Class Action Numbers Dip in 2023, but Settlements Still Costing Billions

Class-action and government enforcement lawsuits continued to take a toll on corporate defendants in 2023, with ten $1 billion settlements and a total cost of $51.3 billion, according to a report released Tuesday by the DuaneMorris law firm.

The total cost was second only to the $67 billion total recorded in 2022, according to the report by DuaneMorris partners Gerald L. Maatman Jr. and Jennifer A. Riley. Maatman said he has been gathering data about class-action costs since 2002.

“Combined, the two-year settlement total eclipses any other two-year period in the history of American jurisprudence,” the report says.

Privacy lawsuits — specifically those alleging violations of the Illinois Biometric Information Privacy Act — made up a large chunk of the settled cases. In 2022, there were more than five times as many BIPA lawsuits than in 2018. Filings continued at an accelerated pace in 2023.

The Illinois Supreme Court issued two decisions last year that increased the opportunity to recover damages under BIPA. The court in February ruled that a five-year statute of limitations applies to claims filed under the act instead of the one-year limit that business interests said should apply.

The high court also ruled in February that a separate claim accrues each time a party unlawfully scans or transmits biometric identifiers without permission. The report says the rulings have the potential to increase monetary damages in an “exponential manner.”

State privacy, anti-surveillance and wiretap statutes also acted as lawsuit fodder for plaintiffs’ attorneys. The report says plaintiff’s attorneys “creatively” have used the Video Privacy Protection Act, passed by Congress in 1988 to prevent wrongful disclosure of videotape sale and and rental records, as a basis to file lawsuits challenging the use of innovative and novel technologies that are used to collect information about consumers’ online activities.

The lawsuits allege that businesses that maintain videos on their websites and deploy pixel tracking tools violate the VPPA because their websites track the videos that visitors watch and share the viewing data with third parties. More than 137 class actions alleging violations of the act were filed in 2023, the report says. Each violation can bring a $2,500 penalty.

Similarly, the plaintiff’s bar has filed class-action lawsuits alleging violation of wiretap statutes such as the California Invasion of Privacy Act, the Pennsylvania Wiretapping and Electronic Surveillance Act, and the Florida Security of Communications Act.

DuaneMorris said lawyers who filed motions to certify classes of plaintiffs succeeded more often than not. In 2023, courts granted 324 motions for certification out of 451 filed, a success rate of 72%. That was only a slight decrease from the plaintiff bar’s 74% success rate in 2022.

The US Supreme Court may have opened another door for class-action litigation with its decision in the Students for Fair Admissions case, where the court held that a race-based admissions programs violated the Equal Protection Clause. Since then, district court rulings have extended that principle to the government contracting context and the Small Business Association’s use of racial preference to award contracts. The report said businesses can expect litigation alleging “reverse” discrimination caused by corporate diversity initiatives.

“The plaintiffs’ bar is nothing if not innovative and resourceful,” DuaneMorris 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.”