History of Class Action Lawsuits in America

Although class action lawsuits have been prominent in the news for only the past century or so, many people are surprised to learn that such actions have been part of the legal system for hundreds of years. While many class actions involve relatively minor disputes, some cases have had significant impacts on law and society.

 

Historical Background

The origins of class actions, or “group litigation,” are rooted in Anglo-Saxon and Norse legal tradition of the so-called “Dark Ages” (in fact, next to pillaging and looting, litigation was a favorite activity of the Vikings). English common law in Anglo-Saxon society had long recognized the right of a plaintiff to bring a complaint on behalf of a larger group.

By the time of the infamous King John of England (1199-1216), lawsuits involving villages and towns and trade guilds were quite common. Between 1400 and and the mid-19th Century, changes in the economic system as feudalism gave way to capitalism as well as political upheavals led to the decline of group litigation. It virtually ceased to exist in England by 1850.

In the United States, Supreme Court Justice Joseph Story (1779-1845) wrote an opinion in the case West v. Randall, which set the foundation of the modern class action by establishing who could participate in a lawsuit: “It is a general rule in equity, that all persons materially interested, either as plaintiffs or defendants in the subject matter of the bill ought to be made parties to the suit, however numerous they may be.” This concept was further cemented into U.S. law by Federal Equity Rules, which governed civil actions from 1822 until 1938.

In 1842, the Supreme Court enacted Rule 48, which stated:

Where the parties on either side are very numerous, and cannot, without manifest inconvenience and oppressive delays in the suit, be all brought before it, the court in its discretion may dispense with making all of them parties, and may proceed in the suit, having sufficient parties before it to represent all the adverse interests of the plaintiffs and the defendants in the suit properly before it. But in such cases the decree shall be without prejudice to the rights and claims of all the absent parties.

This rule allowed a single individual to represent a larger group, establishing the primary prerequisite for a class action lawsuit – a large number of plaintiffs. Rule 48 was eventually replaced.

Since 1938, class actions have been governed under Rule 23 of the Federal Rules of Civil Procedure. In 1966, Rule 23 was revised, giving class members the ability to opt out of an action (and thereby retain their right to file an individual lawsuit).

 

Significant Class Actions in United States History

Below are some of the more significant and interesting class actions that have occurred in the United States.

 

State of Tennessee v. John Thomas Scopes

The “Scopes Monkey Trial” was arguably the first class action lawsuit to get widespread media attention (and ultimately became the subject of numerous stage plays and films). It began as a challenge by the American Civil Liberties Union against a Tennessee state law, passed in 1925, that essentially forbid public school teachers to present Darwin's theory of evolution.

At behest of the ACLU, John Scopes, a schoolteacher in Dayton, Tennessee, deliberately violated what was known as the “Butler Act.” He was indicted in May of that year. Several prominent names in the legal profession of that time were involved in the trial, including former Secretary of State William Jennings Bryan and Clarence Darrow, who led Scopes' defense team.

Eventually, Scopes was found guilty and ordered to pay a $100 fine. Although the verdict was later overturned, the outcome led many state legislatures to put forward their own laws against teaching science in public schools. It was only in the late 1950s that fear of Soviet domination in the sciences led to the passage of the National Defense Education Act. This law resulted in the publication of new biology textbooks that emphasized the importance of Darwin's theories.

In a larger context, the Scopes trial was about the separation of Church and State. Predictably, there was backlash in many conservative regions of the country that continues to the present day. Tennessee's Butler Law remained on the books until 1967. As recently as 1999, the Kansas State Board of Education removed Darwin's theory from the public school curriculum.

 

Brown v. Board of Education

This case, still studied by educators in training, struck down the 1896 Supreme Court ruling in Plessy v. Ferguson which legalized so-called “separate but equal” facilities for African-Americans under individual state statutes.

The class in Brown v. Board of Education consisted of plaintiffs from five states who alleged that preventing black students from attending white schools was a violation of the Equal Protection Clause, since – largely as a result of institutionalized racism – “separate” facilities were inherently unequal.

In May 1954, the Supreme Court unanimously struck down Plessy v. Ferguson, paving the way for integrated public schools and sounding the death knell for “Jim Crow” laws across the country.

 

Roe v. Wade

The case was first argued before the Supreme Court in December of 1971. A 21-year-old Texas woman, identified at the time only as “Jane Roe,” argued that state law restricting her access to an abortion was a violation of her constitutionally protected privacy rights under the 9th and 14th Amendments.

In a 7 to 2 decision, the Court ruled in January 1973 that Roe did have a right to privacy under the Due Process Clause. However, there was a caveat. Those personal privacy rights must be weighed against the state's interest in protecting the health of a woman and the fetus.

As a result, the decision allowed states to continue to regulate abortions, but only after the third trimester of pregnancy, at which point the fetus is considered viable, or “potentially able to live outside the mother's womb.”

 

Anderson v. Pacific Gas & Electric

This case, which inspired the film Erin Brockovich, was an environmental lawsuit filed on behalf of the residents of Hinkley, California. Plaintiffs alleged that the defendants had knowingly discharged chromium-6, a long-known carcinogen, into the town's water supply.

The case ended in a verdict for the plaintiffs. Pacific Gas & Electric was ordered to pay a record amount of $333 million, clean up the contamination, and discontinue the use of chromium-6.

 

Jenson v. Eveleth Taconite Company

Lois Jenson brought the first sexual harassment class action ever filed in the U.S. on behalf of herself and 14 co-workers who were employed at the EVTAC mine in Minnesota. According to the complaint, the women had been subject to unwelcome sexual advances, intimidation, and other forms of abuse. They had also been discriminated against in hiring, pay, training, and promotions.

By the time Jenson filed the lawsuit, she had been suffering from the hostile work environment practically since the beginning of her employment 13 years earlier. In 1984, she filed a formal complaint with the Minnesota Department of Human Rights. Over two years later, the agency ordered one of the owners of the company to pay Jenson $11,000 in damages; however, the parent company refused. Jenson finally filed her lawsuit in August, 1988.

The liability phase of the lawsuit ended in May of 1993, in which Judge Richard Kyle ruled that the company failed in its duty to prevent the harassment. EVTAC management was ordered to institute sexual harassment awareness programs for employees.

The next step was a trial to determine the amount of damages owed to the plaintiff. During pre-trial depositions, the special master (an official appointed by the judge to hear evidence and make recommendations) allowed defense lawyers to put the women's personal lives under a proverbial microscope.

The final report released in March 1996 labeled the plaintiffs as “histrionic,” and made the intimate details of their private lives part of the public record. The plaintiffs were awarded $10,000 each; however, that judgment was overturned on appeal and a new trial was ordered. In December of 1998, EVTAC entered into a settlement with the surviving plaintiffs for $3.5 million.

 

Exxon Shipping Company v. Baker et. al.

In March 1989, the oil tanker Exxon Valdez ran aground on Bligh Reef in Alaska's Prince William Sound, resulting in the largest oil spill in history up to that time. An inquiry discovered that the ship's captain was intoxicated. Furthermore, the size of the crew was insufficient to safely operate the vessel.

Crew members themselves were inexperienced and suffering from fatigue. Investigative reporter Greg Palast discovered that Exxon failed to perform routine maintenance on the vessel's radar system, which would have warned the helmsman of the impending collision.

The original lawsuit was filed on behalf of 32,000 commercial fisherman whose livelihoods were severely impacted by the spill. In 1994, a federal jury in Anchorage awarded the plaintiffs $287 million in actual damages and $5 billion in punitive damages.

Appeals would go on for over a decade. In the meantime, Exxon, in order to protect itself against the possibility that the award would be upheld, arranged for a line of credit from J.P. Morgan in the amount of $4.8 billion.

Exxon appealed the judgment three times over the next 14 years, arguing that the amount was “excessive” and that the company had already paid out $2 billion in cleanup costs and an additional $1 billion to settle civil penalties and criminal charges.

The case finally reached the Supreme Court in early 2008. In a 5-3 ruling, the damages were reduced to $507.5 million (Justice Samuel Alito, a major stockholder in Exxon, had recused himself). The decision drew criticism from Senator Patrick Leahy as “another in a line of cases where this Supreme Court has misconstrued congressional intent to benefit large corporations.”

 

Newby et. al. v. Enron Corporation

The infamous Enron scandal resulted from the company's unexpected bankruptcy in the fall of 2001, which left shareholders with nothing. During Enron's bankruptcy proceeding, investigators discovered that executives had engaged in a campaign to conceal the company's losses and falsified financial statements to investors.

In a separate lawsuit ending in May 2004, 20,000 former Enron employees were awarded $85 million in compensation for the $2 billion that was lost from their pensions. Defrauded investors, who originally sought $40 billion, settled with the defendants in September 2008 for $7.2 billion. The case is noteworthy for resulting in the largest settlement ever awarded in a securities class action.

 

In re: Volkswagen “Clean Diesel” Marketing, Sales and Products Liability Litigation

What came to be known as Volkswagen's “Diesel Dupe” was discovered by a group of scientists from West Virginia University who had been commissioned by the California Air Resources Board to investigate emissions discrepancies between VW diesel models sold in Europe and vehicles made for the US market. The scientists discovered that engineers at VW had developed software for their vehicles’ main onboard computers that was designed to provide false readings during emissions inspections.

In the US, a class action was filed on behalf of Volkswagen owners whose vehicles were now considered of diminished value. In October 2016, a settlement was approved, giving approximately 475,000 VW owners the choice between selling their vehicles back to the company or having the issue repaired free of charge in addition to monetary compensation. In addition, VW was ordered to pay $4.7 billion for environmental cleanup and prevention.