Decisions are out, and Canada's Supreme Court declined to follow SCOTUS' rulings on indirect claimant antitrust class actions, and on more general class certification standards. Numerous stories provide more details - one is here.
With a Criminal Case Lurking in the Background, Flying J Class Action Settlement - 100%, plus interest and attorney's fees
Potential criminal charges certainly can be a game changer. Consider, for example, the new Flying J class action settlement in which it will pay 100% of damages, plus interest and attorney's fees. The claims revolve around failure to pay 100% of promised rebates to trucking firms for purchases at Flying J stations. The settlement arrives while senior officers face potential indictments after five lower level employees pleaded guilty to criminal charges.
Humorously, the Journal duly reported the settlement, but forgot to mention the class was represented by the Barrett Law Group in Alabama. The WSJ is fond of thrashing that plaintiff's firm and other Alabama plaintiff's lawyers for both real and faux "issues." E. g. here. The WSJ's selective reporting and thrashing approach - in the main paper - is sad to see. The Journal's non-blog journalism continues to too often (not always) fail objectivity and completeness tests when it comes to reporting on litigation.
A few words on a class action settlement scam. In this instance, the settlement relates to the much talked about "sticking" of accelerators (electronic throttle controsl) on cars produced by Toyota. The defect was real - I experienced it in my car, several times.
The point here is the scam nature of the settlement. I was sent a postcard which required me to go to this web site to "claim" the right to a corrective process to fix the problem. Once there, all I had to do was enter 2 numbers listed on the post card. So, instead of awarding a fix to everyone, the settlement scam seeks to discourage claims by inserting a useless step into the process. No doubt that step results in many people failing to act, and therefore receiving the corrective fix.
This kind of scam should not be approved by judges, especially when it involves cars and safety. We need many more judges who will ask questions of the sort asked by Judge Rakoff when he declined to be a rubber stamp for the SEC settlement with Citigroup.
Vanessa Blum penned a useful summary article for the Recorder regarding food mislabeling claims pending in the Northern District of California. These days, cases can quickly cluster.
Change continues in the global world of litigation. ClassActionBlawg is reporting a plaintiff's verdict (albeit small) in a class action in South Korea.
New developments in South African class action law are covered here via a link to other coverage.
A decade or more ago, product liability and antitrust lawyers realized and wrote about the reality that conflicts between various claimants, as well as opt out plaintiffs, were creating a real market for representation of opt out plaintiffs, and real issues for defendants interested in trying to reach global peace in antitrust cases and product liability class actions. The same "opt out" points are now more frequently observed in securities class actions, and in class actions in general.
The point? The litigation industry is always evolving, and is growing steadily more complex.
The D & O Diary has an interesting guest post on plaintiff's firms suing to block "misleading" disclosures on executive compensation packages at issue in "say on pay" votes. The cases are having mixed outcomes, according to the guest post.
Class actions in Europe. Not so long ago, the statement was considered an oxymoron.
Today, however, class actions in Europe are growing, and at least some policy-makers find them useful and desirable as a means for securing human rights. As a result, the American Bar Association is sponsoring a an EU Class Action Conference in Brussels on November 12 and 13. The description is set out below from the ABA web site:
Amazing that claims involving national markets and tens of billions of dollars are kept under seal for five years. But, last week, the judge hearing the case first unsealed a 2007 complaint asserting civil antitrust claims for price-fixing and collusion among some of Wall Street's biggest names. The amended complex alleges a web of collusive arrangements involving at least 11 of the world’s largest buyout firms and their roles in some 19 deals. The defendants include Apollo Global Management, LLC; Bain Capital Partners, LLC; the Blackstone Group LP; the Carlyle Group LLC; the Goldman Sachs Group, Inc.; J.P. Morgan Chase & Co.; Kohlberg Kravis Roberts & Co. LP; Providence Equity Partners, Inc.; Silver Lake Technology Management, LLC; TPG Capital, LP (better known as Texas Pacific Group); and Thomas H Lee Partners, LP. The case is Klein et al. v. Bain Capital Partners LLC et al., case number 1:07-cv-12388, in the U.S. District Court for the District of Massachusetts.
This fall, the New York Times published an article about the lawsuit and filed a motion seeking access to the complaint. The motion was granted in less than two months. One has to wonder why it took five years for that to happen. LAW360 also has the story, including summaries of emails said to prove up the claim. The complaint is quite detailed as it quotes from and cites to specific emails between the banking houses. The full text of the complaint is online.
Kevin LaCroix at D & O Diary has mentioned/briefly reviewed a new treatise on class actions around the globe, and a new treatise on class action strategy. The post is here.
Dealing With Obvious Mistakes - Airline Fare Examples - What's the Price for Sloppiness in Business ?
Sometimes it's obvious a mistake has been made by a vendor - e.g. a free overseas airplane ticket at a price of only 4 frequent flyer miles. A WSJ article by Scott McCartney provides insights into the outcomes that follow when airlines catch the mistake.
One can argue that airline should be required to honor mistakes because it really ought to have ways to run its computers to catch and fix mistakes. That said, it makes even more sense to preclude free-riders from glomming on to and taking advantage of obvious mistakes. Airlines face bad press either way. Thus, sloppiness has a price that varies from "not much" to "quite a bit," a lesson some businesses are slow to learn.
Class action rules are now in effect in Mexico, and include some unique rules on opt-in and opt-out procedures, as well as providing for statutory standing for some groups. A summary is here on Mondaq, courtesy of the Bennett Jones firm.
"Be careful what you wish for ..."
The Iqbal and Twombly rulings made it significantly harder for plaintiff to plead claims, even when it was obvious that there was fire behind the smoke. Thus, the two decisions created incentives forplaintiff's lawywers to stay in state court, and to work with state attorney generals able to issue subpoenas to get the internal corporate papers needed to satisfy the new, heightened pleading standards. When obtained, the papers can be compelling, and produce trial verdicts. Thus, outcomes such as the recent spectacular billion dollar jury verdict against Johnson & Johnson, described below in a new AmLaw post from Julie Triedman:
Some say that expiring gift cards are one of the best scams created by financial engineers. But, a judge here in Chicago just certified a class action against Abercrombie because of expiring gift cards. And, various states have legislated to ban or limit the expiration - see collected statutes here. The opinion is here. Hat tip to LAW360 for covering the case.
For Class Actions in Canada, Analysis of the Rules for Cross-Border Cooperation Between Plaintiff's Firms in Canada and Other Countries
Mondaq brought up information leading me to this very useful article summarizing recent Canadian decisions on cooperation between plaintiff's counsel in Canada and in other nations. The article is from Lerners, an Ontario firm that represents both plaintiffs and defendants in class action litigation. A January 6, 2012 decision on the subject is detailed in AmLaw's Litigation Daily on January 11, 2012.
Class Actions to Block Conflicts of Interest in Some Forms of M & A - Newer Decisions and Real Impacts
AmLaw's Litigation Daily includes this informative post on recent Delaware developments in which plaintiff's lawyers are effectively blocking some of the conflicts of interest in some corporate m & a transactions.
Are parens patriae lawsuits by state attorneys general removable to federal court under the Class Action Fairness Act - CAFA? The National Law Journal today includes an interesting summary article by a solid expert. She is:
"Georgene Vairo is a professor of law and William M. Rains Fellow at Loyola Law School, Los Angeles. She serves as a member of the board of editors of Moore's Federal Practice, for which she writes chapters on removal, venue and multidistrict litigation. She also serves on the board of overseers of the Rand Institute for Civil Justice."
The entire article deserves reading. Here's her conclusion after reviewing the law:
"In my view, the Caldwell dissent and the 4th Circuit approaches are more persuasive. If the complaint is brought in the name of the state alone, and state law provides for cases to be brought in a parens patriae capacity, then, as master of the complaint, the AG ought to be entitled to do so without risking removal to federal court. There is no question that the majority's approach in Caldwell reflects congressional intent to interpret CAFA's expanded jurisdictional provisions broadly. However, if the state, which was the only plaintiff named in the complaint, was not the real party in interest, the case should have been dismissed, because there were no proper plaintiffs before the court and there was no attempt to join any new plaintiffs. Or the case ought to have been remanded to state court because that would have done less violence to principles of federalism than the majority's recharacterization of the case as a mass action subject to CAFA jurisdiction. The attorney general should not have been stuck in federal court.
The controversy here is that some state attorneys general employ private plaintiffs' lawyers to prosecute these cases. So, to a defendant, if the case walks like a duck it is a duck — and these are the very types of cases that were the target of CAFA. Nonetheless, the 4th Circuit was right to look to the language of CAFA and not its purpose. If a case is not brought as a class action, it cannot be removed under CAFA. If the case is not brought by more than 100 named plaintiffs, the case cannot be removed as a mass action under CAFA. This approach is preferable because it correctly honors the letter of CAFA, the basic principle that the plaintiff is the master of the complaint, and, perhaps most importantly, principles of federalism."
Mexico is implementing class action law. The new law is briefly summarized by Nathan Koppel of the Wall Street Journal's in this Law Blog post, with links to more detailed analyses. Also, the post begins with one of the most enjoyable first sentences ever used in a law-related writing.
Despite opposition from "big business," class action laws continue to expand around the globe. Not so long ago, some said it would never happen. Here's a current quote froma lawyer at a defense side law firm, Shook Hardy:
“Mexico is the latest in a string of countries in Europe and Latin America to enact class action laws,” Shook Hardy partner Bill Crampton told the Law Blog.
This prior post noted a December 2010 collective litigation conference co-organized by professors Manuel A. Gomez (Florida International University College of Law) and Deborah R. Hensler (Stanford Law School). The conference was the fourth in the series of international conferences on the global spread of collective litigation. The series began in 2007 at Oxford University. Comments and papers from the conference are starting to appear on-line, such as this set of comments and links from Swiss Re. Stanford's website also will host more of the papers on-line after they are all submitted in final form.
Canadian Class Action Law Continues to Evolve - Antitrust Class Approved By Intermediate Appellate Court
Class action law continues to evolve in Canada. This article from McCarthy Tetrault provides a link to and commentary on a recent and controversial appellate decision approving certification of an antitrust class involving DRAM chips. Key excerpts are set out below:
"The DRAM litigation has been closely followed by specialists in the fields of class action and competition/anti-trust law, both in Canada and the United States, where several parallel actions are underway. Until recently, no Canadian court had ordered a price-fixing case certified for a proposed class, like this one, which comprises both direct and indirect purchasers (at least where certification was contested).
The main problem for plaintiffs in these cases has been the difficulty in showing that the class as a whole suffered harm. It is not clear how a plaintiff can prove which buyers actually paid for the alleged price increase, and which suffered only some or no loss at all (either because it was absorbed by someone else or passed on, in whole or in part, to another buyer). These issues threaten to complicate the trial with countless individual inquiries, rendering the case as a whole unmanageable as a class proceeding."
Kevin LaCroix at the D & O Diary blog included this recent brief post mentioning class action law arriving in Hungary. The post states:
"Class Act on the Danube: Here at The D&O Diary, we scour the globe looking of interest for our readers. By way of example, we refer readers to the article that appeared in the March 8, 2010 issue of the Budapest Business Journal (here), in which it is reported that "a revision to the standing civil code will shortly introduce class action lawsuits to the Hungarian legal system and already has a number of nongovernmental interest groups revving up to start the proceedings."
The prospects for class litigation outside the U.S. apparently continue to spread. Everyone here will remain vigilant."
Mass Tort Battles Ahead - New Thinking and Arguments, UK Report Endorses Litigation Funding, and Phillip Morris Hires David Bernick from K & E
I'm setting aside James Hardie and Australia for a few days. News on Friday provides a great springboard for some comments in the same general area of what's new in mass tort resolution thinking, and some points related to corporate actions to cope with/avoid/limit the corporate damage from mass tort claims.
How does big tobacco admit it faces massive global tort warfare ahead ? By hiring David Bernick away from Kirkland & Ellis, as was announced Friday - see article at the bottom.
Why is hiring Mr. Bernick so telling ? Look at what he has done. K & E teams headed up by Mr. Bernick have often (but not always) won some of the most difficult battles in mass tort litigation, and have included various creative and massive efforts to buy time and/or survival for corporate defendants. For example, his team successfully defended Grace executives in a criminal trial involving asbestos regulations and "tremolite contamination" in mined products; that trial would have been easy to lose due to asbestos hysteria. The team also was winning the W. R. Grace asbestos bankruptcy trial by thoroughly discrediting the seamy side of asbestos claiming by the not sick, and so they capitalized by reaching a fantastic mid-trial settlement in the bankruptcy. Bernick and others also did a business-saving (albeit unconstitutional) deal in chapter 11 to free Asea Brown (ABB ) from its Combustion Engineering asbestos liabilities, and obtained that result despite the stench from ABB's $ 20 million payment to plaintiff's counsel. Mr. Bernick and others also undertook an ill-fated but brilliant effort on behalf of car companies to use the Federal-Mogul bankruptcy to convene one massive Daubert hearing in federal court regarding whether brake linings with asbestos actually cause cancers. Even though the latter effort did not succeed on the merits; it bought much needed time for car companies at a time when asbestos litigation was at one of its most frenzied points.
One cannot help but wonder the price. If Mr. Bernick can do for PM what he has done for other entities, the financial dividend for PM shareholders will be huge. Indeed, Mr. Bernick actually will add real value to the bottom line with actual creative thinking and hard work. That said, perpetuating smoking is anything but the work of angels.
What issues are out there to keep Mr. Bernick busy and challenged ? A recent example arises from the disastrous $294 million verdict entered last fall in one of the thousands of pending post-Engle tobacco cases that are being set for trials in Florida. If one took that verdict into bankruptcy court and handed it to the "liability estimators," they could generate a future liability range of numbers that probably would include numbers in the trillions of dollars. Those numbers also could be offered in bankruptcy court to support fraudulent conveyance claims involving various corporate moves by tobacco companies. Recall, for example, that Asarco was hit this past year with a $ 6 billion dollar bankruptcy court judgment based on fraudulent conveyance claims tied to corporate activities undertaken in anticipation of tort and environmental claims.
That said, the bankruptcy liability estimation process is not even close to scientific, as Mr. Bernick well knows. Indeed, the Grace bankruptcy included one of the strongest indictments issued to date regarding the lack science and due process in bankruptcy proceedings, That indictment is set out in the testimony of Professor Heckman, a University of Chicago economist and Nobel prize winner, as described in item 4 of this prior post.
Meanwhile, there is global cigarette litigation. In Nigeria, the tobacco companies are the subject of $ 45 billion government cost recovery claims, as described, for example, here and here. And, as noted on Saturday, there have even been tobacco claims in Japan, which are not noteworthy for any success but are note worthy for the statistics regarding the continuing smoking patterns in Asia.
Perhaps most significantly, the tobacco industry recently suffered a resounding loss as the Massachusetts Supreme Court endorsed in sweeping terms a medical monitoring class action case against tobacco companies. Due to Congressional hearings and the tobacco settlements, it's very plain that the cigarette manufacturing industry very closely follows science, and so its senior executives undoubtedly are aware of the indicators that their companies soon enough will face a wave of expensive medical monitoring and therapy claims arising from new scientific discoveries. Soon enough, it will be routine to provide effective screening examinations to find cancers when they are still microscopic. Incredible new devices and techniques will be used to create innovative therapies that will be developed to "cure" or manage the tumors, all at some significant amount of expense. See generally the many papers of Professor Gary Marchant, most of which are collected on his law school's website at the page which is here. Those developments will make it practical for plaintiff's lawyers to bring claims on behalf of persons in developing countries for which the opportunity for expensive life-saving treatment will create enough economic value to incentivize litigating cases that will have significant emotional appeal to any judge or jury.
My bet? Mr. Bernick's will architect and oversee an effective defense across the broad range of pending cases, all while planning for future efforts to obtain absurdly favorable settlements that promote continuing tobacco use by sharing revenues with governments and lawyers, not to mention, litigation funders, to produce securitized cash flows. The settlement also produced ancillary litigation over access to information from state attorney's general on why and how they settled. Certainly Mr. Bernick is well suited by experience to lead PM through the issues ahead.
Mr. Bernick will have plenty of new challenges because more and more commentators are speaking out on the myriad problems with the handling of mass tort claims. Indeed, new commentators are emerging. Commentators include Prof. Erichson on "The Trouble With All or Nothing Settlements" and others who last year spoke on whether more mass tort claims need to be litigated instead of settled. Prof. Burch wrote a post this past Friday on Prof. Redish's new book arguing that many mass tort class action procedures are unconstitutional (an issue I've been litigating and arguing since the late 1980s.) She also links to a summary of contra papers by Prof. Issacharoff, who also is a paid partisan and advocate in asbestos litigation, including (among others) the THAN bankruptcy (click by the first screen and then you should land at the page for In re T H Agriculture & Nutrition, L.L.C., Case No. 08-14692 (REG). The THAN case is the asbestos bankruptcy that produced a declaration from an asbestos plaintiff's lawyer regarding his understandings from chapter 11 plan negotiations regarding his firm's clients being paid an average of over 700k per claimant for future claims against the THAN trust.
Challenges also will arise due to commentary and new thoughts from overseas. Prof. Burch wrote this recent cogent post summarizing a new report from the UK on tort claiming. To tease you to go read more, here are two key excerpts from the post summary:
"Of additional import, the final report recommends that solicitors and barristers should be allowed to enter into contingency fee arrangements, which are currently prohibited. Before entering into such an arrangement, the report recommends that claimants receive independent advice. It also suggests capping the fees at 25%.
Finally, the report recommends making third-party funding available to personal injury claimants (including those involved in collective actions). It defines third party funding as "The funding of litigation by a party who has no pre-existing interest in the litigation, usually on the basis that (i) the funder will be paid out of the proceeds of any amounts recovered as a consequence of the litigation, often as a percentage of the recovery sum; and (ii) the funder is not entitled to payment should the claim fail." (Final Report at p. 17). Very interesting."
UK corporate and insurance company lawyers issued a January 19 report she links to; here's their bottom line:
"If Jackson LJ's recommendations are passed into law, it seems safe to predict that they will lead to an increase in the number of collective actions seeking damages for personal injury. In particular, group claims against the manufacturers of allegedly defective products, which are no longer routinely funded by legal aid as they were in the 1980s and 1990s, are likely to become more common. Claimants with an arguable claim of this type would generally be able to proceed under a contingency fee, CFA or third-party funding arrangement without the spectre of possibly having to pay, out of their own pockets, either their own lawyers' fees or the costs of their opponent.
Costs shifting would remain in place for most types of collective action, such as those involving claims for anti-competitive behaviour or consumers' claims for economic loss. In these cases, the loser-pays rule would remain a significant disincentive to claimants considering a group action and would protect defendants against frivolous or speculative lawsuits.
The big question now is whether these reforms will be implemented. Jackson LJ appears to hold the view that his recommendations, which he describes as "a coherent package of interlocking reforms", should not be viewed individually but as a comprehensive set of proposals. Some of these proposals could be introduced relatively easily by amendment to the Civil Procedure Rules, such as the introduction of a qualified one-way costs shifting regime, but for the most part primary legislation would be required in order to give effect to other recommendations, such as abolishing the recoverability of success fees from defendants. With the general election taking place this year, civil justice reform is unlikely to be high on the Government's agenda. The likely delay will provide a window of opportunity for those who have concerns about particular aspects of these recommendations to make them known before the reforms are finally implemented."
We surely are living in interesting times for mass tort claiming.
Here is the article from the Chicago Tribune regarding Mr. Bernick; the text is pasted below.
Friday, January 22, 2010
Top litigator at Kirkland leaving for Philip Morris
David Bernick, a star litigator at Kirkland & Ellis, is leaving the firm to become general counsel at Phillip Morris International.
Bernick has been with Kirkland for 31 years and has been involved in nearly every type of complex litigation imaginable, from defending companies with asbestos liability to representing breast-implant manufacturers.
"I have spent my entire career at Kirkland & Ellis and I am proud to have contributed to the growth and success of one of the top law firms," said Bernick in a statement provided by the firm. "I will remain close to my many friends and colleagues at the firm, but I look forward to pursuing new challenges during the next phase of my career with Philip Morris International."
Kirkland's incoming chairman, Jeffrey Hammes, said: "David has been an integral part of our premier litigation practice, and his achievements during his 31 years at Kirkland are truly remarkable. We thank him for his varied and long-standing service to the Firm and we wish him success in his new role.
Bernick will join Philip Morris on March 1. As part of the move, he will relocate to Switzerland from New York.
Tip of the hat to Above the Law for breaking the news.
Who was the last person to assure you that Europe would never entertain class actions ? Perhaps you should send them an email and invite them to attend this upcoming seminar in Frankfurt on March 12 and 13.
The summary below is from an email circulated by Mark Hilgard, chair of the program.
"Topics of the seminar will be, inter alia,
Class Actions in Canada
How Foreign Parties become involved in US Class Actions:
International Human Rights Class Actions
The Status of Class Actions, Mass Litigation and Collective Redress in Europe and the Pirate Bay Case
The European Initiative / Green Paper
Class Actions in Germany
• The Plaintiff's Perspective
• The Perspective of a Defence Lawyer
• Handling of Class Actions: The Perspective of a Judge
Class Actions in Austria
Class Actions in Mexico
Class Actions in Switzerland
Class Actions in Ireland
Class Actions in France
Class Actions in Italy - under new and old Law
Class Actions in Spain
Antitrust Class Actions
Collective Product Liability Claims
• Opt In or Opt Out - Are we heading into the Right Direction?
Funding of Class Actions
D&O and the Role of Liability"
Conflict of Interests and International Tort Claims for Persons from Many Countries - The Libyan Terrorism Example
Here is an unexpected but interesting non-asbestos example of conflict of interest issues arising from efforts to resolve "mass torts" for various persons around the world. The example arises from the airplane crash and airplane hijacking blamed on Libyan terrorists. The article describes a recently filed lawsuit in which two victims of the crash object to the terms of the settlement with Libya. In brief, the two plaintiffs argue that the lawyers who represented the crash victims, Crowell & Moring, operated under conflicts of interest and that the agreement improperly commingles the interests of the various different categories of claimants, including US and non US claimants. The article includes a link to the complaint itself. The complaint, however, does not attach a copy of a "joint prosecution" agreement apparently signed by the plaintiffs and many others.
Here are excerpts from the article by Roger Alford:
"The facts as alleged in the complaint of Davé v. Crowell & Moring are complex. In brief, Libya has been implicated in terrorist activities on numerous occasions, most notably the hijacking of Pan Am Flight 73 in Karachi, Pakistan on September 5, 1986 and the bombing of Pan Am Flight 103 over Lockerbie, Scotland on December 21, 1988. In 2005, victims of these terrorist attacks and their heirs--including American and non-American victims--retained the law firm of Crowell & Moring--known for representing victims of terrorism--to pursue litigation against Libya. The Davés were among those who signed the Crowell & Moring retainer agreement. As part of retaining Crowell & Moring, every client was also required to sign a joint prosecution agreement ("JPA"), a provision of which provided that the proceeds recovered by any signatory to the JPA shall be shared on a sliding scale based on type of injury with all signatories to the JPA, without distinction as to nationality. Only 23% of the victims who signed the JPA were American. A Liaison Group consisting of one American and four non-Americans was established as agents for the victims in their dealings with litigation counsel. The Liaison Group was represented by Latham & Watkins. In 2008, the United States government entered into a bilateral treaty with Libya for an award of compensation for all U.S. nationals harmed by Libyan terrorism, including the victims of the Pam Am Flight 73 hijacking, which included plaintiffs Gargi and Giatri Davé. The treaty provided for distribution of these funds through the Treasury Department's Foreign Claims Settlement Commission ("FCSC"). After the Davés successfully received notice of their entitlement to millions under the FCSC process, Crowell & Moring issued a demand letter to the Davés contending that under the retainer agreement and the JPA the funds secured by the United States government pursuant to the U.S.-Libya treaty on behalf of American victims are to be shared among all of the victims of Libyan terrorism, American and non-American alike. In other words, the vast majority of the funds secured by American nationals under the U.S.-Libya treaty are--approximately 90% according to Crowell & Moring--required to be paid to non-Americans pursuant to these private agreements."
Stanford Law School and Professor Deborah Hensler offer a significant online resource with numerous papers on class action practice around the globe. The resource is titled the Global Class Action Exchange. The website is here. The text of the "About" section is pasted below because it provides an overview.
The Global Class Actions Exchange is an outgrowth of an international conference on the worldwide spread of class actions, group proceedings and other forms of collective litigation that was held in Oxford, England in December 2007. The conference was co-sponsored by Stanford Law School and the Oxford Centre for Socio-Legal Studies and funded by the American Academy of Political and Social Sciences and Stanford Law School, with additional support from individuals, law firms and the business sector in the US and Europe. Participants in the conference were eager to share information about developments in their countries and to establish a network of academicians, judges and lawyers interested in class actions and group litigation to whom they and others could turn for advice on these developments. We established this Clearinghouse in response. The Clearinghouse is directed by Prof. Deborah Hensler of Stanford Law School, who co-organized the 2007 conference with Dr. Christopher Hodges of the Oxford Centre for Socio-Legal Studies.
The Global Class Actions Exchange currently includes country reports and other materials prepared for the 2007 conference; statutes, rules and important cases related to class actions and group litigation; academic and other commentary on global developments regarding class actions; contact information for legal analysts and practitioners who research or practice in the class action or group litigation area; and news of conferences and other events of interest to scholars and practitioners.
If you would like to contribute material for the Global Class Actions Exchange, please contact Deborah Hensler at firstname.lastname@example.org.
This post offers a brief comment arising from the now widely reported fact (see, for example, SCOTUSblog and many others) that the U. S. Supreme Court granted certiorari from the 2d Circuit's opinion in the so-called foreign-cubed (a/k/a f- cubed) Rule 10b-5 securities case titled Morrison, et al., v. National Australia Bank, et al. (08-1191), which is sometimes called the NAB case. For the uninitiated, f-cubed refers to 1) "foreign" plaintiffs suing in the US under US law regarding a 2)"foreign" issuer of securities that resulted in the buying and selling of stock in 3) "foreign" countries.
The comment is that one hopes that briefing in the Supreme Court will cover in some depth the scope of class action litigation in countries outside the US. I say that because the 2d Circuit's opinion, slip op at 14 -15, refers to arguments that seem to me both dated and incorrect as to the extent of class action remedies outside the US. On the topic of the growing availability of class actions or class like remedies outside the US, I once again commend to readers a fairly new article titled "Global Litigation Trends." The authors are Mark Behrens, Gregory Fowler and Silvia Kim, who are all Shook Hardy lawyers. The article was published at 17 Michigan State Journal of International Law 166 (2008-09). You can download it here from the TortsProf blog.
Pasted below are the 2d Circuit's statements about class actions outside the US:
"In support of their position, Appellees and amici point to a parade of horribles that they claim
would result if American courts exercised subject matter jurisdiction over such actions. They
contend that this would, among other things, undermine the competitive and effective operation of American securities markets, discourage cross-border economic activity, and cause duplicative
litigation. Their principal objection, though, is that entertaining such actions here would bring our securities laws into conflict with those of other jurisdictions. For instance, in Switzerland, no
comprehensive federal legislation governs securities fraud, and private remedies are the only ones
available. In Canada, securities class actions are recognized, but most provinces do not recognize
the fraud on the market doctrine. In various other countries, class actions are either not available
or the ability of class actions to preclude further litigation is problematic. See, e.g., David A. Skeel, Jr., Can Majority Voting Provisions Do It All?, 52 Emory L.J. 417, 423 (2003) (noting that "most other countries do not have procedural devices that are even remotely similar to the U.S. class action"); Gerhard Walter, Mass Tort Litigation in Germany and Switzerland, 11 Duke J. Comp. & 3 Int'l L. 369, 372 (2001) (observing that "class actions do not exist in Germany, Switzerland, and most other countries of the civil law system"). In essence, Appellees argue that other countries have carefully crafted their own, individual responses to securities litigation based on national policies and priorities and that opening American courts to such actions would disrupt and impair these carefully constructed local arrangements...." (emphasis added)
It's hard to say where this all will end up since the Court apparently is continuing to pursue Chief Justice Roberts' agenda to decide "business cases," and there are so many interested constituencies. For more background, note that insurance side commentary on NAB was noted in this prior post which, in turn, links to another blog with commentary and links back to the 2d Circuit opinion and briefs. In addition, as SCOTUSblog points out, note that review was granted " even though the U.S. Solicitor General had urged it to bypass the case. Even while arguing that the case was not a proper one to address the issue, Sol. Gen. Elena Kagan filed a brief extensively outlining the government's views on the question, suggesting that the key law against securities fraud should sometimes apply to international dealings. (Justice Sotomayor took no part in the order granting review; it was not immediately apparent why she was recused. She did not vote on this case while on the Second Circuit.)"
So, where and when are US tort and securities judgments binding on persons who live outside the US, and why should does it matter? Let's start with the latter question - why does it matter. Suppose, for example, a US bankrupcty court purports to enter a global injunction that bars future asbestos claims that anyone in the world might hold against particular entities? Is that injunction really enforceable if challenged in other nations or even here? Or, suppose global res judicata issues arise because of securities claims involing stocks sold around the world to persons from many nations?
As usual, the answers are going to emerge first in securities claims because the amounts at issue in any one case are enough that squadrons of lawyers are deployed to argue the issues. Answers are starting to arrive and indeed one could say the pot is boiling in the world of securities and D & O litigation as lawyers ponder and argue about various current lawsuits.
For example, some wonder and argue about whether the U. S. Supreme Court will or or should consider a discretionary appeal from a 2d Circuit ruling on jurisdictional issues in the context of alleged global securities fraud. This AmLaw article by Andrew Longstreth presents the issues and links to the Justice Department's brief invited by the Court in the Morrison case. The government urged the Court NOT to take the case (one wonders how that will view will sit at the Court when considered in the light of Chief Justice Robert's expressed interest in building the legacy of his court by reaching out to decide business cases).
The topic also is addressed on the excellent D & O Diary blog by Kevin LaCroix, in a recent guest post (here) from a Cozen & O'Connor lawyer, who, presumably, represents insurance companies. Another example arises from the ongoing more or less global Vivendi securities fraud trial, which is covered in general here by Mr. LaCroix, with many helpful links to source documents, with links to undelrying rulings on the global class action issues. The Vivendi class action opinion is here, and provides a helpful discussion on what courts in overseas countries might have to say about the res judicata nature of a US judgment on the securities law issues in the context of a purported class action.
Conclusion ? Concrete answers will take many years to evolve. But plainly some of the judgments entered to date will never be enforced because overseas claimants were not given anything close to adequate notice or representation.
Here is an AmLaw article about the apparently fairly real possibility of chapter 11 type legislation in Hong Kong. This is getting ahead of the game, but it does provide an opportunity to pause and think about what Hong Kong or other sovereigns might use as an approach to corporate failures caused by mass tort claims. After all, we've seen some serious mass tort issues arise from Hong Kong's nearby neighbors.
Let's hope other sovereigns do better than section 524(g) of teh US bankruptcy code. Otherwise, we may see a global spread of mass claiming by the least sick.
Decisions on Efforts to Press Legal Malpractice Claims Against Class Counsel and the Scope of the Legal Duties
DRI's blog includes this post by Shari Claire Lewis providing a concise summary of two recent appellate decisions involving attempted legal malpractice claims against class counsel by absent class members. One decision is by the New York Court of Appeals and one is from California's intermediate appellate court. Both decisions protected class counsel.
The New York decision precluded discovery into class counsel's files. This could be an important precedent so many collateral estoppel and class action cases are won or lost based on whether class counsel provided adequate representation for a group of claimants. The issues may be even more complex when global class actions are involved.
The UK is famous for assessing costs if a case actually goes to judgment. A new look at that topic is underway and is slated to produce a final report by year end 2009. A preliminary draft report has been issued and will be the subject of meetings and comments over the summer. More specifically, a press release from the British Judiciary explains that " Lord Justice Jackson has published the preliminary report in his Review of Civil Litigation Costs.The report is a major piece of work, deriving from four months of fact-finding, research and receiving submissions, and it extends to over 650 pages with three annexes and 30 appendices. It is available" online here.
A June 1, 2009 article in Business Insurance by Sarah Vesey provides a terse summary of the report. She comments:
"In the report, Justice Jackson said several potential changes to the existing cost regime for group actions "merit consideration."
Among them are instituting a no-cost-shifting rule; allowing cost-shifting for only part of the proceedings, for example only after the stage where a class wins certification; implementing a common funds doctrine, such as that used in the United States in which successful lawyers are entitled to have their fees reimbursed from the fund awarded to the class; public interest litigation, whereby the court has power to order that no cost-shifting occur when a group representative brings an action on an issue of public interest; and using a lower-cost scale for collective actions.
Justice Jackson said his "tentative view" to do away with cost-shifting for collective actions merits serious consideration in the second phase of his review and would, among other things, promote access to justice and be fairer for defendants."
Global Litigation Trends Article - Aggregate Litigation, Contingent Fees, Litigation Funding, and Punitive Damages
Looking for a tight but informative summary of changes around the globe with respect to (1) aggregate or class action litigation, (2) contingent fees and litigation funding, and (3) exemplary or punitive damages? If so, you should read a new article, "Global Litigation Trends." The authors are Mark Behrens, Gregory Fowler and Silvia Kim, who are all Shook Hardy lawyers. The article was published at 17 Michigan State Journal of International Law 166 (2008-09). You can download it here from the TortsProf blog.
I particularly liked the article because it packs a material amount of information into 30 pages. The first two sections provide an overview of particular developments in aggregate litigation/class actions and some nation by nation citations to articles on aggregate litigation. Those highlights are followed in section III by an incredibly handy reference tool that provides a country by country synopsis of the aggregate litigation procedures increasingly available in countries ranging from Argentina to Taiwan, followed by a brief section IV addressing EU law aggregate litigation developments. Section V addresses developments in paying for litigation. First covered are changes around the world with respect to contingency fees (they are permitted more places than you might think - for example, Italy recently passed legislation to permit contingent fees), as well as uplift fees, success fees and multipliers. The section also touches briefly on the rise of litigation funding outside the US. Global developments in punitive damages are covered in section VI. The article provides cogent cites to demonstrate that new attitudes are developing outside the US with respect to non compensatory damages.
As the name of this blog reflects, it seems plain enough to me that tort litigation is indeed going global, albeit with regional and national twists, not to to mention the intricacies of comparing civil law countries to common law countries, as well as developments in Asia where some countries have this century essentially embarked anew in their approach to courts and law because past law was feudal or otherwise outmoded. I was curious though to read the the concluding remarks of Mark and his colleagues since they (like me) are not academics and represent the defense side in most cases. Here's what they had to say:
"A growing list of countries outside the United States, including Canada, Australia, most European, and several South American countries, now recognize some form of multiclaimant litigation-- whether class actions, groups actions, or representative actions by consumer or public organizations. The trend, however, has been to reject wholesale adoption of U.S.-style class actions. What has emerged instead is a distinctly "un-American" approach that generally disfavors opt-out procedures and often allows public bodies and private consumer organizations to bring collective actions in addition to (and sometimes in place of) individuals. Foreign countries also have "not so far been inclined to change other rules that have helped make class action lawsuits practical in the United States." In particular, there have not been widespread calls to do away with the loser-pays rule. Contingent fees and punitive damages remain generally prohibited, but changes are occurring in this area and past prohibitions are softening. The stepstaken so far in these two areas, in particular, have been incremental and modest--but a wall is built one brick at a time. If collective actions become more prevalent, and the foreign plaintiffs' bar better funded and coordinated as a result, it would not be surprising to hear calls for broader and speedier reform."
News this morning includes word that the Obama Administration will revive antitrust law and enforcement. Where the government leads, class actions are sure to follow.
(Speaking only as a consumer fresh from purchasing a new cell phone under the bizarre rules and pricing created by the cell phone companies. I'd like to see the cell phone market changed to encourage new telephone retailers from which we could safely buy a relaible phone that will work on any network that uses its type of signal (e.g. GSM). It's ridiculous to either have to sign up for years of service (and ancillary penalties) or pay $ 400 for a phone, epsecially when I can buy a small, web-focused laptop for the same amount.)
As class action statutes proliferate around the world, a key issue for corporations is whether they can block class actions through contract terms. The April 6, 2009 National Law Journal includes a good summary article by plaintiff's lawyer Linda Mullenix regarding the enforceability of class action waivers. She reviews specifically the recent decisions in Homa v. American Express, 2009 WL 440912 (3rd Cir. Feb. 24, 2009), and In re American Express Merchants' Litigation, 554 F.3d 300 (2nd Cir 2009). The Merchants' decision is especially interesting because of the court confronting and rejecting an attempt to apply the law of one state (Utah) remote to the transactions. Utah law apparently was chosen by Amex because of a state statute upholding the validity of class action waivers. The court declined to let Utah law control.
When is a multinational at risk for "aiding and abetting" human rights violations?
The answer is evolving. One case on the issue is Khulumani v. Barclay National Bank Ltd., 504 F.3d 254 (2d Cir. 2007). Recent developments are described in an interesting law.com article online as of today and written by Professor Georgene Vairo of Loyola Law School in Los Angeles; the article is available here
Much of the article focuses on an April 8, 2009 opinion by Judge Scheindlin that analyzes the issues in depth on a motion to dismiss in a case known as In re South African Apartheid Litigation. The opinion dismissed some claims but sustained others. The opinion by Judge Scheindlin is here, and seems well worth reading. Of note, the opinion allows American Pipe tolling of statutes of limitation in favor of the plaintiffs. That's a powerful incentive to the filing of class actions. It's also a weapon against governments - I may have been the first to apply it against the U.S. government, which we did successfully when representing businesses seeking to recoup taxes paid under an unconstitutional "Harbor Maintenance" tax. See Stone Container Corp. v. U.S., 229 F.3d 1345 (Fed. Cir. 2000).
The following excerpt from Professor Vairo's article provides a summary of some but not all of the "aiding and abetting" and conspiracy issues evaluated by Judge Scheindlin:
"On the other hand, she refused to dismiss claims that Ford Motor Co., General Motors Corp., International Business Machines Corp. and other companies aided and abetted torture and other atrocities committed by the regime, such as arbitrary denationalization by a state actor and cruel, inhumane and degrading treatment because such torts are well established in the community of nations.
Scheindlin's opinion is important because she takes a careful look at the standards for imposing liability, noting that the 2d Circuit had not left her with precise standards on a number of issues. Having established that aiding and abetting may violate the ATS does not answer the question of the type of mens rea required by nonstate actors. She rejected the defendants' argument that specific intent be required, holding instead that international law "requires that an aider and abettor know that its actions will substantially assist the perpetrator in the commission of a crime or tort in violation of the law of nations."She noted that the 2d Circuit had not addressed the question of whether conspiratorial liability was a tort cognizable under the ATS, but found that there was no consensus among nations and therefore refused to recognize conspiracy as a tort. According to Scheindlin, the defendants' political-question and international-comity arguments were largely eviscerated by her rulings on each of the classes of claims raised in the case. She noted the U.S. State Department's opposition to the litigation, as well as that of the current government of South Africa. She dismissed the State Department's arguments because they were vague, on the one hand, and irrelevant to the remaining claims. The political-question doctrine argument would have merit had the case impacted U.S. foreign policy, but she failed to see how litigating the remaining claims would have any impact on it at all."
Australia - Class Action Funders, and Competition Between Lawyers to Pursue Securities Class Action Claims
A Mondaq article from the Deacons law firm provides an interesting example of how entrepreneurial claiming is changing the face of litigation. The article is a brief but illuminating account of current, ongoing competition between multiple securities class action claims brought by different law firms, with some of the litigation financed by professional litigation funders. As a result of the litigation funders, the class claims are not identical, adding a new wrinkle to the mix as to coordination of litigation.
Business Insurance Europe is reporting 6 months of delay in implementing legislation for class actions in Italy. The delay moves the effective date from July 1, 2008 to January 1, 2009. The article presents the delays as needed to accommodate changes needed to satisfy concerns on all sides of the issues, but provides very few, if any specifics.