The value of U.S. shareholder class action settlements in the first half of 2022 totaled $2.32 billion, the exact amount as the same period in 2021. However, the quantity of settlements in the first six months of the year increased by 23.7%, from 59 in 2021 to 73 in 2022. The average value of settlements in 2022 was $31.8 million (or 19.1% less than the $39.3 million average in 2021).
The largest settlement so far in 2022 was with Teva Pharmaceutical Industries at $420 million, accounting for 18% of the total value of settlements. Interestingly, the largest settlement from the first six months of 2021 was driven, in part, by one mega settlement: Valeant Pharmaceuticals at $1.21 billion, accounting for 52.2% of the total value of settlements. (2020 totals were also driven, in part, by a specific billion-dollar mega settlement: American Realty Capital Properties at $1.025 billion.)
The Teva litigation was managed within the United States District Court for the District of Connecticut. The initial complaint was filed back on November 6, 2016 – 5.1 years from complaint to settlement. The average class action of the 73 settlements during the first half of 2022 took 3.58 years, an increase of 10.2% from the 3.25 years of the 59 settlements during the first half of 2021.
Of the 73 settlements during the first six months of 2022, the most popular court venues were as follows:
- USDC California (Central) – Nine settlements valued at $288.7 Million
- USDC New York (Southern) – Nine settlements valued at $251.1 Million
- Delaware Court of Chancery – Seven settlements valued at $232.2 Million
- USDC New Jersey – Seven settlements valued at $141.1 Million
- USDC California (Northern) – Five settlements valued at $255.0 Million
Looking outside the United States, the value of shareholder class action settlements increased significantly during the first six months of the year, specifically in Australia, Canada, and Europe/Africa:
- Australia: AUD $143,000,000 from two settlements; an increase of 33% from the AUD $107,250,000 from three settlements during the first half of 2021. The 2022 number was driven by the Crown Resorts resolution for AUD $125,000,000 on April 28th.
- Canada: CAD $127,500,000 from two settlements, an increase over the CAD $6,450,000 from two settlements in 2021. The 2022 number was driven by the CIBC resolution for CAD $125,000,000 on January 17th.
- Europe/Africa: The Steinhoff International investor action was officially resolved on March 15, 2022 at €1,400,000,000 – ending litigation in the Netherlands and South Africa. This action became the largest non-U.S. investor-related settlement of all-time. There were no public shareholder settlements during the first six months of 2021.
For antitrust related cases, the settlement value in dollars dropped in the first half of the current year, from $133.5 million in 2021 to only $15.7 million in 2022 (only one action settled during the first six months of 2022). However, investors will have ample opportunities to recover lost assets in the near future as a half-dozen antitrust actions have scheduled settlement dates in the second half of 2022 totaling $600 million.
While the settlement amounts continue to bring good news to investors, there are potential areas of concern shareholders need to be aware of. Specifically, the quantity of newly filed shareholder class actions continue to decline.
As previously reported by ISS Securities Class Action Services, a record number of new complaints were filed in U.S. Federal courts from 2017 through 2019, followed by a 22% drop in 2020 and a further 33% reduction in 2021. This two-year decline was primarily related to the lower quantity of merger-objection cases. The drop in newly filed cases continued into its third year, as the first half of 2022 had 103 newly filed complaints in U.S. Federal Courts (versus 110 newly filed complaints from the first half of 2021). (Note: Shareholder class actions in U.S. State courts have mirrored the three-year decline as well.)
ISS Securities Class Action Services will continue to monitor all shareholder class actions, and update its clients with key industry trends, developments, and statistics.
By Jeff Lubitz, Managing Director, ISS Securities Class Action Services