Dive Brief:

• Companies spent a record $3.64 billion defending against class actions last year, an 8% increase compared to 2021, according to a recent report.
• Labor and employment cases comprised roughly one-third of the matters and led the way in the share of class action defense spending (34.8%) they comprised by a wide margin, the 2023 Carlton Fields Class Action Survey found. 
• Consumer fraud was the second largest area of class action spending in 2022 and companies see those types of legal complaints as posing the largest threat moving forward, according to the survey of GCs or senior legal officers at more than 400 large companies.

Dive Insight:

The report said there were two key drivers of the increased class-action defense spending: Claims are getting larger and more companies are facing class actions. 

Overall, companies reported the average number of class actions they faced rose from 8.9 in 2021 to 9.6 in 2022.

Labor and employment matters were a major driver of this increase, as the report said they “rose substantially.”

“Companies perceive both regulatory agencies and employees (through their counsel) as being more aggressive than in years past,” the report said. “The announcement of a regulatory investigation or enforcement action, in such an environment, can lead to a follow-on putative class action.”

The nearly 35% of overall class action budgets labor and employment cases accounted for was up from 23.5% in the prior year’s survey.

Additionally, while COVID-19 related class actions were down, 50% of the remaining pandemic class actions were in the employment arena. 

Meanwhile, the report said consumer fraud class actions were up “due to claims resulting from the use of social media, product labeling, and debt collection.”

Additionally, the plaintiff’s bar has been vigilant in challenging corporate statements regarding environmental, social, and governance (ESG) issues, the report said. 

Consumer fraud cases made up 21.7% of class-action matters and 21% of related spending in 2022. 

The consumer fraud matters are perceived by in-house counsel as posing the largest risk at 27.5%, followed by employment cases at 19.6%.

Surveyed companies had an average annual revenue of $23.7 billion and a median annual revenue of $14.1 billion. They operate in more than 25 industries.