Crime doesn’t pay (except when it does) and the same applies to corporate malfeasance, faulty product design or bad behavior of any stripe that falls short of a crime but is still legally actionable. America’s earned a reputation as an unusually litigious country, with Americans of many classes able to obtain cheap legal advice and representation, and whether that’s a good thing or not probably depends on whether you are so annoyed by stories about people suing shopping malls for not adequately protecting customers from squirrel attacks that you’re willing to give up the opportunity to sue your doctor for accidentally taking out the wrong kidney. Here we’ll take a look at a few of the biggest legal settlements in American history.
BIGGEST DIVORCE SETTLEMENTWho says you can’t put a price on love? It wasin fact the 1980s new-wave group The Knack who claimed that you can’t put a price on love, but any number of divorce and alimony lawyers could put forth a convincing argument to the contrary. For instance, Australian media mega-mogul and possible skeleton witch-king Rupert Murdoch found the price of splitting up with his second wife and marrying 30-year-old paramour Wendi Deng to be a total of $1.7 billion, with $110 million of the settlement paid in cash.
The massive fee presumably reflected Murdoch’s enormous personal wealth, and considering that he and Deng sealed the deal just two weeks later (probably after signing a prenup) it’s likely that Murdoch’s ex had pretty strong evidence of unfaithfulness on his part. What do you say to that, 1980s new-wave group The Knack? Yeah, that’s what I thought, losers.
BIGGEST WRONGFUL-DEATH SETTLEMENTWhile wrongful-death claims can be brought against individuals (e.g. O.J. Simpson, who has the head-scratching distinction of not being technically a murderer but still legally and financially responsible for stabbing two people to death) they’re most often brought against corporations and other entities responsible for products or services that are technically not criminally bad or dangerous, yet still end up killing people.
When David and Ann Drye burned to death in a horrific plane crash in June 1999, the NTSB originally chalked it up to pilot error in spite of witnesses who claimed the right engine of their Cessna 421 stopped shortly after takeoff. The Drye Estates’ lawyer commissioned a number of engineering studies on the right engine, including electron microscope surveys and metallurgical analyses. The results that came back indicated a vibration-damping plate had been mounted incorrectly, salting the engine oil with tiny flakes of metal that over time built up to a level that stopped the engine dead. Faced with this and other evidence, engine manufacturers Teledyne Inc. finally settled for $26 million.
BIGGEST SECURITIES-FRAUD SETTLEMENTThere’s a great deal of overheated rhetoric about why there aren’t more banking executives in prison, or being forced to work at soup kitchens, or being chased around the streets with flaming torches, considering that even if they managed not to violate the letter of the law with their business practices, surely there must have been something shady and illegal about how they managed to set the entire economy on fire before shoving it headfirst into a toilet.
As it turns out, the Securities and Exchange Commission decided in most cases to pursue settlements rather than criminal charges. These are much easier to obtain, ruffle considerably fewer feathers among the financial lobbyists and congressmen who have the power to fire SEC apparatchiks, and makes it look like something is being accomplished somehow, which is why the $550 million settlement Goldman Sachs was ordered to pay (the largest amount in the SEC’s history) was made out to be such big news.
In fact, for most companies, being forced to pay $550 million after provably misleading buyers of mortgage-related investments would probably be a significant setback, but Goldman Sachs being Goldman Sachs, they were able to pay off the settlement after rooting around in the break-room couch cushions for a while, at which point they were free to continue their newest project: a machine that turns shredded and incinerated newborn puppies and kittens into tiny flakes of precious gold.
BIGGEST FALSE-ADVERTISEMENT SETTLEMENTRemember back in 2009 when shoe manufacturers across the world tried to convince us that if you wore sneakers that made you look like an 8-year-old with a few extra chromosomes, you’d be burning more calories or toning more muscles or somehow walking more exercise-y?
For a few months these shoes were a helpful way of determining how dumb someone was just by looking at their feet, until overwhelming scientific evidence and personal experience finally got people to realize they’d dropped a hundred or so bucks on the ugliest non-Croc-shoes ever designed. Unfortunately for shoe companies like Skechers, the Federal Trade Commission was paying close attention to all the times it was claimed that their ShapeUp-brand shoes would increase muscle density by x percent (x being any convincing-sounding number that could be pulled out of a scientific report and/or somebody’s ass) and brought the company to court -- specifically for taglines like “Get in Shape Without Setting Foot in a Gym” -- and failing to disclose that a chiropractor featured in one of their ads was not only a Skechers employee, but was married to one of the company’s marketing executives.
Skechers eventually settled out of court for $40 million, although some observers felt the company should have been more harshly penalized for allowing a chiropractor to pretend to be some sort of medical professional in the first place, and if you’re not ashamed to admit that you were dumb enough to purchase a pair of Skechers’ dorky, weirdo, boat-shaped shoes, you can apply for a full refund at the FTC’s website.
BIGGEST CRIMINAL SETTLEMENTIt’s already been a rough year to be an unethical pharmaceutical conglomerate under Justice Department investigation, what with Abbott Laboratories receiving a $1.6 billion fine because of its marketing for Depakote and Johnson & Johnson taking a $2 billion hit for promoting its buggy antipsychotic, Risperdal. So far, the biggest loser has been GlaxoSmithKline, who plead guilty at the beginning of July to criminal charges for withholding safety data and promoting their antidepressants Paxil and Wellbutrin for medically unapproved uses, and is now set to pay out at least $3 billion.
As the case was tried under the federal whistle-blower law, there was no specific human target of the investigation, which is something former New York attorney general, governor and illegal-sex-haver Eliot Spitzer publically proclaimed to be a bad idea. Spitzer himself prosecuted GSK for nearly identical crimes in 2004, after which they promised to never do something like that again.
Until the system for identifying the originators of unethical and illegal behavior in pharmaceutical companies is improved and reformed, Americans are just going to have to rely on the Food and Drug Administration to protect them from spurious medical products, which means that you should probably avoid any sort of pill stronger than a Tic Tac from now on.
BIGGEST CIVIL RIGHTS VIOLATION SETTLEMENTA lot of people like to believe that racism in America is restricted to a bunch of slope-browed assholes going around vandalizing black churches and scratching swastikas into the walls of gas-station bathrooms, but the most damaging and pernicious forms of racial discrimination are those that are so subtle they’re hard to even detect outside of wide-ranging surveys.
The best example of this form of prejudice is the collection of unfair banking, insurance and real-estate practices generally known as “red lining,” through which businesses take it on themselves to create racially segregated neighborhoods by offering minority customers a different set of rates/fees/mortgages/etc. than white customers, thus steering them away from artificially over-valued “white” neighborhoods and into racial and ethnic enclaves that typically offer a lower return on the home buyer’s investment.
In December of 2011, the Justice Department confronted this problem with a case against Countrywide Financial Corporation (at the time, a subsidiary of Bank of America) presenting evidence that Countrywide had charged higher fees and interest rates from over 200,000 black and Hispanic borrowers compared to white home-buyers as part of an effort to prevent inconveniently dark-skinned homeowners from bringing down property values in white enclaves.
The Justice Department also claimed that many of the minority home buyers were aggressively steered into the infamously risky sub-prime mortgage market, even when their credit ratings and financial profiles were identical to white buyers who were given prime loans. Faced with an avalanche of evidence, Countrywide more or less threw up its hands and agreed to pay a $335 million settlement to the minority families that it had tried to screw over, and when Countrywide reenters the home lending business, they will be required to implement federally mandated policies and practices to guard against violations of fair lending practices.
BIGGEST SEXUAL-HARASSMENT SETTLEMENTRent-to-own store Aaron’s is a nationwide franchise with an enormous marketing presence, thanks to its lucrative NASCAR tie-in. You would think that such a major brand would know how to work with employees who want to report bad behavior, but when St. Louis employee Ashley Alford phoned the company’s harassment hotline to report numerous incidents of her manager teasing her, groping her, and on several occasions bopping her on the head with his dick, she received zero support, feedback or even communication from the corporation’s national office.
Shortly after her attempt to contact Aaron’s, Alford was assaulted by her horrible creepo manager (featuring a regulation horrible creepo mustache) in an incident that just barely stopped short of rape, and realizing that the company would never bother to investigate the offense by itself, she filed a lawsuit against Aaron’s Inc. that became America’s largest harassment payoff.
After hearing Alford’s testimony (including “DNA evidence” left on her uniform by her disgusting, perv boss) the jury awarded her an unprecedented $95 million, even though federal law caps the maximum award in any sexual harassment suit to $40 million. Alford plans to contribute much of her winnings to women’s shelters, sexual abuse counseling centers and legal funds to help other women fighting sexual harassment.
BIGGEST PRODUCT-LIABILITY SETTLEMENTFor the largest individual product-liability settlement (paying off at $9.9 million), there are surprisingly few details available regarding 1997’s Molinaro v. Harley-Davidson, Inc. It might be due to Harley-Davidson wanting to hush up the fact that they sold a motorcycle with a defective throttle, or it might be because Mr. Molinaro’s injuries included “permanent loss of sexual function,” an awkward situation when the reason most men buy Harleys in the first place is because they think that they’ll get laid. At any rate, the settlement came a full six years after the initial accident, suggesting that Harley-Davidson might have believed for a long time that they had a decent chance in court.
BIGGEST CLASS-ACTION LAWSUIT EVER SETTLED, PERIODThe Tobacco Master Settlement Agreement of 1998 was the summation of suits filed by the attorneys general of 46 states against America’s four largest tobacco companies in an attempt to recover the costs of caring for lifelong smokers, as well as levying punitive fines against Big Tobacco for their deliberately misleading advertising and unethical business practices.
That meant that whatever settlement the court arrived at was going to be big, but the final judgment of over $206 billion over a period of 25 years knocked everyone for a loop. The settlement not only provided funds for hospitals to take better care of ill smokers, but established an anti-smoking advocacy group named the American Legacy Foundation, producers of ad campaigns such as “The Truth” and similarly prominent and mildly annoying public service announcements. While the settlement exempted the tobacco companies from further litigation, you can bet that they can’t wait for 2023.
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MOST-TALKED-ABOUT LAWSUIT SETTLEMENTWhen 79-year-old Stella Liebeck spilled a cup of hot McDonald’s coffee on her lap in 1992, she probably wasn’t anticipating being the poster child of a national campaign against frivolous lawsuit. Actually, she probably wasn’t thinking of anything at all except for how the 180-degree coffee was soaking into the flesh of her legs and groin, resulting in severe third-degree burns that required extensive skin grafts and an eight-day hospital stay that ended up costing her a total of $18,000 for medical care and loss of income.
Liebeck originally sought to settle with Mickey D's for the fairly reasonable sum of $20 grand, but when the company came back with the ridiculously small counteroffer of $800, she ended up hiring an attorney, one who turned out to be well worth the cost, as she ended up receiving $160,000 in compensatory damages (reduced from $200,000) and $480,000 in punitive damages (again, reduced from the original headline-grabbing sum of $2.7 million dollars).
Many myths have arisen from the Liebeck case, including the popular belief that she was driving at the time (she was in the passenger seat of a parked car when she burnt herself) and the creation of the “Stella Awards” for frivolous lawsuits, but after looking at the facts of the case, it’s hard to argue that she didn’t deserve the money she was awarded.