority retirees who claimed the CTA wrongly made them pay for health insurance. The settlement ranked as the top class action settlement in Duane Morris' Labor Class Actions category in 2023;
- $68.5 million to settle claims against Meta Platforms for claims that Instagram users' privacy rights were violated under the Illinois Biometric Information Privacy Act;
- $31 million to settle alleged sex discrimination claims against the Cook County Sheriff's Office;
- $28.5 million to settle claims that ID verification company Onfido improperly scanned users' faces;
- $23 million to settle a class action led by the Consumer Financial Protection Bureau against TransUnion;
- $16.7 million to settle claims that blood plasma donation centers operated by Biomat USA improperly required donors to scan fingerprints to verify their identity; and
-$14.8 million to settle a class action alleging that GreatBanc Trust Co. overcharged participants for ESOP stock shares.
Illinois Biometrics Surge
The report indicated Illinois courts served as ground zero for one of the fastest growing of those segments, privacy litigation.
For years, courts in Chicago and elsewhere in the state have absorbed thousands of class action lawsuits filed under the state's stringent biometrics privacy law against employers and other businesses operating in the state.
First enacted in 2008, the Illinois Biometric Information Privacy Act largely lay dormant for years, until a group of class action lawyers discovered its potential for large payouts through class actions.
Utilizing the law's so-called private right of action, the small but fast growing cadre of plaintiffs law firms brought a range of lawsuits, first against tech giants and app operators, famously including Facebook and Google, before turning the brunt of the law against employers, accused of improperly requiring workers to scan fingerprints or other so-called biometric identifiers to verify their identities when punching the clock to begin and end work shifts, or when accessing secure areas within a workplace.
A spate of more recent class actions have also taken aim at employers who use voice-scanning or face-scanning technology to monitor worker activity in real time.
However, the number of such class actions under BIPA surged to new highs in 2022 and 2023, fueled by recent Illinois Supreme Court rulings which interpreted the law to allow plaintiffs' lawyers to demand what judges and others have called "astronomical" and potentially financially "annihalitive" payouts from employers targeted under the law.
Specifically, the Illinois Supreme Court interpreted the BIPA law to define "individual violations" as each time a biometric scan takes place without written authorization or without providing notices allegedly required by the law, not just the first such scan. Further, the court said the statute of limitations for the law should be five years, dating back from the time any lawsuit is filed.
As the BIPA law allows plaintiffs to demand damages of up to $5,000 per violation, when multiplied across entire workforces punching the clock or otherwise scanning their fingerprints or other biometrics multiple times per day, such damages could quickly climb into the many millions or even billions of dollar.
To avoid the risk of potentially devastating judgments at trial, most businesses stung by BIPA lawsuits have settled or moved toward settlement.
According to the Duane Morris report, more businesses should expect to be targeted by BIPA class actions and should make plans for what comes next.
The report notes that in 2022, there were more than five times as many BIPA-related lawsuits filed than in 2018. That was more than the combined total of BIPA lawsuits filed from 2008-2018 combined.
In 2023, however, the number of BIPA lawsuits only further multiplied. Duane Morris reported that at least 418 BIPA class actions were filed in Illinois courts in 2023, with a surge in new class actions coming immediately after the Illinois Supreme Court's ruling in the case known as Cothron v White Castle, when the court ruled businesses could be on the hook to pay up to $5,000 for each biometric scan.
"Given the five-year statute of limitations, and the potential for enhanced monetary penalties, we anticipate that filings and settlement numbers in BIPA litigation will continue to expand," the Duane Morris report said.
At the same time, plaintiffs lawyers used federal and state privacy laws to file hundreds of lawsuits targeting businesses in courts in Illinois, California and throughout the country, Duane Morris said.
While defendants hit by lawsuits under laws other than BIPA have found some success in defending against those actions, the report said Duane Morris expects "plaintiffs will respond with additional creativity as they attempt to plead around these potential issues and identify new technologies at which to target their claims."
What's Next?
The report identified other key trends in class action litigation across the country.
The Class Action Review, for instance, revealed that plaintiffs have been more successful at advancing their class action claims, persuading courts to certify nearly three-quarters of all class actions.
The report further noted that, along with privacy lawsuits, businesses have also been targeted by an explosion of class actions over data breaches. In all, the report said, 1,320 lawsuits were filed in U.S. courts against companies over such alleged breachs in 2023, compared to 604 in 2022 and 310 in 2021.
And the report indicated businesses were also hit by a renewed explosion of government enforcement actions, which had appeared to slow in recent years.
While employers and other businesses have used an array of legal tools to blunt the impact of class actions on their own financial wellbeing and on the economy as a whole, the report indicated few defense instruments have proved as effective at thwarting class actions than arbitration agreements.
Throughout the country, and particularly in California and other states dominated by progressive Democrats and their trial lawyer allies, fierce legislative and legal battles have been waged over the ability of businesses to enforce arbitration clauses.
Such clauses, typically included in the terms and conditions of employment contracts or product user agreements, usually block people from suing over alleged legal injury claims, forcing them instead to bring their claims individually before an arbitrator.
According to the Duane Morris report, defendants seeking to enforce such arbitration agreements to defeat class action lawsuits found success nearly two-thirds of the time in 2023.
However, Duane Morris warned that success rate could be imperiled in the years ahead, "as advocacy groups, government regulators, and political figures push for a ban on class action waivers in arbitration."
"Given the impact of the arbitration defense, in 2024, companies are apt face additional hurdles, on the judicial or the legislative front, as the plaintiffs’ bar continues to look for workarounds," the Duane Morris report said.
Further, Duane Morris warned businesses to expect the favorable results of the past two years for plaintiffs' lawyers to only spur still more class action activity, across the spectrum of the law and case types.
"The plaintiffs’ bar is nothing if not innovative and resourceful," the Duane Morris report said. "Given the massive class action settlement figures in 2022 and 2023 (a combined total of $113 billion), coupled with the ever-developing law, corporations can expect more lawsuits, expansive class theories, and an equally if not more aggressive plaintiffs’ bar in 2024."