Class Action Settlements Reached Record High Last Year

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The COVID-19 pandemic has impacted all aspects of life, including the legal system in general and workplace class actions in particular — in 2021, the value of class action settlements reached in the United States hit a record high.

The general thought might have been that the ongoing pandemic would depress the pace and size of settlements, but this ultimately proved incorrect.

A labor law firm published a report detailing how workplace class action lawsuit settlements reached a record $3.62 billion in 2021, compared to $1.58 billion in 2020.

In the report’s executive summary, Seyfarth chair and managing partner Peter C. Miller noted that “the continuation of the COVID-19 pandemic has impacted everyone and everything, including class action litigation. The last few years have seen a transformation in class action and collective action litigation involving workplace issues.”

The annual report, which is now in its 18th year, analyzed 1,607 class action rulings on a circuit-by-circuit and state-by-state basis.

With the rollout of return-to-work programs and vaccine mandates in the fourth quarter of 2021, class actions by states, employee advocates, unions, and employer groups were filed in record numbers.

“Given the rise of abusive labor practices, particularly within the tech industry, these numbers are not surprising,” Mark Burton, a class actions lawyer at Audet & Partners told Top Class Actions. 

Based on sheer volume and statistical numbers, workers scored the most success in securing certification of wage and hour class and collective actions in 2021 (compared to other areas of workplace law). 

The plaintiffs’ bar converted case filings into successful certification rulings at a rate of 81% –  the highest level ever.

Last year, workplace class action litigation was fueled by the change from conservative to democratic policies in the White House, expansion of workers’ rights, increased regulation of businesses, and aggressive enforcement of workplace laws, according to the report. 

Eric Kingsley, a class action lawyer at the Kingsley & Kingsley law firm, told Top Class Actions that he believes the inflated class action settlement numbers for 2021 are likely due to the courts being backed up during the pandemic. 

“I’m not sure that’s (the report) necessarily the best capturing of data. Maybe 2022 compared to 2019 will be a better comparison to see where the trends really are lined,” Kingsley told Top Class Actions. 

According to a 2021 survey by Carlton Fields, class action matters have become increasingly high-risk for corporations. 

“In 2020, companies reported that 34.3% of the class actions they faced were high-risk or bet-the-company, up from only 4.5% reported in 2011. Class action spending has increased for six consecutive years, and companies project that spending will hit nearly $3.3 billion in 2021,” according to Carlton Fields

In actuality, this projection was incorrect by an additional 320 million.

Author of the original report Gerald L. Maatman, Jr. said, “many thought the impact of the pandemic — with months of court closings and transition of legal proceedings to zoom hearings — would depress settlement numbers and allow corporate defendants to defer legal issues for months if not years.”

This turned out not to be the case. Instead, these class action cases were only deferred for a short while. 

“From personal experience, in 2020, the courts just weren’t hearing stuff, and April, May, June – it was basically completely shut down, so you couldn’t get hearings in front of the court. There was a period of at least a year when there was a huge bottleneck in the court,” Eric Kingsley said. 

This bottleneck eventually dissipated, resulting in a whopping $3.62 billion in class action settlements just last year. One class action attorney believes this is a trend that will not continue into the future, and that 2021 was an outlier year.

Douglas N. Silverstein, a class action lawyer with the Kesluk, Silverstein, Jacob & Morrison firm, and the president of the Consumer Attorneys Association of Los Angeles told Top Class Actions that the upward trend in class actions suits has been pretty consistent until now. 

“When the pandemic hit, things really slowed down and the cases that would have otherwise resolved in 2020 did not. You basically had increased resolutions in 2021, accounting for the increased amount, so 2020 was still largely in line with prior years. There does seem to be an upward trend – but the significant increase in 2021 I think is best explained by cases being pushed off due to the pandemic,” Silverstein told Top Class Actions. 

Aside from pandemic-related backups, Silverstein believes employers are also at fault for the increase in class actions. 

“Employers are trying to find ways to save money, and they do that by not complying with the law. So that’s why there’s been an explosion of class action cases in a variety of areas,”  Silverstein told Top Class Actions. 

Silverstein says the long-term trend is actually a decrease in class action cases because employers are becoming better at complying with the law because they want to avoid exposure. 

“The stakes in these types of employment lawsuits can be extremely significant, as the financial risks of such cases are enormous. More often than not, class actions adversely affect the market share of a corporation and impact its reputation in the marketplace. It is a legal exposure which keeps corporate counsel and business executives awake at night,” Seyfarth chair and managing partner Peter C. Miller said in the report’s executive summary.

The report noted that advocates for workers and labor are doubling down on efforts to overturn the regime of workplace arbitration agreements with class/collective action waivers established by Epic Systems v. Lewis.

“The most significant thing that has happened in class action litigation is the increased use of arbitration with class waivers, meaning that employees who are subject to arbitration may only bring the case on their own behalf and not as a class action on behalf of other employees,” Silverstein said. 

Lastly, Silverstein says that one of the factors that will affect these cases in the future is the 6-3 conservative majority of the US Supreme Court.

“I expect there will continue to be decisions that are pro-employer and anti-employees in the class action context, given the current constitution of the US Supreme Court, and that will trickle down to all levels of the federal courts and district courts,” Silverstein said. 

Employers can look at this past year as a precursor to new legal challenges and an explosion of class and collective actions in 2022, according to the report.

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