Surge in Class Actions Raises Risk for Businesses Handling Consumer Data

A newly released report found a sharp resurgence in class action filings over the last year, driven largely by consumer protection claims tied to digital commerce and data privacy. The report showed meaningful shifts in where cases are filed, who is filing them, and how they are resolved. These trends have significant implications for companies facing class exposure.

Consumer Protection Claims Make Up a Significant Increase in Filings

After nearly a decade of relative stability, federal class action filings surged in 2025, reaching the highest level since 2016 at more than 12,000 cases. This marks a substantial deviation from prior years and reflects renewed plaintiff-side activity. The primary driver of this growth is consumer protection litigation, which now accounts for nearly half of all class action filings and more than double that of the next largest category.

Notably, filings alleging violations of consumer protection statutes increased more than 40% year-over-year in 2025. These claims frequently involve data breaches, privacy practices and online consumer transactions. As businesses continue to expand their digital footprints, exposure to such claims is likely to persist or grow.

Geographic Shifts Reflect Expanding Litigation Hubs

Although the Southern District of New York has historically been the most active forum for class action litigation, recent trends signal a shift. The Central District of California saw a significant rise in filings and surpassed S.D.N.Y. in total cases filed in 2025. Other districts, including the Northern District of California and Northern District of Illinois, continue to rank among the most active venues.

This diffusion of filings across multiple jurisdictions suggests that plaintiffs are increasingly leveraging multiple forums rather than concentrating cases in a single district. For defendants, venue strategy remains critical, particularly given differences in judicial tendencies, local rules, and applicable state-law overlay.

Rise of Repeat Players and High-Volume Litigation Models

The report highlights the continued growth of a “repeat-player” ecosystem, with a relatively small number of plaintiffs and plaintiffs’ firms accounting for a disproportionate share of filings. Some individual plaintiffs filed dozens or even over 100 cases during the analyzed period, often focusing on specific statutory claims such as website accessibility under disability laws.

On the defense side, major national companies, including large retailers, technology companies and financial institutions, appear repeatedly in class action dockets. In this maturing litigation environment, class actions are increasingly driven by sophisticated, high-volume strategies employed by specialized firms.

Early Resolution Dominates Outcomes

One of the most significant findings is that approximately 95% of class actions are resolved without reaching a merits determination. Most cases are either settled or dismissed on procedural grounds, with only a small fraction proceeding to summary judgment or trial.

For cases that do result in merits decisions, defendants prevail far more frequently than plaintiffs, particularly at the pleading and summary judgment stages. These data reinforce the importance of early-stage motion practice as a key opportunity to limit exposure or dispose of cases outright.

Class Certification Remains a Critical Battleground

Class certification continues to be a pivotal inflection point in litigation. Courts denied certification in a substantial portion of contested motions, often based on deficiencies in Rule 23(b)(3), particularly the predominance and superiority requirements.

At the same time, many classes are certified solely for settlement purposes, rather than litigation. Certification is often intertwined with settlement negotiations, making it a central leverage point for both plaintiffs and defendants.

Substantial Financial Exposure Driven by Settlements

Settlement remains the primary driver of financial outcomes in class actions. Total settlement damages fluctuate significantly year to year, but they generally range in the tens of billions of dollars annually. From 2023 through 2025 alone, courts approved more than $32 billion in class settlements, exclusive of costs and interest. Attorneys’ fees totaled approximately one-quarter of that amount.

Key Takeaways for Businesses

These developments highlight several practical considerations:

• Increased risk environment: The surge in filings, particularly in consumer and data-related claims, signals heightened litigation risk for companies with significant digital or customer-facing operations.
• Importance of early strategy: Given the prevalence of early resolutions, proactive motion practice and case assessment are critical.
• Certification strategy matters: Challenges under Rule 23(b)(3) remain a key defense tool.
• Venue selection is critical: The growing prominence of California courts and continued activity in traditional hubs necessitate careful forum analysis.
• Repeat litigants require coordinated defense approaches: Companies should anticipate repeat claims and consider strategies to address them consistently.

Conclusion

The new data reflects a class action landscape that is increasingly specialized, data-driven and concentrated among repeat players. To manage the combination of increased filing volume and evolving litigation patterns, companies and their legal counsel should focus on proactive risk management, early case strategy and coordinated defense planning.

Contact Chris Bach or any member of Phelps’ Cybersecurity, Privacy and Data Protection team if you have questions or need compliance advice and guidance.