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How the pandemic is fueling class action lawsuits

  • 21 July, 2020

A new survey from Carlton Fields indicates that the economic fallout caused by the COVID-19 pandemic might also be driving a sharp increase in class action lawsuits.

While the survey does admit that class action lawsuits have already been on the rise, even before the pandemic, the large spike of cases is a recent development and thus most likely related to the disruptions COVID-19 has brought into society.

Carlton Fields’s survey found 560 COVID-19 related class action lawsuits since the shutdowns and restrictions of many states. Moreover, of those 560 class actions, more than 100 of them were filed in California alone. The class actions are largely against insurance companies for the cutoff of coverage as well as against universities and educational institutions regarding refunds.

This data was gathered by interviewing chief legal officers, general counsel, and by the direct reports of over 400 large companies across industries.

The survey goes on to explain that 40% of in house counsel believe that the rise of COVID-19 related class actions, will cause more companies to quickly settle preexisting cases. Again, the survey is only reporting what experts believe will soon happen, as it is yet too soon to gather this specific data. Yet, Julianna Thomas McCabe, a shareholder for Carlton Fields, strongly speculates that this will be the case since plaintiffs might also be feeling pressured to settle due to the effects of the pandemic. The pandemic, thus, could then also lead to a surge of settlements, both in favor for the plaintiffs and for the companies.

Another expectation McCabe and other researches have had is that the pandemic will also incite an increase in employment and labor class actions in the coming months. McCabe states that, “Historically, in our survey, the top category of class actions is usually labor and employment cases, and we haven’t seen the breadth of those cases that I think are going to come out of this,” she said. “There have been layoffs in many, many industries. There are changes in work practices in virtually every industry. And I think companies are concerned about that.”

While the Carlton Fields survey has not yet found in its data that expected increase in labor class action suit, what other research does show is an increase in workplace lawsuits since the start of the pandemic, particularly in California and Texas.

Overall, the Carlton Fields survey places 2020 as a year that is on track to see a significant increase in class action activity. Yet, what the survey also indicates is that as the pandemic continues, more and more litigation is being connected to the disruptions of COVID-19.

Source: law360

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