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Growing Wave of Class Actions in Consumer Fraud and Labor Issues

Across industries, companies spent $2 billion defending class action lawsuits in 2014, slightly less than the $2.1 billion they spent in 2013, according to the 2015 Carlton Fields Jorden Burt Class Action Survey. This year, spending is expected to return to 2013 levels.

Consumer fraud and labor issues

Fifty-three percent of all class action matters, and 47 percent of class action spending, fall within the practice areas of consumer fraud and labor and employment. Consumer fraud accounts for 30 percent of class action matters and 24 percent of class action spending, while labor and employment accounts for 23 percent of class action matters, and 23 percent of class action spending. These practice areas are followed by securities, product liability, insurance, antitrust, data privacy, and intellectual property.

Data privacy and insurance class actions

Insurance and data privacy matters emerged as significant areas in 2014, making up 6 percent and 4.2 percent, respectively, of class actions handled. At the same time, the percentage of labor and employment, product liability, securities, and antitrust class actions dropped.

  • Consumer fraud remains the largest component of class action portfolios
  • As other class action sectors cool off, insurance and data privacy emerge

Next wave of class actions in Data Privacy

While data privacy matters currently represent a small portion of class actions, when corporate counsel were asked what area they saw as the next wave, they most often identified data privacy. And, while class certification has been a stumbling block for plaintiffs in this area, the following factors suggest data security matters are nonetheless poised for growth:

  • increasing hacker activity;
  • more frequent internal protocol and security lapses; and
  • ongoing consumer and business sensitivity regarding data sharing and use.

Corporate counsel also expect a wave of consumer fraud class actions, even though these are already prevalent.

 Class actions becoming more frequent

More than one in three companies, up significantly from one in four last year, report managing multiple class actions on a regular basis. Experienced companies work with their law firms to develop formal, established class action protocols, including early case assessment, sophisticated analysis of potential financial exposure, and proactive tracking of major decisions impacting class actions.

Among the 54 percent of companies currently managing class actions, 35 percent report handling one or more open lawsuits on an ongoing basis. Nine percent say class actions arise every year or two, and 10 percent say they are rare, occurring only every few years. Forty-six percent of companies report no current class action lawsuits

  • More than one in three companies report managing multiple class actionlawsuitson a regular basis
    • A year ago, only 28 percent of corporate counsel dealt with class actions routinely—an increase of nearly 25 percent

To see the rest of the report, visit 2015 Carlton Fields Jorden Burt Class Action Survey

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