Biggest Class Action Settlements of All Time
It might seem as if big business rules the world, but that doesn’t mean they aren't above suspicion. In fact, companies have to comply with various rules, regulations and laws to avoid criminal and civil negligence.
Most people can’t afford to pay for a lawsuit to sue a company or institution. That’s where a class action lawsuit comes in. It allows groups of people with the same or similar grievances whose alleged damages are too small to warrant an individual lawsuit to join forces and have their cases represented.
Class actions have enabled individuals to hold some of the world's most powerful organizations accountable for their actions, from the environmental effects of oil spills to the defrauding of shareholders. And in some cases, the settlement amounts are staggering.
These are the biggest class action settlements of all time.
20. SCANA Lawsuit
Company: SCANA Corporation
Settlement amount: $192.5 million
Bottom Line: SCANA Lawsuit
In 2018, SCANA Corp. agreed to a $2.5 billion settlement with the customers it charged high electric rates (an additional $30 on average, included in their monthly bills) for a failed nuclear plant construction project.
After the construction company building the plant went bankrupt in 2017, customers brought a class action lawsuit.
In July 2020, a federal judge approved a final settlement of $192.5 million between the former SCANA shareholders and the company’s new owner Dominion Energy.
19. Exxon Valdez Oil Spill Litigation
Company: Exxon Valdez
Settlement amount: $500 million
Bottom Line: Exxon Valdez Oil Spill Litigation
Before the 2010 BP oil spill, the most notable – and devastating – oil spill was the 1989 Exxon Valdez spill.
It occurred when a tanker accidentally ran ashore and spilled millions of gallons of oil into Prince William Sound, Alaska.
In 2001, around 32,000 plaintiffs in a class action lawsuit were awarded $5 billion in punitive damages, although the amount was later reduced to $500 million.
18. Auto Parts Antitrust Class Action
Companies: 160 auto parts manufacturers, including Sanden and Tenneco
Settlement amount: $1.05 billion
Auto Parts Antitrust Class Action
A huge number of auto parts manufacturers agreed to pay $1.05 billion to auto dealers, consumers and mechanics following their deliberate participation in a price-fixing scheme.
The massive global conspiracy kept vehicle and replacement auto part prices unnaturally high and ended up being one of the biggest U.S. antitrust lawsuits ever.
The initial agreement of more than $640 million was reached in 2016, but this was revised following the inclusion of more plaintiffs in the class action.
17. Syngenta Corn Litigation
Settlement amount: $1.5 billion
Bottom Line: Syngenta Corn Litigation
Various corn growers and exporters filed a class action lawsuit against Syngenta, an agricultural seed developer, in 2013.
The suit was based on Syngenta’s sale of a corn seed before it got import approval in several countries, including China, who subsequently rejected shipments that might contain the seed.
A settlement amount of $1.5 billion was approved in 2018, and claims administrators began sending payments to farmers in March 2020.
16. USDA Racial Discrimination
Defendant: U.S. Department of Agriculture
Settlement amount: $2.3 billion
Bottom Line: USDA racial discrimination
Around 20,000 black farmers were awarded cash payments and debt relief in a 2010 settlement of racial discrimination claims in the administration of federal farm loan programs.
The farmers said they were unjustly being denied farm loans or subjected to longer waits for loan approval, accusing the USDA of racism and failure to respond to their complaints.
The total settlement, including an earlier partial settlement in the case Pigford v. Glickman, reached $2.3 billion.
15. Bank of America’s Acquisition of Merrill Lynch
Company: Bank of America Corp.
Settlement amount: $2.4 billion
Bottom Line: Bank of America’s acquisition of Merrill Lynch
In 2013, a federal judge in New York approved a $2.4 billion settlement relating to claims that Bank of America Corp hid vital information from shareholders when it acquired the investment bank Merrill Lynch & Co. at the peak of the 2008 financial crisis.
As part of the agreement, around four to five million investors were due to receive shares in the company.
14. Actos Diabetes Drugs Case
Company: Takeda Pharmaceutical
Settlement amount: $2.4 billion
Bottom Line: Actos Diabetes Drugs Case
The reputation of Actos, at one time the best-selling Type 2 diabetes drug in the world, took a hit in 2015 when the manufacturer, Japanese drug company Takeda Pharmaceutical, agreed to pay out $2.4 billion over safety claims.
More than 10,000 people claimed they have experienced adverse (and potentially life-threatening) health effects from using Actos.
In 2012, Takeda was accused of wrongdoing by one of its safety consultants, who alleged that the company knew about Actos’ link to several types of cancer but failed to act.
13. Nortel Accounting Fraud
Company: Nortel Networks
Settlement amount: $2.45 billion
Bottom Line: Nortel Accounting Fraud
Under a 2006 settlement amounting to $2.45 billion, telecommunications company Nortel Networks agreed to pay $575 million in cash and issue shares equal to around 14.5 percent of its current outstanding equity.
The case was a complex one. It actually consisted of two separate class action securities fraud suits, brought by different shareholder groups, who claimed that Nortel Networks recorded phony sales between 2001 and 2003.
12. AOL Time Warner Accounting Fraud
Company: AOL Time Warner
Settlement amount: $2.5 billion
Bottom Line: AOL Time Warner accounting fraud
A class action lawsuit brought against AOL Time Warner and the auditing firm Ernst & Young resulted in a $2.5 billion settlement, approved by a federal judge in New York in 2006.
The shareholders complained that AOL inflated advertising revenue between 1998 and 2002, both before and after its merger with Time Warner.
Despite the agreement, Time Warner continued to deny the investors’ allegations of misconduct.
11. Tyco Accounting Scandal
Company: Tyco International Ltd.
Settlement amount: $3.2 billion
Bottom Line: Tyco Accounting Scandal
In 2006, the U.S. Securities and Exchange Commission filed a civil action against Tyco International Ltd, claiming that Tyco executives defrauded shareholders via various improper accounting practices, including a scheme involving worthless transactions that overstated its reported financial results by at least $1 billion.
The following year, a federal judge in New Hampshire approved settlements worth $3.2 billion. Additionally, Tyco’s former CEO Dennis Kozlowski served six and a half years in prison and paid $167 million in restitution and fines.
Former CFO Mark Swartz also served prison time and paid $72 million in restitution and fines.
10. Cendant Accounting Fraud
Company: Cendant Corporation
Settlement amount: $3.2 billion
Bottom Line: Cendant Accounting Fraud
In 1998, a class action lawsuit against travel and real estate company Cendant Corp. became the largest case of accounting fraud of all time.
It’s estimated that deliberate accounting irregularities over a period of several years lost investors $19 billion. In 2000, a federal judge in New Jersey approved a $3.2 billion settlement for shareholders.
Cendant chairman Walter Forbes and vice chairman Kirk Shelton were later imprisoned on conspiracy charges and ordered to pay over $3 billion each in restitution.
9. Native Americans vs. U.S. Government
Defendants: The Department of Interior and the Department of the Treasury
Settlement amount: $3.4 billion
Bottom Line: Native Americans vs. U.S. government
Elouise Cobel remembers her parents wondering why they weren't getting paid regularly for letting others use their land to farm and drill for oil.
In 1996, Cobell and other Native American representatives brought a class action lawsuit against the Department of Interior and the Department of the Treasury, alleging that the federal government had mismanaged funds in land trust accounts dating back to the 19th century.
In 2011, a federal judge in the District of Columbia gave a $3.4 billion settlement final approval, authorizing $1,000 payments to about 325,000 individuals, beginning in 2012.
8. Diet Pills Payout
Company: American Home Products Corporation
Settlement amount: $3.75 billion
Bottom Line: Diet Pills Payout
Before the diet drug combination fen-phen, sold by American Home Products Corporation, was pulled from the market in 1997, thousands of people claimed they were injured from using it.
In 2000, a federal judge in Philadelphia approved a $3.75 billion settlement – at the time, one of the largest in a product liability case.
Under the agreement, people who used one of the diet drugs for 60 days or less were eligible for $30 to $60 prescription refunds, while those with a heart valve injury were eligible for as much as $1.5 million.
7. Silicone Breast Implants Damages
Companies: Bristol-Myers Squibb, Dow Corning and the Baxter Healthcare Corporation
Settlement amount: $4.25 billion
Bottom Line: Silicone Breast Implants Damages
Three leading producers of silicone gel breast implants were ordered to pay out $4.25 billion to thousands of women around the world who claimed they were injured by the product, alleging serious neurological and immune disorders.
Each woman was given up to 30 years to collect between $200,000 and $2 million, depending on the severity of the injuries.
6. WorldCom Telecommunications Accounting Scandal
Settlement amount: $6.1 billion
Bottom Line: WorldCom Telecommunications Accounting Scandal
In 2005, a federal judge in New York concluded a fraud litigation class action lawsuit against the telecommunications company WorldCom, resulting in settlements to shareholders amounting to $6.1 billion.
The company manipulated its financial information to falsely inflate the earnings on its profit and loss statement by nearly $4 billion. Banks involved in the settlement included Bank of America and Citigroup. JP Morgan Chase paid $2 billion of the total.
For their part in the accounting scandal, former WorldCom executives Bernie Ebbers and Scott Sullivan served jail time.
5. Visa/MasterCard Antitrust Lawsuit
Companies: Visa and MasterCard
Settlement amount: $6.2 billion
Bottom Line: Visa/MasterCard antitrust lawsuit
A long-running suit between leading U.S. merchants and Visa and MasterCard was finally settled in 2019 by way of an agreement for at least $5.54 billion and as much as $6.2 billion.
The merchants claimed that Visa and MasterCard had breached antitrust laws by fixing prices to benefit the nation’s top banks.
An appeal of the final approval order was filed in January 2020, so this case may not be over just yet.
4. Enron Energy Securities Fraud
Settlement amount: $7.2 billion
Bottom Line: Enron Energy Securities Fraud
In 2008, Enron investors (an estimated 1.5 million individuals and institutions) were awarded a $7.2 billion class action settlement to resolve fraud claims against the energy trading company.
The bulk of the settlement monies were provided by Citigroup, JP Morgan Chase and the Canadian Imperial Bank of Commerce.
Former Enron executives Kenneth Lay and Jeffrey Skilling were convicted of conspiracy and fraud. Lay died of a heart attack less than six weeks after the verdict, while Skilling was released in 2018.
3. Volkswagen Diesel Emissions Scandal
Settlement amount: $14.7 billion
Bottom Line: Volkswagen Diesel Emissions Scandal
The Volkswagen emissions scandal, also called Dieselgate or Emissionsgate, started with a notice of violation of the Clean Air Act from the United States Environmental Protection Agency (EPA).
The agency said Volkswagen had deliberately programmed turbocharged direct injection (TDI) Diesel engines to cheat the testing process.
In 2016, a federal judge in San Francisco approved a $14.7 billion settlement to provide funds for vehicle buybacks at market values prior to the scandal, plus additional cash payments for 475,000 diesel car owners.
2. BP Gulf of Mexico Oil Spill
Settlement amount: $20 billion
Bottom Line: BP Gulf of Mexico Oil Spill
Considered to be the largest marine oil spill in the history of the petroleum industry, the BP oil spill (also known as the Deepwater Horizon oil spill or the Macando blowout) started on April 20, 2010, following an offshore rig explosion in the Gulf of Mexico.
Six years later, a New Orleans federal judge approved an estimated $20 billion settlement resolving civil claims over environmental damage from the 134 million gallons of petroleum that spilled into the gulf.
Judge Barbier ruled that BP had been "grossly negligent" in the explosion, which killed 11 workers.
1. Tobacco Industry Medical Costs for Smoking-Related Illnesses
Companies: Phillip Morris Inc., RJ Reynolds, Brown & Williamson, Lorillard
Settlement amount: $206 billion
Bottom Line: Tobacco Industry Medical Costs for Smoking-Related Illnesses
History was made in 1998 when the four largest tobacco companies in the U.S. agreed to a $206 billion settlement covering medical costs for smoking-related illnesses.
The companies entered into the Tobacco Master Settlement Agreement (MSA) with the attorneys general of 46 states to settle Medicaid lawsuits, agreeing to provide annual payments over 25 years.
The companies also agreed to reduce or stop certain commonplace tobacco marketing practices, including using cartoons, outdoor advertising, billboard, product placement in media and free product samples.