Introduction
Class action lawsuits serve as a powerful mechanism for holding corporations accountable for wrongdoing on a massive scale. When these cases result in settlements, they can lead to historic payouts that reshape industries and establish new standards for corporate conduct.
In this article, we'll examine the largest class action settlements in history, exploring not just the enormous financial figures involved, but also the stories behind these landmark cases and their lasting impact on both the affected parties and society as a whole.
Tobacco Master Settlement Agreement - $206 Billion
The largest civil settlement in U.S. history isn't technically a class action, but its scope and impact merit inclusion. In 1998, the attorneys general of 46 states reached the Master Settlement Agreement (MSA) with the four largest tobacco companies.
Settlement Amount: $206 billion to be paid over 25 years
The Case: States sued tobacco companies to recover Medicaid and other public health costs related to treating smoking-related illnesses. The lawsuit alleged that tobacco companies concealed the health risks and addictive nature of cigarettes for decades.
Impact: Beyond the financial settlement, the MSA imposed major restrictions on tobacco advertising, especially targeting youth, banned merchandise branding, and required the companies to fund anti-smoking education programs. The settlement fundamentally changed how tobacco products are marketed and sold in the United States.
BP Deepwater Horizon Oil Spill - $20 Billion
The 2010 explosion of the Deepwater Horizon oil rig caused the largest marine oil spill in history, releasing approximately 134 million gallons of oil into the Gulf of Mexico.
Settlement Amount: $20 billion
The Case: The settlement resolved claims from the U.S. Department of Justice and five Gulf states. Additionally, BP faced numerous class action lawsuits from businesses, property owners, and individuals affected by the spill.
Impact: The settlement funds were allocated for natural resource damages, state and local economic claims, and restoration projects throughout the Gulf region. It remains the largest environmental settlement in U.S. history and established new standards for corporate environmental responsibility.
Volkswagen Emissions Scandal - $14.7 Billion
In 2015, the Environmental Protection Agency discovered that Volkswagen had installed "defeat devices" in its diesel vehicles that could detect when the cars were being tested and temporarily reduce emissions to pass inspections.
Settlement Amount: $14.7 billion
The Case: The settlement covered claims from the FTC, EPA, and private consumer class actions. VW admitted to installing software in nearly 500,000 "clean diesel" vehicles in the U.S. that allowed them to cheat emissions tests while actually emitting up to 40 times the legal limit of nitrogen oxides during normal driving.
Impact: The settlement included buybacks and compensation for affected vehicle owners, environmental remediation funds, and investments in zero-emission vehicle technology. The scandal severely damaged Volkswagen's reputation and accelerated the automotive industry's shift toward electric vehicles.
Enron Securities Fraud - $7.2 Billion
Once celebrated as an innovative energy company, Enron's collapse in 2001 revealed one of the most complex corporate fraud schemes in modern history.
Settlement Amount: $7.2 billion
The Case: Shareholders filed class action lawsuits against Enron and its banking partners, alleging they artificially inflated the company's stock price through fraudulent accounting practices and misrepresentations of financial health.
Impact: The Enron scandal led directly to the passage of the Sarbanes-Oxley Act of 2002, which dramatically reformed corporate governance and financial disclosure requirements. The settlement compensated shareholders who had lost billions when Enron's stock became worthless, though many recovered only pennies on the dollar of their initial investments.
WorldCom Accounting Scandal - $6.1 Billion
Following closely after Enron, telecommunications giant WorldCom admitted in 2002 to improperly booking $11 billion in expenses, leading to the largest bankruptcy in U.S. history at that time.
Settlement Amount: $6.1 billion
The Case: Investors filed class action lawsuits alleging that WorldCom and its executives had committed securities fraud by manipulating financial statements to hide the company's deteriorating financial condition.
Impact: Combined with the Enron scandal, WorldCom's collapse significantly eroded public trust in corporate America and accelerated regulatory reforms. The case also resulted in criminal convictions for several executives, including CEO Bernard Ebbers, who received a 25-year prison sentence.
Bank of America Mortgage Securities - $8.5 Billion
In the aftermath of the 2008 financial crisis, Bank of America faced massive liability for mortgage-backed securities sold by Countrywide Financial, which it had acquired.
Settlement Amount: $8.5 billion
The Case: Institutional investors alleged that Countrywide had misrepresented the quality of mortgage loans packaged into securities and failed to properly service the loans after they were sold.
Impact: This settlement was one of many resulting from the subprime mortgage crisis and helped establish standards for mortgage servicing and securitization. Together with other financial crisis settlements, it reinforced the need for transparency in complex financial products.
Tyco International Scandal - $3.2 Billion
In the early 2000s, Tyco's CEO Dennis Kozlowski and CFO Mark Swartz were accused of stealing $150 million from the company through unauthorized bonuses, fraudulent stock sales, and lavish perquisites.
Settlement Amount: $3.2 billion
The Case: Shareholders filed class action lawsuits alleging that Tyco had misrepresented its financial condition and that its executives had looted the company, causing significant stock price declines when the misconduct was revealed.
Impact: The Tyco scandal, along with contemporaneous corporate scandals, contributed to increased scrutiny of executive compensation practices and corporate governance standards. Both Kozlowski and Swartz served prison sentences for their roles in the fraud.
Exxon Valdez Oil Spill - $5 Billion (Later Reduced)
In 1989, the Exxon Valdez oil tanker ran aground in Alaska's Prince William Sound, spilling approximately 11 million gallons of crude oil into pristine waters.
Settlement Amount: Initially $5 billion in punitive damages, later reduced to $507.5 million by the U.S. Supreme Court
The Case: Commercial fishermen, Native Alaskans, and property owners filed class action lawsuits against Exxon for the devastating environmental and economic impacts of the spill.
Impact: The case dragged on for nearly 20 years and ultimately reached the Supreme Court, which issued a landmark ruling limiting punitive damages in maritime cases. The spill led to the Oil Pollution Act of 1990, which mandated double-hulled oil tankers and established liability frameworks for future spills.
Toyota Unintended Acceleration - $1.2 Billion
Between 2009 and 2010, Toyota recalled millions of vehicles due to reports of unintended acceleration issues that had allegedly caused multiple fatal accidents.
Settlement Amount: $1.2 billion (in addition to a $1.2 billion criminal penalty)
The Case: Vehicle owners filed class action lawsuits alleging economic losses due to diminished resale value, while personal injury and wrongful death suits were handled separately.
Impact: The settlement created a customer support program for affected vehicles and compensated owners for the reduced value of their cars. The case highlighted the critical importance of swift and transparent responses to product safety issues in the automotive industry.
Visa/Mastercard Antitrust Settlement - $6.2 Billion
This long-running antitrust case centered on allegations that Visa and Mastercard had fixed credit card swipe fees charged to merchants, costing businesses billions of dollars over many years.
Settlement Amount: $6.2 billion
The Case: Merchants filed a class action lawsuit alleging that Visa, Mastercard, and partner banks had violated antitrust laws by conspiring to set artificially high fees and preventing merchants from steering customers to lower-cost payment methods.
Impact: The settlement is one of the largest antitrust settlements in U.S. history and addressed fundamental issues in the credit card payment system that affect virtually all retail businesses and consumers. The case illustrated how class actions can challenge complex, industry-wide practices that individual plaintiffs could never afford to litigate.
Conclusion
These historic settlements demonstrate the profound impact that class action lawsuits can have on corporate accountability, regulatory frameworks, and consumer protection. While the financial figures are impressive, the most significant outcomes often lie in the structural and behavioral changes these cases force upon entire industries.
Class actions remain one of the most effective tools for addressing widespread corporate misconduct and ensuring that even the largest companies cannot escape responsibility for their actions. For consumers, staying informed about potential settlements is important not just for possible compensation, but also for participating in this vital accountability mechanism.