United States: The Rise Of Smaller Class Actions

On July 22, 2014, NERA Economic Consulting (NERA) published a study of consumer class action settlements between 2010 and 2013.  The report states that NERA's data "show a steady increase in consumer class action settlements from 2010–2013."  NERA found that 66 class actions were settled in 2010, 111 were settled in 2011, 141 were settled in 2012 and 161 were settled in 2013.  In other words, nearly 100 more class actions were settled in 2013 than were settled just three years prior.

At the same time, however, NERA also concluded that the aggregate amounts paid by settling defendants in each year only exhibited a "gradually increasing trend" when two large, outlier settlements are excluded.  (These two outlier settlements are a $7.25 billion settlement of antitrust claims alleging that merchants paid excessive interchange fees for accepting Visa/MasterCard and a $1.6 billion settlement of claims alleging that Toyota vehicles experienced sudden, unintended acceleration.)  In fact, when these two outlier settlements are excluded, the average amount of each settlement "showed a slightly decreasing trend" during this period.  Thus, although the number of class action settlements increased substantially since 2010, the average per-case settlement amount actually declined while the aggregate annual settlement amount increased only gradually.

NERA's data are consistent with the authors' experience in consumer class actions during the last five years, who have also observed the trend of more class action settlements for smaller settlement amounts.  What is causing this trend, and what can businesses expect in the future?  Three basic conclusions are drawn, as follow.

Conclusion No. 1:  Class Action Lawyers Are Focusing on Volume

A primary cause of this trend is a shift in the nature of the class actions being filed.  Plaintiffs' lawyers are filing a higher volume of class actions that have comparatively smaller values.  Indeed, class actions are increasingly becoming a volume, "commoditized" enterprise for many plaintiffs' lawyers.  The following factors from the NERA data and the authors' own experience support this observation.

Plaintiffs Are Filing More Class Actions Involving Smaller Damages

For example, there has been a recent boom in the filing of smaller value class actions, including claims involving food labeling (e.g., claims alleging that products are mislabeled as "All Natural," claims alleging misleading calorie content, etc.), consumer privacy (e.g.,data breaches) and violations of the Telephone Consumer Protection Act (TCPA) (e.g., unsolicited faxes and texts).  These types of cases typically involve smaller potential damages than consumer class actions filed in the past.  Because plaintiffs' lawyers do not anticipate the historical returns on these types of cases, they will not invest as much on the front end and will be inclined to try to settle as early as possible in the litigation to maximize the return on their investment.  Defense counsel are inclined to settle early, too, because these cases can often be settled for much less than the costs of defense in a typical class action.  Also, given the commoditized nature of the complaints, plaintiffs' counsel often file large volumes of these cases against different defendants to offset the smaller average amount of the settlements.

Data Show Most Settlements During this Time Period Were Relatively Modest for Class Actions

According to the NERA data, "roughly half of the cases with a reported settlement value settled for less than $10 million."  Although not broken down in the NERA data, based on experience, the authors believe it is likely that a significant number of those settlements were valued at $1 million to $2 million.  Plaintiffs' counsel receive a smaller fee per case, but they seek to make up for it through the volume of actions they bring and settle early.

Plaintiffs Are Targeting Venues with Perceived Lower Pleading Standards

According to the NERA data, approximately 50 percent of the consumer class actions that were settled were filed in California.  California courts provide a favorable forum for the filing of these small-dollar, high-volume class actions.  The vast majority of those California cases, especially the food labeling cases, involve claims brought under the California Unfair Competition Law, Business and Professions Code §§ 17200 et seq. (UCL).  California courts have not required reliance by absent class members and, even for the named plaintiffs, have been willing to infer reliance if the plaintiff was exposed to a long-term advertising campaign.  These comparatively low pleading standards increase the likelihood that the plaintiff will survive a motions to dismiss (which is the one opportunity that defendants have to win the case before they need to begin the costly discovery process) and bring the defendant to the negotiating table.  (Mandatory early mediation rules in the California courts also foster early settlements of class actions on either an individual or classwide basis.)

Conclusion No. 2:  Product Liability Actions Are Increasing Due to Recent Decisions

The NERA report identified two areas in which the average settlement value was the highest between 2010 and 2013:  antitrust and product liability.  Antitrust class actions have always been high-stakes litigation, and the fact that many of the largest class actions settlements involved antitrust claims is nothing new.

However, in accordance with the NERA data, the authors have noticed a clear increase in the number and size of settlements of product liability class actions.  The increased filing and settlement of product liability class actions are likely the direct result of several recent decisions from federal appellate courts granting class certification in product liability class actions.  See, e.g., Butler v. Sears, Roebuck & Co., 727 F.3d 796 (7th Cir. 2013); In re Whirlpool Corp. Front-Loading Washer Prod. Liab. Litig., 722 F.3d 838 (6th Cir. 2013); In re Zurn Pex Plumbing Prod. Liab. Litig., 644 F.3d 604 (8th Cir. 2011); Pella Corp. v. Saltzman, 606 F.3d 391 (7th Cir. 2010).  Prior to these rulings, plaintiffs typically faced a very high burden to obtain certification of product liability claims because individual issues of causation would typically predominate under Federal Rule of Civil Procedure 23(b)(3).  See, e.g., McLaughlin v. Am. Tobacco Co., 522 F.3d 215 (2d Cir. 2008); In re St. Jude Medical, Inc. Silzone Heart Valve Prod. Liab. Litig., 522 F.3d 836 (8th Cir. 2008); In re Bridgestone/Firestone, 288 F.3d 1012 (7th Cir. 2002); Castano v. Am. Tobacco Co., 84 F.3d 734 (5th Cir. 1996).  The recent appellate court decisions have circumvented the predominance of individualized issues of causation by recognizing "issue certification" under Federal Rule of Civil Procedure 23(c)(4) and/or bifurcating issues of causation or damages for separate individual trials.  As a consequence, plaintiffs' lawyers are using those recent decisions as blueprints for asserting and certifying product liability class actions, while defendants are facing increased pressure to settle due to the increased risk of classwide relief.

Conclusion No. 3:  These Trends Will Likely Continue

The NERA data tell a clear story.  More class actions are being settled in recent years (particularly in areas such as food labeling, consumer privacy and TCPA cases), but the per-case settlement value slightly declined, and the aggregate annual settlement dollars increased only gradually even though substantially more cases were settled.  Taken together, this data reveal that many class action lawyers are filing more smaller-value class actions (and then seeking to settle them quickly).  These lawyers will likely also continue to file high-stakes class actions that they perceive to be easier to get certified, such as antitrust and product liability class actions.  This is consistent with the authors' own experience in class actions in recent years, who expect that businesses will see these trends continue.

The Rise of Smaller Class Actions

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions