Take cigarettes as an example. States sued the tobacco companies. The cost of those legal settlements was merely passed on to smokers in the form of higher cigarette prices Since all companies were affected, no one was afraid to raise prices. The effect of the suit was equivalent to raising cigarette taxes, but raising taxes would have been perceived as "punishing" the wrong people. Ironically, after the settlement, tobacco companies' stock price and profits continued to rise. As it turned out, the Attorneys General looked like heros, the tobacco companies prospered and smokers paid the price.
A more recent example comes as a survivor of the Aurora, Colorado shooting is preparing to sue the theater. Who do you think will ultimately pay for that? Everyone who plans to see a movie at any theater in the future will be affected by higher prices to cover the additional liability costs.