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Class Actions: Carlton Field’s 2019 Eighth Annual Class Action Survey Shows Class Action Spending By Nearly 400 Responding Companies At Record High Since 2008 Recession

Labor/Employment Class Actions Are Most Common, With Over 50% Of Class Actions Settling Before Certification.

            Carlton Fields has put out some annual class action surveys with respect to spending and trends by American companies for the last 8 years. Its 2019 (eighth annual) survey is out. We provide a summary of what was reported through a survey of almost 400 companies:

• The surveyed companies spent $2.46 billion on class actions, the largest amount since the 2008 recession;
• 75% of class actions centered in these areas –labor/employment, consumer fraud, product liability, and antitrust;
• Labor/employment class actions were the most common ones encountered;
• Most of the companies, although expecting some actions in this area, had data breach action plans—but many of the companies were concerned with the impact of California’s Consumer Privacy Act;
• One-fourth of the class action cases were viewed as “bet the company” or high-risk cases;
• Over 50% of the class action cases settled before class certification motions, although a lot of the companies did fight for quite a while;
• Arbitration clauses are being increasingly used by companies in this area; and
• 95% of the surveyed companies say they rely on a small group of outside counsel with respect to handling class action cases, rather than gravitating to large firms.

Class Actions: Carlton Fields’ Seventh Annual Class Action Survey Of More Than 400 General Counsel/Legal Officers Shows Increased Class Action Litigation Defense Spending By Responding U.S. Companies

Study Also Surveyed Most Prevalent Types Of Class Actions, Risk Evaluation Factors, Settlement Percentages, And Use Of Class Action Waiver Arbitration Clauses.

                Carlton Fields has published its seventh annual Class Action Survey, which surveyed more than 400 general counsel and chief legal officers in U.S. companies about class action trends for the 2017 year. Its findings are edifying in nature.

                From a high-level executive perspective, class action defense spending has been rising steadily in the last 3 years, reaching its highest level (in 2017) since 2010. In 2017, class action spending went up about 5% from the previous year, namely, 53.8% in 2016 to 59% in 2017, as measured by the percentage of companies managing class action cases out of the total surveyed population. The surveyed companies projected spending $2.24 billion defending themselves in class actions, which was 11.4% of all litigation spending (which total spending came to $19.7 billion for the companies).

                Labor and employment matters were the most common type (24.7% of matters and 21.6% of spending), consumer fraud clocked in at #2 (18.2% of matters and 18.9% of spending), while products liability and antitrust came in respectively at #3 and #4. These four categories accounted for 2/3rds of all the class actions. Interestingly enough, despite the publicity generated with respect to data privacy cases, fewer than 25% of the business population surveyed have faced class actions in this area.

                For purposes of evaluating the risks presented by class actions, exposure not surprisingly was the prime factor considered in the evaluation calculus.

                Class action settlement rates for 2017 increased from 62.5% in the previous year to 70.8%, with 37.5% settling after the class certification stage of the litigation.

                Also, 37.2% of responding companies used class action waivers in arbitration agreements for 2017, up from 30.2% in 2016. Around a third of the companies believe that favorable changes were coming in the class action area based on anticipated changes to the U.S. Supreme Court constituency.