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The Biggest Class Action Settlements
Tobacco Settlements
In 1998, Philip Morris, RJ Reynolds, and two other tobacco corporations agreed to a $206 billion settlement that would pay medical expenditures for smoking-related ailments at a minimum. Attorneys general from 46 states took part in the settlement, which provided annual payments over a 25-year period. Due to the involvement of public prosecutors, this is not a standard class action, but the deal settled long-standing responsibility in class action lawsuits for the cigarette industry. 1)
BP Gulf Of Mexico Oil Spill
In 2016, a federal judge in New Orleans gave final approval to a $20 billion settlement resolving civil claims related to the Deepwater Horizon oil spill. The majority of the revenues are used to settle federal claims and fines, while the remaining $5 billion to $6 billion is used to pay state and local governments. This is not a standard class action, as it was spearheaded by public prosecutors rather than the plaintiff's bar, as was the case with the tobacco settlements. Some legal experts questioned the settlement for allowing BP to deduct $15 billion of the settlement costs from its taxes. 2)
Volkswagen Emissions Scandal
A federal judge in San Francisco granted a $14.7 billion settlement in 2016 as a result of a Volkswagen plot to cheat emission testing on its diesel vehicles. The deal includes monies for vehicle buybacks at pre-scandal market values, as well as additional cash payouts to 475,000 diesel car owners.3)
Enron Securities Fraud
A federal judge in Houston granted a $7.2 billion settlement in 2008, ending charges that the energy trading company Enron deceived shareholders prior to filing for bankruptcy. Over 90% of the settlement money were provided by JP Morgan Chase, Citigroup, and the Canadian Imperial Bank of Commerce. Payments were planned to be made to around 1.5 million individual and institutional investors. 4)
Enron Securities Fraud Continued
Citigroup and the University of California, the primary plaintiff who represented Enron investors, agreed to a $2 billion settlement. Kenneth Lay and Jeffrey Skilling, former Enron executives, were convicted of conspiracy and fraud for their roles in the scam. 5)
Worldcom Accounting Scandal
In 2005, a federal judge in New York approved settlements worth around $6.1 billion in shareholder fraud litigation against WorldCom. The case was led by New York State Comptroller Alan Hevesi on behalf of WorldCom stock and bondholders, including New York State's public pension fund. JP Morgan Chase agreed to pay a total of $2 billion. Bank of America and Citigroup are among the other institutions engaged in the settlement. Former WorldCom CEO Bernie Ebbers and CFO Scott Sullivan have both been sentenced to prison for their roles in the WorldCom accounting scam. 6)
FEN-PHEN Diet Drugs
In 2000, a federal judge in Philadelphia granted a $3.75 billion settlement over fen-phen, a diet medicine linked to potentially catastrophic heart valve damage. Six million people were said to have used fen-phen, which was supplied by American Home Products before it was withdrawn from the market in 1997. The deal offers patients up to $1.5 million in compensation, based on their injuries and the length of time they used the medicine.7)
American Indian Trust
A federal judge in the District of Columbia has given final permission to a $3.4 billion settlement involving American Indian claims that the federal government misused monies in land trust accounts dating back to the nineteenth century. The case arises from the government's practice of leasing tribal lands to agricultural, mining, and other extractive industries and then dispersing the proceeds to American Indians. 8)
Silicone Breast Implants
In the mid-1990s, manufacturers of silicone gel breast implants agreed to settle accusations that they had caused autoimmune and connective tissue diseases in women. According to California Law Review, the manufacturer's group, lead by Dow Corning, first settled for $4.75 billion, but the settlement crumbled because the number of claims exceeded expectations. The remaining manufacturers, including Bristol-Myers Squibb, eventually agreed to a $3.4 billion settlement, and Dow Corning settled its claims in bankruptcy court. 9)
Cendant Accounting Fraud
A federal judge in New Jersey granted a $3.2 billion settlement in 2000 based on shareholder claims that a merger inflated the value of Cendant Corp., a travel and real estate corporation that owned Ramada Inns and other well-known brands. Cendant shares dropped $14 billion in a single day after investors discovered accounting issues.10)