Holding Corporations Accountable: The Top 10 Class Action Lawsuits

Thu, 12 Jun 2008 23:12:56 GMT

A class action lawsuit occurs when one or more members of a large group, or class, take legal action against a company or other entity whose actions have damaged the class members in a similar way. Although the actual damage or cost to the individual class member may be small, class action cases can produce huge settlements, based upon the number of members in the lawsuit.

The following list comprises the top ten highest settled, or pending, class action lawsuits. Note: although these corporations were found legally and financially responsible for damages, all settlement agreements stipulated that the defendant did not admit to any wrongdoing.

1. Master Tobacco Settlement Agreement – (1998) $206 billion over 25 years

Each individual state, represented by that state’s Attorney General, filed suit against each of the top 6 tobacco companies in state court. To settle the individual suits, tobacco companies Brown & Williamson Tobacco Corporation, Lorillard Tobacco Company, Philip Morris Incorporated, R.J. Reynolds Tobacco Company, Commonwealth Tobacco, and Liggett & Myers entered into a joint settlement.

The individual lawsuits were filed under the different states’ consumer protection and anti-trust laws for the recovery of smoking related healthcare costs covered by each state under their Medicare/Medicaid programs, and to enforce laws designed to reduce smoking by those less than 18 years of age. Under the settlement agreement, the tobacco companies agreed to:

Refrain from directly or indirectly advertising to persons under the age of 18
Refrain from using cartoons in any tobacco related advertisements, and
Refrain from sponsoring concerts, athletic teams and events, and events where participants or spectators are under the age of 18.

The settlement releases the tobacco companies from further litigation in state courts.

2. Dukes v. Wal-Mart Stores – (Filed 2000) N.D.C.A. seeking $11 billion.

A female employee is suing for sexual discrimination under Title VII of the Civil Rights Act of 1964 because after several years of excellent work evaluations, she was denied a promotion. Case was converted to class action status to represent every female employee from 1998 onwards. This case is pending.

3. Enron, Inc. – (2006, Texas) $7.2 billion

Investors in Enron corporate stock filed lawsuits under both federal and state securities laws against Enron Corporation, individual Enron officers and directors, Enron’s accountant Arthur Anderson, individual Arthur Anderson partners and employees, and Enron’s former law firm Vinson & Elkins. The lawsuit’s primary contention was that Enron engaged in fraud by concealing from investors losses by Enron-controlled special purpose entities (the Raptors). Because Enron’s primary corporate losses were attributed to these entities, those losses were not disclosed in annual reports or SEC filings.

4. World Com, Inc. – (2004, New York) $6.2 billion

This class action lawsuit represented investors who held World Com stock from April 29, 1999 through June 25, 2002. Lawsuits were initiated against World Com, and individual employees Bernard Ebbers (CEO), Scott Sullivan (CFO) David Myers (Controller) and Buford Yates (Accounting Director) for fraud. The main charges of fraud stemmed from improperly classifying expenses as “capital costs” and inflating revenue statements with false entries. The Securities and Exchange Commission (SEC) later stated that the earnings and assets had been falsely stated by over $11 billion.

5. Cendant Corp. – (2000, New Jersey) $3.1 billion

A lawsuit representing all investors who held stock in Cendant from May 31, 1995 through and including August 28, 1991 was filed against the company for securities fraud. In 1998, Cendant disclosed that for the past 10 years the company had been fraudulently overstating its income by up to $500 million. Executives created false profit statements which caused an increase in the value of the company’s stock. When the false profits were discovered, the value of the company collapsed. In addition to being sentenced to jail, former Vice-Chairman Kirk Shelton was ordered to reimburse Cendant $3.27 billion at the annual rate of $2,000.00.

6. AOL Time Warner – (2005, New York) $2.5 billion

Investors in AOL Time Warner stock sued the company for fraud under federal securities law. The company improperly accounted for dozens of advertising transactions between 1998 and 2002. The improper transactions created the appearance that they were generating revenue when in reality were just shifting money back and forth. The false earnings statements inflated the company’s value by $1.7 billion.

7. Nortel Networks – (2006, New York) $2.4 billion

Two separate class actions covered investors who held Nortel stock from October 24, 2000 through February 15, 2001, and from April 24, 2003 through April 27, 2004. The lawsuits were filed under federal securities laws for fraud. Nortel was a leading supplier of fiber optic equipment to emerging internet companies. After the internet bust caused the company’s sales to vanish, the company started creating false accounting entries showing steady equipment sales. When the fraud was uncovered, Nortel’s stock eventually fell to $0.47 from a high of $124.00.

8. Royal Ahold – (2005, Maryland) $1.09 billion

A class action lawsuit alleging violation of federal securities laws through fraud was filed against Royal Ahold, individual officers and directors of Ahold, Ahold investment bankers Goldman Sachs, Merrill Lynch, ING and several other outside advisors.

The class represented investors who held Royal Ahold stock from July 30, 1999 through February 23, 2003. The alleged fraud consisted of accounting manipulations by a U.S. subsidiary, U.S. Food Service. Executives used inflated promotional rebates from suppliers as income. This caused the company in 2003 to restate earnings by more than $800 million covering 2000 to 2002.

9. Initial Public Offerings Litigation – (1998, New York) 1.02 billion

A master settlement agreement was entered into covering 309 separate class actions involving the sale of initial public offerings (IPO) of 309 separate companies. Plaintiffs claimed that 22 investment banks who underwrote the sale of the IPO’s illegally sold the IPO shares by forcing interested purchasers to buy additional shares at double or greater the cost of the share. These tactics forced investors to buy more than they wished, increased the demand for the shares which increased their cost, and eliminated all risk for the investment banks. In a normal IPO, the underwriter has usually guaranteed to its client, the company issuing the shares, that they will purchase all unsold shares after the IPO has expired. The banks’ tactics guaranteed that there would not be any unsold shares and increased the banks’ profits at the expense of investors.

10. McKesson HBOC – (2006) $960 million

A class action was filed against McKesson, subsidiaries HBOC and McKesson HBOC, investment bank Bear Stearns & Co. Inc., accountants Arthur Andersen, and several individual employees and directors of HBOC. The plaintiffs claimed that from 1997 to 1999, HBOC fraudulently misstated earnings and revenue. When the fraud was discovered in July 1999, McKesson was forced to restate $327.8 million in prior earning.

Do you feel you have a claim as part of a class action? Are you wondering if you should file a class action or an individual lawsuit? An experienced Lead Counsel Class Action Lawyer, as provided on this site, can advise you on whether filing a class action or an individual lawsuit is best for your case, as well as advise you on what steps you need to take.

Legal Negligence

Mon, 26 Oct 2009 18:01:09 GMT

Negligence is a term that is commonly used to mean that someone did not act with the appropriate level of care. However, when negligence is used as a legal term it has a very specific definition and in order for a person who sustained injuries in an accident to recover damages, each element of the legal definition of negligence must be satisfied.

Generally, there are four elements that a plaintiff must prove in a negligence case. Those elements include:

· Duty of Care: A plaintiff first needs to establish that the defendant had a legal responsibility to exercise a reasonable degree of care toward the victim. The way in which you determine whether a defendant owed the victim a duty of care depends on the jurisdiction in which the case is heard. Some states have adopted a “foreseeability” test to determine if a duty of care exists. In these states, the defendant owed the victim a duty of care if harm to the victim was a foreseeable consequence of the defendant’s actions. Other states determine whether a duty of care exists by applying a balancing test that considers the forseeability of the harm, the degree of certainty that someone will be harmed, the burden that would be placed on the defendant if he tried to prevent the harm and other similar factors.

· Breach of the Duty of Care: Once a duty of care is established, the plaintiff must prove that duty of care was breached. Typically, the duty of care is breached if the defendant knew what the consequences of his or her actions would be or failed to act like a reasonable person would have acted given the circumstances. The reasonable person standard considers both the location and qualifications of the defendant. For example, a cardiologist is compared to other cardiologists in his jurisdiction when the court is deciding if he failed to act like a reasonable person would act in a medical malpractice action.

· Causation: If a defendant is found to have breached his or her duty of care, the next step for the plaintiff is to prove that the defendant’s actions caused the plaintiff’s injuries which would not have happened but for the defendant’s actions. For example, if the victim was hurt in a car accident then the victim’s injuries must have occurred because of the defendant’s breach of his duty of care (for example, speeding) and not for any other reason (for example, the victim suffered a heart attack while driving).

· Damages: If a plaintiff is successful in proving that the defendant had a duty of care that was breached and that caused the victim’s damages then the plaintiff must prove that he or she is entitled to damages pursuant to state law.

It is important to remember that negligence cases are most often tried in state court and that while many jurisdictions follow the basic definition of negligence provided above, every jurisdiction has its own laws about what constitutes legal negligence. Therefore, it is important to contact a personal injury attorney in the state in which your accident occurred if you believe that you might have a negligence case in that jurisdiction.

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Holding Corporations Accountable: The Top 10 Class Action Lawsuits

Legal Negligence