It’s not every day that companies agree to pay $2 billion or more to compensate the victims of irresponsible corporate behavior. Class action settlements of this magnitude are historic. They are also a matter of huge public interest. And yet, it’s not easy to compile a complete list of these cases.
This is partly because class action settlement amounts are a moving target until payments are made, long after the parties strike a deal. To make matters even more complicated, defendants sometimes reach separate settlements during litigation. Even if all parties agree to settle, the court must review and approve distribution plans, and the court of appeals can review them too.
In March 2017, for example, the US Supreme Court closed the book on a $7.5 billion settlement with Visa and MasterCard, resolving claims that retailers had overpaid on credit and debit card fees. The Supreme Court declined to review a lower court ruling that the settlement was unfair to some retailers who stood to receive little or no benefit from the case. In 2008, the Supreme Court squashed another multibillion-dollar settlement, cutting total damages in litigation over the Exxon Valdez oil spill, originally pegged at $5 billion, down to $1.5 billion.
The Top class action settlements
We’ve done our best to include all class action settlements of $2 billion or more, at this time. Do you know of a case that should be added? Please post a comment here or on one of our social media pages.
Tobacco settlements for $206 billion
In 1998, Philip Morris, RJ Reynolds, and two other tobacco companies agreed to a $206 billion settlement, at a minimum, covering medical costs for smoking-related illnesses. Attorneys general for 46 states participated in the settlement, providing annual payments over 25 years. This is not a traditional class action due to the involvement of public prosecutors, but the agreement resolved longstanding liability in class action litigation for the tobacco industry. Many participating states have been criticized for using the settlement funds as collateral for bond financing, putting money into public accounts sooner but reducing the overall settlement value after bonds are repaid with interest.
BP Gulf of Mexico oil spill $20 billion
In 2016, a federal judge in New Orleans granted final approval to an estimated $20 billion settlement resolving civil claims over environmental damage from the Deepwater Horizon oil spill. Most of the funds cover federal claims and penalties, while approximately $5 billion to $6 billion provides payments to state and local governments. Like the tobacco settlements above, this is not a traditional class action because it was led by public prosecutors rather than the plaintiff’s bar. Some legal observers criticized the settlement for allowing BP to claim $15 billion of the settlement cost as a tax write off.
Volkswagen emissions scandal $14.7 billion
In 2016, a federal judge in San Francisco approved a $14.7 billion settlement resulting from a Volkwagen scheme to cheat emission tests on its diesel cars. The settlement provides funds for vehicle buybacks at market values prior to the scandal, plus additional cash payments for 475,000 diesel car owners.
Enron securities fraud $7.2 billion
In 2008, a federal judge in Houston approved a $7.2 billion settlement resolving claims that the energy trading company Enron defrauded shareholders prior to declaring bankruptcy. JP Morgan Chase, Citigroup, and the Canadian Imperial Bank of Commerce provided over 90 percent of the settlement funds. About 1.5 million individual and institutional investors were expected to receive payments. The settlement includes a $2 billion deal between Citigroup and the University of California, the lead plaintiff that represented Enron investors. Former Enron executives Kenneth Lay and Jeffrey Skilling were convicted of conspiracy and fraud for their roles in the scandal.
WorldCom accounting scandal $6.1 billion
In 2005, a federal judge in New York concluded settlements totaling approximately $6.1 billion in shareholder fraud litigation against the telecommunications company WorldCom. New York State Comptroller Alan Hevesi led the case on behalf of WorldCom stock and bond holders, including New York State’s public pension fund. JP Morgan Chase agreed to pay $2 billion of the total. Other banks involved in the settlement include Bank of America and Citigroup. Former WorldCom CEO Bernie Ebbers and CFO Scott Sullivan have served jail time for their part in the WorldCom accounting scandal.
Fen-Phen diet drugs $3.8 billion
In 2000, a federal judge in Philadelphia approved a $3.75 billion settlement over a diet drug known as fen-phen that had been associated with potentially fatal heart valve damage. Six million people reportedly used fen-phen, sold by American Home Products, before it was pulled from the market in 1997. The settlement provides up to $1.5 million to users, depending on their injuries and how long they used the drug.
American Indian Trust $3.4 billion
In 2011, a federal judge in the District of Columbia granted final approval for a $3.4 billion settlement over American Indian claims that the federal government had mismanaged funds in land trust accounts dating back to the 19th century. The case stems from a government practice of leasing out tribal lands for agriculture, mining, and other extractive industries, then distributing revenues to American Indians. The court authorized $1,000 payments to about 325,000 members of the class starting in 2012.
Silicone breast implants $3.4 billion
In the mid-1990s, producers of silicone gel breast implants agreed to resolve claims that they had exposed women to autoimmune and connective tissue disorders. The manufacturer’s group, led by Dow Corning, initially settled for $4.75 billion, but the settlement collapsed because the number of claims exceeded expectations, according to California Law Review. The remaining manufacturers, including Bristol-Myers Squibb, ultimately settled for $3.4 billion, and Dow Corning resolved its claims in bankruptcy court.
Cendant accounting fraud $3.2 billion
In 2000, a federal judge in New Jersey approved a $3.2 billion settlement based on shareholder claims that a merger had inflated the value of Cendant Corp., a travel and real estate company that owned Ramada Inns and other well-known brands. Once investors discovered accounting irregularities, Cendant stock lost $14 billion in a single day. Pension funds for California state employees, New York state employees, and New York City employees represented Cendant shareholders as lead plaintiffs. Cendant chairman Walter Forbes and vice chairman Kirk Shelton were both imprisoned on conspiracy charges and ordered to pay over $3 billion each in restitution.
Tyco accounting scandal $3.2 billion
In 2007, a federal judge in New Hampshire approved settlements worth $3.2 billion to resolve claims that Tyco International executives enriched themselves at shareholders’ expense. Tyco agreed to pay nearly $3 billion while its former auditing firm PricewaterhouseCoopers paid the rest. Tyco’s former CEO Dennis Kozlowski served six and a half years in prison and paid $167 million in restitution and fines for his role in the scandal. Former CFO Mark Swartz also served prison time and paid $72 million in restitution and fines.
AOL Time Warner accounting fraud $2.5 billion
In 2006, a federal judge in New York approved a $2.5 billion settlement over an America Online practice of inflating advertising revenue before and after its merger with Time Warner. The Minnesota State Board of Investment led a group of 625,000 shareholders, bondholders, and institutions in the case against AOL Time Warner and the auditing firm Ernst & Young.
Nortel accounting fraud $2.5 billion
In 2006, two federal judges in New York approved a $2.45 billion settlement involving the alleged recording of phony sales at the telecommunications company Nortel Networks. The deal provides a combination of cash and equity from a new issuance of company shares to a group of investors led by public pension funds in New Jersey and Ontario.
Actos diabetes drugs $2.4 billion
In 2015, a federal judge in Louisiana reported that a Japanese drug company, Takeda Pharmaceutical, had agreed to pay $2.4 billion over claims that Takeda concealed the safety risks of its Actos diabetes drug before regulators warned that extended use could cause bladder cancer. A Minnesota labor union health care fund and individual consumers from around the US led the case against Takeda. The settlement administrator has reported that 9,820 people filed qualifying claims for the Actos fund.
Bank of America acquisition of Merrill Lynch $2.4 billion
In 2013, a federal judge in New York issued final approval to a $2.4 billion settlement stemming from the failure of mortgage-backed securities and Bank of America’s acquisition of Merrill Lynch & Co. Public pension funds in Ohio and Texas were among the lead plaintiffs in the case. An estimated 4 to 5 million investors were due to receive shares of the settlement.
Foreign exchange price fixing $2.3 billion
In 2015, the parties in federal court in New York reported a $2.3 billion settlement over price fixing in foreign exchange markets. The settlement was part of a wider action in the US and Europe netting over $10 billion from banks including Bank of America, Citigroup, JPMorgan Chase, and Morgan Stanley. A large group of pension funds and private investment funds represented the plaintiffs in the case. Federal prosecutors also extracted guilty pleas and additional fines from some of the banks involved in the civil settlement.
USDA racial discrimination $2.3 billion
In 2010, the US Department of Justice and the US Department of Agriculture announced a settlement over claims of racial discrimination in the administration of federal farm loan programs. Combined with an earlier partial resolution in the case, Pigford v. Glickman, the total settlement had reached $2.3 billion. The settlement provides cash payments and debt relief for approximately 20,000 black farmers.
Massive Class Action Cases not included in the list
This post does not include the $3.4 billion Toyota corrosion warranty settlement, because the settlement amount is based on projected future expenses for Toyota rather than up-front cash payments.
Many other multibillion-dollar settlements, like those for the victims of Bernie Madoff’s Ponzi scheme, are not included because they were obtained outside of class action proceedings.