Survey Reports New Class Action Suits on the Rise in the Wake of the COVID-19 Pandemic
At the start of the COVID-19 pandemic, many in the legal community expressed concern over the possibility that it would result in a significant slowdown in the number of new cases filed, notably class action cases. However, as the country begins to move forward and a “new normal” emerges, legal experts report a significant increase in the number of newly filed-class action lawsuits.
The 2020 Carlton Fields Class Action Survey was recently released, a report comprised of data from interviews with chief legal officers, general counsel and direct reports to general counsel at 400 large companies across a wide range of industries. The survey states that as of May 2020, corporate America is facing more than 500 new class action suits stemming from COVID-19 and shutdown-related matters. It further details the newly filed class actions associated with the pandemic and reports that:
- 25% have been filed against insurance carriers over business interruption coverage claims;
- 25% have been filed against educational institutions over tuition refunds;
- 10% have been filed against gyms, venues, and other entertainment related events;
- 8% have been filed against the airline industry and the government respectively; and
- 7% have been filed against financial institutions over the Cares Act claims.
The survey conjectures that the full breadth of pandemic-related class action suits is yet to be seen as the risk remains prominent while the country continues to navigate the process of reopening.
The survey also indicates that Labor and Employment law may experience a significant increase in the volume of cases filed, attributable to a record number of layoffs across numerous industries. In addition, remaining employees are likely to face serious changes in work practices, as the new reality resulting from the pandemic continues to develop.
A second, unexpected result of the pandemic and rise in new class action cases filed, is that existing class action suits may ultimately settle at a faster pace, as corporate defendants experience mounting pressure of defending multiple expensive litigations.
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