Gazette features editor Eduardo Reyes recently wrote about his $51 windfall from a US class action that he was unaware he was involved in (17 March). I have benefited similarly. Having purchased some expensive A&M jeans while living in California, I was automatically added to a class action brought because the jeans were advertised as ‘Made in USA’ when they were not. I got three new pairs of jeans out of that one.
Class actions are everywhere in the US. In 2025, plaintiffs filed more than 13,000 in US federal courts alone, equating to almost 36 filings every day. That ignores the many thousands filed in US state courts. Class actions have become an existential threat to companies, not just in the US, but also here.
In 2025, the combined value of the 10 largest US class actions totalled $79bn, according to global law firm Duane Morris’s 2026 Class Action Review. To put $79bn into perspective, that is the entire GDP of Venezuela, double the GDP of Ethiopia, or equivalent to the total value of annual trade between India and all ASEAN countries.
As lawyers, we all know the social benefits of allowing class actions: companies are discouraged from abusing the ‘little guy’, who will not have the guts or finances to get redress for wrongs perpetrated by the big, nasty corporates. In class actions, the little guys band together and, alongside principled, hard-working attorneys, they bring the bad guys to heel, countering the excesses of corporate greed. The folklore would have you think of Julia Roberts in Erin Brockovich: the tenacious paralegal who fights for compensation for the small community of Hinkley, California, which has been systematically poisoned by a large water utility company.
But classic consumer class actions for dangerous products such as cars and medicines are a tiny part of the industry. In a 2025 consumer action, Visa and Mastercard agreed to pay $38bn to merchants for excessive fees.
Class actions are now common in areas such as securities (think Elon Musk’s purchase of Twitter), though I have always thought that the notion of shareholders suing the company in which they own shares is a little odd. In fact, a 2014 study by Navigant (Economic Consequences: The Real Cost of U.S. Securities Class Action Litigation) found that shareholders lose $39bn annually on the announcement of these lawsuits, compared with the average of $5bn that investors receive from settlements.
Defendants are often fighting claims from multiple levels of the food chain; from consumers, through to retailers and wholesalers, all claiming losses. And corporate plaintiffs are increasingly looking to ‘opt out’ because they think that they can get a higher payout than if they remain part of a class. So, defendants are fighting single plaintiffs at the same time on the same facts.
Data breach/privacy class action litigation is a massive growth area. Data privacy class actions totalled more than 1,800 last year, with an average of more than 150 filings per month. This represents more than 25% growth over 2024 and more than 200% since 2022.
Then there are class actions brought by local state attorneys general, some of which appear to be politically motivated. I am thinking of the action several AGs and the Department of Justice brought against the software firm RealPage, alleging that its AI-driven software acted as a ‘conspiratorial hub’ to inflate house rental prices.
In 2019, the New York attorney general unsuccessfully brought a lawsuit alleging ExxonMobil defrauded investors by downplaying the financial risks of climate change regulations. The action failed because the court found nobody was misled.
My experience as a corporate defendant was that the US class action industry is primarily benefiting claimant lawyers, and ironically also other corporates.
When I was general counsel at Sony Electronics US, we were involved in several multi-party competition class actions. Many of these were ‘bet the company’ in terms of the amounts being claimed. I recall a directions hearing in federal court in San Francisco with more than 60 lawyers attending for the dozen or so class-action plaintiffs; and a similar number for the 10 or so defendants. All these lawyers had to be paid to attend, and some had a significant financial stake (up to 40%) in the final outcome. Others were working with litigation funders, further muddying the waters when it came to settlement discussions.
One such suit followed European Commission findings that we had been involved in cartel activity in one of our component businesses. In one of these cases, we had opted to make a so-called ‘leniency program’ admission to reduce an inevitable fine from the European Commission. It felt unfair to me that, in doing so, we laid ourselves open to class action civil suits in several jurisdictions as a direct result. Layer on to this the fact that individual employees can sometimes be the target of criminal proceedings – meaning that they cannot necessarily assist in your civil action defence and may even engage in plea-bargaining – and you are looking at a world of pain.
Another action we were subject to related to a highly competitive components business in which we were involved. This industry was so competitive that our customers insisted we bid against our competitors in online auctions. The action was brought because, during these auctions, our customers would often tell us what prices our competitors were offering – to drive down our prices. This only benefited consumers. Despite the very flimsy logic that this price-sharing was anti-competitive, we had to spend millions fighting this class action brought by end-users and retailers of the final product in which our components ended up.
I saw how law firm fortunes were joined at the hip with their litigation choices. For a couple of years, we had been fighting what we felt was a very weak class action brought due to technical problems with the ‘trackball’ on one of our VAIO laptop computers. The trial was approaching and we heard that the plaintiffs were looking for a quick settlement. The reason was that the small firm acting for the plaintiffs had recently started a class action against Donald Trump in connection with Trump University. They did not have enough resources to take on that case while pursuing us.
This is not to excuse alleged wrongdoing by my employer, but the litigation cost, which was experienced at similar eye-watering levels by all our competitors, definitely had a negative impact on prices. I do not think that the threat of class actions affected our product development or product quality (which was always world-class).
I couldn’t help wondering if the litigation was fulfilling any of its stated goals of improving business practices and increasing corporate accountability.
Jonathan Pearl is a civil mediator and former executive vice president of Sony
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