What are the Types of Class Action Lawsuits?

Class action lawsuits involve wrongs or injuries sustained by a large number of people. As such, class actions tend to fall into certain common categories, or types.  While there is some overlap among the categories, the top ten types are listed below:

1. Disasters or “Mass Torts”
2. Defective Products and Foods
3. Pharmaceuticals
4. Environmental Pollution
5. Institutional Abuse
6. Discrimination and Harassment
7. Consumer Protection and Price Fixing
8. Pensions and Benefits
9. Securities
10. Extra-Territorial Claims

 

1) Disaster or “Mass Tort” Class Actions

Mass torts were among the first claims recognized by North American courts as being best dealt with by way of class proceedings. Mass torts are disasters such as plane crashes, train derailments, or ship sinkings. Class actions are often a preferable procedure for adjudicating mass tort claims because class actions avoid having tens or hundreds or claimants bringing individual claims based on the same incident. This can save the court system time, money and resources.

For example, a class action was brought on behalf of hundreds of people who were injured, and families of approximately 100 people who were killed, in a fire that destroyed “The Station” nightclub in Rhode Island in 2003. The class action settled in 2010 for $176 million.

In a recent Canadian example, a class action was started against Via Rail and the Canadian National Railway Company seeking compensation for people who suffered damages or losses as a result of a train derailment in Southern Ontario in February 2012.

Another well-known disaster class action involved Air France Flight 358. On August 2, 2005, the flight en route from Paris to Toronto overran the runway at Pearson International Airport. It came to a stop in a gulley and burst into flames. While all passengers and crew members survived, passengers suffered both physical and emotional injuries and the baggage of the majority of passengers was damaged or destroyed.  On August 5, 2005 a class action commenced against Air France, the Toronto Airport, Airbus and several other defendants. The action was certified in August 2006 and it settled in January 2011 for over $20 million.

Examples of Mass Tort Class Action

• Air France Class Action

2) Defective Product and Food Class Actions

Defective product class actions, also known as product liability class actions, are lawsuits which allow multiple people to sue a company when they have been injured as the result of a product’s defect. The more well-known defective product class actions have involved common household products like baby cribs, vehicles, pet foods, toasters and electronics. Food-related class actions usually involve claims related to false advertising or misrepresentation of foods or related products. They can also involve personal injuries relating to the contamination of foods sold in the marketplace.

Recently, class actions have been filed in the Canada and the US against Stork Craft, Fisher Price, Sears Canada, Wal-mart and other makers and sellers of the Stork Craft baby crib. Following the deaths of 4 infants in the US and injuries to over 100 other infants, 2.1 million Stork Craft “drop-side” baby cribs were recalled, resulting in the largest crib recall in North American history. Over 1000 people have joined the class actions filed in various Canadian provinces by Merchant Law Group. Plaintiffs are seeking compensation for the purchase of the cribs.

Another well-known class action was brought in both Canada and the US against the manufacturers, distributors and sellers of pet foods that may have had contaminated ingredients. As a result of the settlement of these class actions, people were eligible to receive money for their losses if they purchased the pet foods which were later recalled, or if they suffered other economic losses such as veterinary bills and other expenses related to a pet’s illness or death.

Recently, two notable class actions were settled against Ferrero USA., one for $2.5 million and one for $550,000, after plaintiffs claimed the company marketed and advertised its hazelnut spread, “Nutella” as being healthier than it actually is. Consumers who purchased Nutella for private consumption between 2008 and 2012 (depending on the State) are entitled to claim compensation of $4 per jar, to a maximum of $20 per household. As part of the settlement, Ferrero has corrected its marketing and advertising of Nutella.

Tobacco, though not a food per se, has been at the centre of class actions in the US and Canada for decades. The best known tobacco class action settlement was the Master Tobacco Settlement of 1998, which provided $206 billion over 25 years to various states for the recovery of health care costs related to consumers’ use of tobacco products.  The movie “The Insider” places tobacco class action litigation in context in the mid-20^th century in the US. Similar litigation has recently begun Canada, through which provinces are attempting to recover health care costs related to tobacco products. Interestingly, the same key witness portrayed by Russell Crowe’s character in “The Insider” is now being called as a key witness in the Canadian class action litigation against big tobacco companies.

Examples of Defective Food and Products Class Action

• Nutella Lawsuit
• Maple Leaf Lawsuit

3) Pharmaceutical Class Actions

These class action lawsuits involve people who are injured, or the families of people who have died, as a result of using a government-approved drug or device sold legally in the marketplace. Examples of famous pharmaceutical class actions include VIOXX, Yaz, transvaginal mesh and silicone breast implants.

The first example involves the drug VIOXX, a non-steroidal anit-inflammatory drug (NSAID) otherwise known as Rofecoxib. The painkiller was reported to increase risk of cardiovascular problems such as heart attack and stroke; however the manufacturer, Merck, marketed the drug anyway. After continued testing of VIOXX’s problematic side effects, VIOXX was eventually taken off the market. Almost twenty law firms across Canada worked together to bring a VIOXX class action to certification. Currently, a settlement is pending approval of the courts. There are reportedly thousands of lawsuits in the US relating to VIOXX, including numerous individual lawsuits and class actions.

The second example involves the birth control pill, Yaz, or Yasmin. The drug is at the centre of class actions across North America after women complained of blood clots, pulmonary embolisms and other serious conditions, allegedly caused by Yaz/Yasmin. Yaz became the first birth control pill in the North American market that contained drospirenone and it is alleged that this component is problematic.

In both Canada and the US, class action lawsuits have been filed against the manufacturers and distributors of transvaginal mesh products. Transvaginal mesh has been used quite commonly in North America to treat pelvic organ prolapse and stress urinary incontinence. The mesh is intended to support and reinforce soft tissue previously weakened by childbearing or a hysterectomy. Plaintiffs allege that transvaginal mesh products are defective and that they erode and cause infection, scarring, perforation of surrounding tissue as well as nerve damage. At the same time, they allege that transvaginal mesh products do not prove useful in treating the problems or symptoms for which they were intended.

Another classic example is the famous US class action brought against the major manufacturers of silicone breast implants by women who claimed to suffer autoimmune disease as a result of the implants. The class action settled in 1994 for about $3.4 billion dollars and was the largest class action lawsuit in history, at that time.

4) Environmental Class Actions

Environmental class actions are brought by people who allege they have suffered losses caused by pollution of land, air or water. The damage is often alleged to have been caused by a company acting negligently, or even recklessly. These cases often have mixed results in the courts.

For example, the movie “Erin Brokovich” depicts the legal claims of residents of Hinkley, California, who sued Pacific Gas and Electric (PG&E) after PG&E contaminated the groundwater. The case was settled in 1996 for $333 million, the largest settlement ever paid in a direct action in the US.

In another famous example, a $5 billion judgment, later reduced to $507.5 million, was granted against Exxon Mobil after the Exxon Valdez oil spill affected innumerable people and coastlines, particularly people in Alaska whose lands and livelihoods were directly harmed by the spill.

In the Smith v. Inco Ltd. case, plaintiffs sued Inco Ltd. for the devaluation of their private properties allegedly from contamination of the properties surrounding Inco’s nickel refinery near Port Colborne, Ontario. Initially, the Superior Court of Ontario sided with plaintiffs and awarded $36 million at trial, finding Inco liable for the property devaluations due to its refinery depositing nickel particles on plaintiffs’ properties over a 66 year period and due to the nuisance to property owners. However, the Ontario Court of Appeal dismissed the case and reversed the trial judgment in 2012. In April 2012, plaintiff’s leave to appeal was denied by the Supreme Court, which means that the Court of Appeal decision stands.

5) Institutional Abuse Class Actions

These claims are brought by people who allege they were abused in residential schools, care homes and other institutions. Usually, these institutions were set up by governments or in coordination with governments and religious organizations, in order to house, treat, or educate people who were in some way vulnerable. Plaintiffs have often been children, people of indigenous cultures and people with mental illnesses and disabilities.

The most well-known Canadian example is the “omnibus” Indian residential school class action which in 2006 settled multiple class actions across every province and territory in one coordinated settlement. It provided $1.9 billion dollars to survivors and their families and created “Common Experience Payments” as well as a Truth and Reconciliation Committee, among other resources. The settlement aimed to compensate Indian, Metis and Inuit people for their experiences at residential schools run by the Government of Canada often in coordination with various churches.

This first institutional abuse case of its kind in the US proceeded in the late 1970s against the Pennsilvannia state government. In the 1977 case of Halderman v. Pennhurst State & Hospital, Terry Lee Halderman filed a class action suit on behalf of herself and other residents of Pennhurst. She alleged conditions were unsanitary, inhumane and dangerous and that Pennhurst used cruel and unusual punishment. The District Court ruled that patients’ rights had been violated, that Pennhurst was overcrowded, understaffed, and lacked programs necessary for adequate habilitation, and that residents had suffered injuries from abuse by staff and other residents. Among some of the worst abuses were the use of isolation and the use of physical and chemical restraints whereby residents were sedated and tied to their beds. The case settled with a 1984 agreement that required community-based services be offered to all Pennhurst residents. However, several years of litigation followed the settlement. The school was eventually closed in 1987, but plaintiffs filed motions for years to attempt to enforce the settlement agreement, with the defendants being found noncompliant, even up until 1994, for the lack of individualized services available to all plaintiffs.

Examples of Institutional Abuse Class Action

• Huronia Institutional Abuse
• Indian Residential Schools Class Action Lawsuit
• Pennhurst School and Hospital Class Action

6) Discrimination and Harassment Class Actions

These class actions are brought by plaintiffs who allege they have been discriminated against or harassed in the workplace.

On June 19, 2001, six current and former female Wal-Mart and Sam’s Club employees filed a class action lawsuit in Federal Court in San Francisco called Dukes v. Wal-Mart Stores, Inc. The plaintiffs alleged that Wal-Mart discriminates against its female employees when deciding promotions, job assignments, pay and training, and that Wal-Mart retaliates against women who complain against such practices. The case proceeded through both District Court and the Court of Appeals. However, in June 2011, the US Supreme Court ruled the case could not proceed as a class action. Plaintiff’s lawyers responded by filing smaller class actions in California, Texas, Tennessee, Florida and Wisconsin, each of these smaller class actions representing plaintiffs from various regions and states. In addition, they are filing discrimination claims with the United States Equal Employment Opportunity Commission (EEOC). These claims may also result in individual or class action lawsuits.

A famous class action is currently underway in Canada involving female RCMP officers, civilian members and public service employees of the RCMP, who allege they were harassed on the job, often for years and to the point of some women leaving their jobs. The lawsuit names the governments of Canada and British Columbia as defendants, stating that the RCMP failed to exercise a duty to women in the RCMP to ensure that they could work in an environment free of gender-based discrimination, bullying and harassment. Separate from the class action and interesting to note, a government inquiry has also been conducted into the systemic failure of the RCMP to prevent or address gender harassment. This lawsuit is primarily being advanced by the law firm of Klein Lyons in Vancouver, British Columbia.

Examples of Harassment and Discrimination Class Action

• RCMP Harassment and Discrimination Lawsuit

7) Consumer Protection and Price Fixing Class Actions

Consumer claims are often based on economic injury to the everyday consumer or an alleged unjust enrichment to the defendant company. These claims are sometimes based in misrepresentation, for example if a company doesn’t disclose upfront key terms of a sale or makes claims about a product that mislead consumers. Claims can also be based in fraud.

Consumer class actions have proceeded within the mobile premium text messaging industry in the US, where multiple cell phone plan providers and mobile content providers have been sued by thousands of disgruntled consumers. Jamster, Mobile Messenger, Open Market, Cylon, Jawa and Eyelevel Holdings are just some of the mobile content providers who have been successfully sued in class actions in the US after consumers alleged a host of unfair practices. Usually consumers claimed that they were charged unauthorized charges on their cell phone bills, were subscribed to premium text messaging services without their consent, were charged long after having unsubscribed from services, or were misled in advertisements as to the nature, content, frequency or cost of premium text messages.

The telecom industry in the US is fertile soil for class action litigation, but there have also been cases in Canada against wireless providers. A well-known case is currently proceeding against Bell, Rogers, Fido, Telus, BC Tel, SaskTel, MTS and  others, for the years in which the wireless carriers charged consumers a “system access fee” or similarly described fee every month. The fee ranged from about $5 to $8 and was not disclosed to consumers before they purchased the phone plans. The class action has been certified and is currently proceeding through various courts, with plaintiffs represented by Merchant Law Group.

Sketchers and Reebok have both settled, or in the process of settling, class action lawsuits in the US over claims about the benefits of their “toning” shoes. The companies claimed that the toning shoes helped people lose weight, develop muscle tone and get in shape by merely wearing the shoes for everyday activities. The Federal Trade Commission (FTC) prosecuted the class actions against the companies, alleging that advertisements made claims that were not substantiated by evidence and were therefore false or misleading to consumers. In Canada, various law firms have proceeded with similar class actions.

Price-Fixing is another type of manipulation of the marketplace.  Price-fixing can directly affect consumers because prices of products are purposely maintained at a higher rate, often through conspirators in the marketplace. This practice is considered unfair because it allows companies to dictate the prices for goods and services rather than allowing prices to fluctuate according to free market influences.

A prime example is the e-book price-fixing class action involving Apple. Antitrust class action lawsuits have been filed by the Department of Justice in the US and by the European Union against Apple and other major publishers. The lawsuits centre on the allegation that Apple developed a pricing model with publishers which would allow publishers to dictate prices and give 30% of revenues to Apple. This resulted in significant price increases of e-books for Apple’s competitor – Amazon – who had until then secured 90% of the e-book market. After Apple’s motion to dismiss the US class action was denied in May 2012, three publishers subsequently agreed to a $69 million settlement in the US.  On a related note, in 2012, class actions were filed in three Canadian provinces alleging that Apple and other publishers engaged in a conspiracy to fix, maintain, increase or control the price of e-books. These lawsuits seek damages for Canadians who had purchased e-books since April 2010.

8) Pensions and Benefits Class Actions

An increasingly common trend in class action litigation involves plaintiffs suing their former employers to collect the pensions and benefits they negotiated and contributed to while working, but which were denied them upon retiring. A further twist is the use of class action litigation by employers against former employees, to allow employers to unilaterally change or stop pension benefits.

For example, in the case of Smith v. Labatt Brewing Company Ltd. retired former employees found it necessary to sue their employer in order to collect post-retirement health benefits.  Labatt had attempted to change the benefit plan from unlimited lifetime coverage of drugs with a minimal deductible, to a lifetime cap with larger deductibles. Through the class action settlement, Labatt agreed to restore much of the benefits; however, Labatt was able to negotiate in the settlement the ability to increase deductibles in the future.

In the case of General Motors of Canada Ltd. v. Abrams, post-retirement health care benefits earlier put in place through collective bargaining agreements, were unilaterally altered and reduced through a class action filed by GM against former employees. The class action settled in 2009, one of the terms being that GM would set up a $1 billion health care fund. Once GM issued cash and promissory notes for the fund, it would be absolved of all future claims for post-retirement health care benefits. It is estimated that the fund may pay only 80% of the original benefits.

9) Securities Class Actions

Securities claims are based on economic injury to investors or shareholders. These class actions are less about the everyday consumer and more about the players “higher up” in the market. Economic injuries to investors usually result from a company misrepresenting risks or misstating earnings.

One of the most infamous securities class actions involved Enron. Investors, represented by California-based law firm Coughlin Stoia Geller Rudman & Robbins, filed lawsuits under both federal and state laws alleging that Enron fraudulently concealed its losses from investors. Implicated in the class actions were Enron, certain Enron officers and directors, Enron’s accounting firm including certain partners and employees, and Enron’s former law firm, Vinson & Elkins. Settlements totalling approximately $7.2 billion were distributed by the class action administration firm of Gilardi & Co., and are the highest so far in shareholder class actions in North America.

Separate from the Enron class action initiated by investors, the SEC also commenced several civil and administrative proceedings to recover damages as a result of the Enron-related frauds. Corporate and individual defendants collectively paid about $450 million to settle the SEC actions. The Department of Justice also proceeded with several judicial forfeiture actions recovering an additional $65 million.

A second infamous investor case involved Nortel Networks. Class actions were brought in New York, Ontario, Quebec and British Columbia. Essentially, the litigation centred on Nortel materially misrepresenting revenues, earnings and receivables and improperly accounting income in such as was as to suggest profitability, which did not exist. The plaintiff class was comprised of investors who purchased Nortel common stock between specific dates in 2000 and 2004. Plaintiffs were represented in the US action by Milberg LLP, assisted by Koskie Minsky LLP; in the Ontario action by Rochon Genova LLP; in the Quebec action by Belleau Lapointe, S.A., assisted by Unterberg Labelle Lebeau s.e.n.c.; and in the British Columbia action by Klein Lyons. Nortel class actions settled for approximately $2.4 billion.

As with the Enron case, the SEC also prosecuted civil and administrative actions against Nortel. These existed separate and independent from the class action lawsuits undertaken by shareholders. The SEC’s actions settled for a further $35.5 million.

Another well-known securities class action involved AOL Time Warner, who was sued by investors under federal securities law for allegedly creating false earnings statements which improperly accounted for advertising transactions in the late 90s, early 2000s. The result was that the company’s value was falsely inflated. The class action settled in 2005 for $2.5 billion.

Examples of Securities Class Action

• Agnico Eagle Mines Investor Class Action

10) Extra-Territorial Claims

Extra-territorial claims are an interesting type of class action increasingly being litigated in Canada and the US. These are class action lawsuits litigated in North American courts, but relating to events which occurred in another country (hence “extra-territorial” claims). These claims arise most often when a North American company or government is implicated in human rights abuses, corporate misconduct, negligence or other tort claims in another country. For these claims to proceed in North American courts, certain legal thresholds need to be met such as there being a substantial connection to North America, or, for example, the North American court being the only real option for pursuing a claim. Extra-territorial claims are a controversial , but exciting, area of the law because they allow victims of torture, human rights abuses, sexual assault, forced evictions, murder and other atrocities to pursue legal remedies in courts with some level of stability and power to demand redress against perpetrators. At the same time, these claims allow innocent defendants the opportunity to clear their names in court. Extra-territorial claims face significant hurdles in North American courts, and some jurisdictions are tougher arenas than others for plaintiff’s seeking redress.

One prominent and recent example is the Anvil Mining case. In Association Canadienne Contre L’Impunite v. Anvil Mining Ltd., plaintiffs attempted to use class action litigation to hold the Canadian mining company “Anvil Mining” accountable for its alleged connections to the Kilwa massacre which took place in the Democratic Republic of Congo in 2004. Allegedly, Anvil Mining had provided logistical support to Congolese military, who then massacred between 75-100 civilians and also committed rape, torture, looting and summary executions. The Superior Court ruled in 2011 that the case could be heard. However, the Appeal Court ruled in early 2012 that the case could not proceed, as there was insufficient connection between Anvil Mining’s Montreal office and the jurisdiction of the Court.  Sadly for the victims, in late 2012 the Supreme Court of Canada declined to hear the plaintiff’s appeal.

Three separate cases were filed in 2010-2011 involving the same Canadian company, HudBay Minerals. The plaintiffs are Guatemalan nationals who allege that HudBay and its predecessor corporation negligently managed operations at the Fenix Mine in Guatemala and that HudBay is connected to the mass atrocities committed by the mine and its private security personnel. One lawsuit seeks redress for the murder by the mine’s private security personnel of a local Guatemalan man who opposed the mining project. Another seeks redress for the severe injuries sustained by a man shot by the private security personnel. The class action of Caal v. HudBay Minerals Inc. concerns the gang rape of eleven local women from Lote Ocho, Guatemala, by the mine’s private security personnel, police and military forces who were attempting to force the locals off the land to allow for mine development. Many of the women were permanently injured during the rapes including suffering miscarriages and other lasting internal injuries. Amnesty International was grated leave in February 2013 to intervene in the HudBay Minerals case. A motion to dismiss, brought by HudBay Minerals, was heard in Toronto in March 2013, the results of which are highly-awaited.