Legal action costs companies both time and money, particularly if it goes to court, and it can even lead to bankruptcy. According to the Harvard Business Review, US corporations pay more than $20 billion (£14.3bn) a year to lawyers. Of course major lawsuits are not limited to American companies, and many major companies from around the world have found themselves in sticky legal situations. Click or scroll through as we look at some of the costliest court battles.
On 23 March the Ever Given container ship gained global notoriety when it became stuck in the Suez Canal for six days. The ship, which is owned by Japanese company Shoei Kisen Kaisha, caused a blockage of 442 vessels in one of the world’s busiest waterways and prevented the movement of an estimated $9.6 billion (£6.9bn) of goods each day that it was aground. The vessel was finally refloated on 29 March but now finds itself impounded by the Suez Canal Authority, which is demanding $916 million (£658m) in damages to release the ship. A full breakdown of the costs isn't available, but the bill includes a $300 million (£215m) claim for “loss of reputation” and a $300 million (£215m) salvage bonus. The Egyptian authorities are currently negotiating the Ever Given’s confinement and the cost of its release with the ship’s insurers.
Traders working at investment giant JP Morgan were found guilty of market manipulation for the company’s gain between 2009 and 2016. The practice, known as 'spoofing', involves faking either demand or lack of demand to increase or decrease prices. Fifteen people involved in the trading of metals futures and Treasury securities landed the investment bank with a $920 million (£696m) fine after using the illegal method over eight years. Their actions cost other participants in those markets $300 million (£227m). The penalty is the biggest ever given out by the Commodity Futures Trading Commission.
Retired American football players sued the National Football League (NFL) over concussions and other head injuries that have left them with serious, long-term health problems. The case claimed that the NFL knew of the risks and failed to warn and protect players. While the league denied these claims, it agreed to a settlement in 2015 which will total up to $1 billion (£771m) in payouts. So far retired players have received around $720 million (£555m) for neurocognitive problems, including more than $300 million (£231m) for dementia-related claims. As of October 2019, more than 20,500 players had registered as part of the settlement.
Between 2015 and 2019 French authorities investigated whether Google had been paying enough tax. In Europe, Google is headquartered in Ireland, a country where corporation tax is low at 12.5%. French officials argued some of that business has been done in France, so Google should pay tax on it. In September 2019, the two reached an agreement, and Google agreed to pay a €500 million ($488m/£451m) fine, plus €465 million ($547m/£419m) in back taxes, adding up to around $1 billion (£771m).
In 1993 a Christmas Eve collision in California left a family severely burned. A drunk-driver had hit the back of their car at a red light and the fuel tank exploded. The victims sued carmaker General Motors, claiming it knew the rear location of the tank on this model, a 1979 Chevrolet Malibu, was unsafe but didn’t change the design as it wanted to save money. A jury ruled in the victims’ favour and awarded them $4.9 billion (£3.2bn) in July 1999. However, the judge reduced the payment to $1.2 billion (£862k) the following month.
The US Justice Department and Abbott settled a lawsuit for illegal marketing in May 2012. Its medication Depakote was only approved in the US for treatment of seizures. However, the pharmaceutical company also advocated the drug for schizophrenia and dementia. Abbott pleaded guilty to misbranding Depakote, and admitted that from 1998 to 2006 the company maintained a “specialised sales force” trained to market the medicine in nursing homes for elderly dementia patients. The move cost the company $1.5 billion (£960m).
In 2004 GE’s finance division purchased a company called WMC Mortgage, which offered home loans to customers with bad credit, known as subprime mortgages. In fact, according to the US Federal Reserve it was one of the top subprime lenders in the years leading up to the 2007/8 mortgage crisis. The US Department of Justice claimed that GE hid the poor quality of its loans when it repackaged them into investment products. GE denied this, but in April 2019 agreed to pay a $1.5 billion (£1.2bn) fine.
The US Department of Justice sued Barclays in 2016, claiming it caused billions of dollars in losses to investors from 2005 to 2007. The case centred on Barclays’ complex financial instruments that were made up of subprime mortgages held by people with bad credit. It said Barclays misled investors about how likely the mortgage holders were to keep up repayments, meaning the financial instruments were much riskier than advertised. Barclays agreed to pay $2 billion (£1.5bn) to drop the case in 2018.
This April, Chinese e-commerce giant Alibaba accepted a record fine after anti-monopoly investigations ruled the company had been abusing its market position. Regulators announced it had unfairly restricted merchants from doing business or running promotions through rival platforms. Alibaba accepted a $2.8 billion (£2bn) fine, which is equivalent to just 4% of the company’s 2019 domestic revenue. The Chinese tech firm also agreed to lower business costs and entry barriers currently faced by its merchants. The multibillion-dollar penalty is seen as a warning to China’s other big tech firms and a reflection of the government’s determination to ensure no single company becomes more powerful than the country’s ruling Communist Party.
After losing several lawsuits in 2016 and 2017 where individuals claimed that they had developed ovarian cancer and other health issues due to suspected asbestos in talcum powder, Johnson & Johnson had to pay out millions. But that got worse in 2018 when a Missouri jury awarded $4.7 billion (£3.6bn) to 22 women and families who claimed that the manufacturer had failed to warn them of the dangerous ingredients. Johnson & Johnson appealed the verdict, and the damages charges were reduced to $2.1 billion (£1.6bn) in June 2020. However, the company wants to appeal that verdict again as it insists that the products are completely safe to use. That said, in October 2020 Johnson & Johnson agreed to pay out a further $100 million (£73.2m) to resolve more than 1,000 lawsuits against its talc product, doing so without an admission of liability. It has, however, stopped selling Johnson’s Baby Powder in the US and Canada after a slump in sales following the lawsuits’ media attention. With around 20,000 lawsuits still outstanding, it has been estimated that it could cost Johnson & Johnson as much as $10 billion (£7.3bn) to settle the matter for good.
In 2004, the CEO and CFO of Tyco, a supplier of fire protection, CCTV and other security technology and services, were found guilty of stealing $600 million (£330m) from the company to fund their extravagant lifestyles, including a lavish Manhattan apartment that was furnished with a shower curtain that cost $6,000 (£3.3k). Investors in Tyco bonds, including state pension funds, then successfully brought a class action lawsuit against the company, claiming they were not made aware of criminal activities going on within the firm when they invested. In 2007 the company agreed to pay $3 billion (£1.5bn) to shareholders.
In 2015, US truck owners sued Toyota, claiming its vehicles had deficient rust protection that might lead to bigger structural problems. The lawsuit concerned the Tacoma and Tundra pick-up trucks and Sequoia SUVs produced roughly between 2005 and 2010. Toyota would not admit to wrongdoing, but agreed to a $3.4 billion (£2.6bn) settlement in 2016 that would pay for inspections and replacing the frames of affected vehicles, which would cost approximately $15,000 (£11.6k) for each one.
In 2012, the Federal Trade Commission (FTC) sued Facebook over privacy violations. One particular concern was that users could set their privacy to just “friends”, however any apps those friends chose to use would also be able to access the first person’s data. This included relationship details, religious and political views, work history, photos, and the videos they watched. The FTC announced the $5 billion (£3.9bn) settlement in July 2019, which also required Facebook to implement new privacy measures.
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In 2015, some of the world’s biggest banks were made to pay $5.15 billion (£3.3bn) in penalties after an investigation revealed that some of their traders were complicit in moving foreign currency rates for their own financial gain. Barclays, Citigroup, JP Morgan and RBS pleaded guilty to manipulating the US dollar and euro market, which is a $500 billion (£388bn)-a-day market. In the same chain of investigations, Swiss bank UBS was given a fine of $545 million (£423m) for its part in rigging interest rates.
The US Justice Department said GSK illegally promoted depression medication Paxil for children when it was only approved for adults. Similarly, it claimed Wellbutrin, approved for Major Depression Disorder, had been marketed for other uses such as weight loss, saying GSK paid doctors millions of dollars to promote the drug. It also failed to report safety information about Avandia, a diabetes medicine. The settlement of $3 billion (£1.9bn) in July 2012 was the largest payment levied at a pharmaceutical company in the US. In 2017, following another lawsuit the company had to pay $3 million (£2.3m) to Wendy Dolin, the wife of a man who took his own life after taking a generic form of Paxil.
More than 12 million US retailers, including big names such as Amazon and Costco, sued Visa and Mastercard, as well as several banks, over fees charged to merchants when customers pay by card. The court battle has been ongoing for more than a decade with stores saying the fees are excessive. In late 2018 the court preliminarily approved a settlement at $6.2 billion (£4.7bn), with Visa paying the largest share of $4.1 billion (£3.2bn). Things are set to get worse for Mastercard now that the UK’s Supreme Court has ruled in merchants’ favour, which leaves the company facing compensation charges of £14 billion ($19.1bn) to refund card fees that made products more expensive to buy. If European merchants follow suit, the total fines could rack up to a total of €68 billion ($80bn/£62.1bn).
Launched in 1983, this telecommunications giant, also known as MCI, grew rapidly through acquisitions over 20 years, until 2002 when a team of employees worked undercover to reveal a massive accounting fraud totalling $11 billion (£7bn). It found that the firm had misreported profits and expenses for years. WorldCom’s CFO and controller were arrested, the firm filed for bankruptcy and investors sued the company, which settled the matter in 2005. A US judge imposed a $3.6 billion legal settlement, which combined with an earlier settlement of $2.6 billion, led to a $6.2 billion (£3.5bn) payout for investors.
In the 1990s thousands of women sued silicone breast implant manufacturers, of which Dow Corning was the largest. Women claimed their implants caused long-term health problems, such as leaking implants, rheumatoid arthritis, lupus and other autoimmune diseases. Dow Corning admitted that its implants can rupture, but denied accusations that its product caused the diseases. In 1998 Dow Corning offered a $3 billion (£1.8bn) fund for women who have experienced health problems due to breast implants. This was followed by its agreement to a $3.2 billion (£2bn) bankruptcy plan to compensate women. Women impacted by the scandal were able to claim for compensation until June 2019.
In 2013 a US man sued Janssen Pharmaceuticals, a subsidiary of Johnson & Johnson, saying its drug Risperdal, prescribed for patients with autism, caused him to grow breasts. He started taking the drug in 2003 as a nine-year-old child. Charges included claims that the manufacturer failed to warn doctors about this and other side effects in children. The jury ordered that the man be paid $8 billion (£6.2bn) in October 2019, which was reduced to $6.8 billion (£5.3bn) at the beginning of 2020.
Brazilian mining company Vale has recently agreed to the largest settlement in the country’s legal history after the collapse of its mine-waste dam in Brumadinho, Minas Gerais on 25 January 2019. The $7 billion (£5.1bn) payout will go towards compensating the loved ones of the 270 people who were killed by the disaster, as well as reversing the colossal environmental impact the mudslide had on the local rivers and surrounding landscape. The Brumadinho dam disaster came just 20 months after the collapse of another Vale-controlled dam (known as the Fundao dam) in 2015, killing 19 people. BHP, the joint-owner of the Fundao dam, is now facing a $6.3 billion (£4.6bn) lawsuit following a group claim put forward in Britain on behalf of Brazilian citizens. As the legal action duplicates proceedings in Brazil, and the company has already contributed £1.3 billion ($1.8bn) to the Renova Foundation which has helped indigenous families financially as well as funded the rebuilding of villages and water supplies, BHP described the new action as “pointless”.
Working in energy, communications and many other industries, Enron claimed it was making revenues of more than $100 billion (£77.6bn) at its peak, but many of its assets, or sources of income, were made to seem larger than they actually were or did not actually exist. In the early 2000s it became the poster child for accounting scandals and corruption in the corporate world, and it fell apart in 2001. Shareholders and investors lost a combined sum of $74 billion (£57bn) in the years leading up to Enron's bankruptcy. Unsurprisingly they sued and secured a settlement for $7.2 billion (£3.6bn) in 2008. The scandal even inspired a play and a film.
In October 2020, Russian energy corporation Gazprom received a 29 billion złotys ($7.6bn/£5.9bn) fine from Polish watchdog UOKiK for building a gas pipeline without Warsaw’s approval. The Nord Stream 2 runs from Ust-Luga, Russia to Greifswald, Germany, via the Baltic Sea, and will double Russia’s gas export capacity to Europe. Gazprom leads on the pipeline’s development, but other companies that helped to fund the $11 billion (£8.5bn) project, including Germany’s Uniper and Austria’s OMV, have also been fined and will no longer be financing the pipeline, according to UOKiK. This is not the first fine administered by the Polish watchdog – in August it demanded Gazprom pay 213 million złotys ($55.6m/£43.2m) for a lack of cooperation during the project, which Polish authorities believe will hamper their access to natural gas and increase Europe’s economic dependency on Russia. Gazprom filed an appeal against the latest ruling in November.
The maker of OxyContin, a prescription pain medication known as an opioid, had defended allegations it played a role in a recent public health crisis because it downplayed the risk of addiction to the drug. However, lawyers announced in September 2019 that a $12 billion (£9.3bn) settlement was reached, and the company, which is owned by the Sackler family, was forced to file for bankruptcy. A reduced settlement deal of $8.34 billion (£6.1bn) was then agreed upon by brokers and federal lawyers in October last year following Purdue Pharma's guilty plea. Reports estimate it will consist of a $3.54 billion (£2.7bn) criminal fine, a $2 billion (£1.6bn) criminal forfeiture and a $2.8 billion (£2.2bn) civil penalty. Purdue Pharma isn’t the only company shelling out a fortune because of ties to OxyContin – consulting giant McKinsey & Co. recently agreed to a $573 million (£419m) settlement over its part in advising drug manufacturers to aggressively boost sales of the opioid painkillers.
In 2019, a California jury ruled in favour of a couple in their seventies who claimed that Monsanto’s Roundup weed killer caused their non-Hodgkin lymphoma, a type of cancer. The lawsuit was the biggest of 125,000 cases that have been made against the company, and led to a payout of $2 billion (£1.6bn) by Monsanto, which was acquired by German chemicals firm Bayer in 2016. In June last year, Bayer confirmed that it would pay up to $10.9 billion (£8.5bn) to settle claims based on Roundup’s carcinogenic effects. The company agreed to pay up to $9.6 billion (£7.5bn) to cover existing lawsuits, and in February a $2 billion (£1.5bn) settlement for an initial four-year period to cover any future claims was proposed.
In early 2019, a Canadian court ordered these three tobacco companies to pay more than CA$15 billion ($11.4bn/£8.8bn) to former customers who say the firms didn’t warn them of the health risks of the addictive habit. It was an appeal of a 2015 ruling in Quebec, with the tobacco companies arguing that Canadians do have a high awareness of these risks. The higher court upheld the decision.
According to the California Department of Forestry and Fire Protection, PG&E’s equipment, such as power lines, started at least 17 of 21 major wildfires in 2017, as well as a major fire in 2018 and the 2015 Buttle fire. Insurance companies who have made payments to individuals and businesses that suffered from fire damage sued the energy supplier in early 2019. They reached the $13.5 billion (£10.5bn) settlement for the wildfire claims in December that year.
In the 1990s millions of people took Pondimin diet pills, better known as 'Fen-Phen'. The government banned the drug in 1997, and studies found it caused heart valve problems that may take years to develop. In a 1999 settlement the company agreed to pay $3.75 billion to those with heart valve injuries. As of 2017, lawyers say there are still claims against American Home Products (now called Wyeth), and analysts estimate the damages paid out could total more than $20 billion (£15.6bn).
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On 20 April 2010, the Deepwater Horizon oil rig exploded in the Gulf of Mexico, killing 11 people and injuring 17. For 87 days oil spilled into the ocean, harming or killing more than 82,000 birds, wiping out more than 6,000 sea turtles and causing the death of nearly 26,000 marine mammals including whales and dolphins. The US government approved an environmental damage settlement of $20.8 billion (£15.7bn), the largest on record, in April 2016. The money is being used for projects to attempt to reverse the damage and improve the areas affected, for example $215 million (£167m) will go towards restoring marshes in Louisiana, while $28 million (£21.7m) has been spent on park and community centre improvements in Tampa, Florida.
After it was revealed in 2015 that the German vehicle manufacturer had installed software on its diesel cars that “cheated” exhaust emissions tests, allowing the company to produce cars that were producing more than 40 times more emissions than is legal, Volkswagen has paid out more than €31.3 billion ($36.9bn/£28.4bn) following multiple court cases. And it has still not heard the last of this issue. In June last year, the states of Florida and Utah won an appeal against the carmaker that means it could have to pay more billion-dollar fines in those states, although Volkswagen asked for those decisions to be reversed in January. A similar case against the company has recently been brought forward by a lawyer in Ohio, and this month Australian regulators dismissed the company’s appeal against a AU$125 million ($98m/£69m) fine in relation to the global emissions scandal. Meanwhile, in England and Wales 90,000 motorists have sought action against the Volkswagen Group, and in April last year they won the first stage in court proceedings.
Tobacco companies and state governments across America reached a major settlement of $246 billion (£150bn) in November 1998. That's the equivalent of $391 billion (£286bn) in 2021 money. Known as the MSA, this includes annual payments over 25 years for healthcare costs related to tobacco. It also changed the rules for how products are advertised, how low they are priced, and paid for an educational campaign to help prevent children from picking up the habit.