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Archive for August, 2008

Here is an interesting tidbit about a possible class action reform in South Korea from the Korean newspaper the Chosun Ilbo.  Reportedly, “the Presidential Council on National Competitiveness and the ruling Grand National Party” have agreed to “introduce class action suits as a way to compensate victims of illegal collective actions such as illegal rallies and strikes.”  (“Collective actions” in this context apparently means group activity, not collective legal action).

It is unclear from the article who the possible victims are that would have standing to bring the proposed class action suits, who could be sued, and what types of injuries could be remedied.  The article does go on to quote a presidential official as stating that the device would be intended to “put pressure on civic organizations that have so far led to illegal, violent protests.”

For those of us unfamiliar with South Korean society and culture, the whole idea seems a bit backwards.  A class action device for the purpose of suing the perpetrators of public protests?  However, this pictorial review from the blog Who Sucks? and this article from the Kyoto Journal on the often bizarre world of South Korean protests may shed some light on the problem, if not the justification for this particular solution.

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Although courts have upheld class arbitration waivers–contract clauses requiring arbitration but prohibiting class treatment of claims in the arbitration–under some circumstances, the trend seems to favor striking them down as unconscionable or void as against public policy, especially in consumer contracts where any individual dispute is likely to involve only small amounts of money.  The latest decision supporting that trend came today from the Supreme Court of Washington.  The opinion is the second from the Washington high court holding a class arbitration waiver provision invalid.

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As reported today in the UK trade publication Professional Pensions, the Civil Justice Council, a governmental advisory committee charged with studying and recommending policy decisions relating to civil justice issues, issued a report earlier this month recommending that enhanced collective action procedures be adopted in the British civil courts.  The procedures, if adopted, would include many of the features of class actions in the United States.  Many of the recommendations are similar to those recently recommended by an advisory group in the Australian state of Victoria.

Here is a summary of the panel’s recommendations:

1) Introduction of a generic collective action procedure;

2) Procedures to allow a wider range of representatives to bring collective actions, ranging from individuals to “ad hoc bodies”;

3) Permitting both opt-in and opt-out actions, with tolling procedures to apply during the pendency of an opt-out action;

4) Strict certification requirements;

5) Enhanced case management of collective actions by specialized judges;

6) Permitting awards of aggregate damages in opt-out actions, which would involve changes to both procedural and substantive law;

7) Requirement that the court conduct a fairness hearing to evaluate the fairness of a collective action settlement to absent parties;

8) “Full” cost-shifting;

9) Cy pres awards allowing unclaimed funds to be distributed to a foundation or trust;

10) Recommendation that the changes be introduced by legislation as opposed to by changes to the civil rules.

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Canadian attorney Howard Levitt has an interesting article published today on FinancialPost.com about trends in Canadian employment class action law.  The article offers some practical preventative tips for employers, but also makes a few keen observations about the dynamics surrounding a recent increase in employment class actions in Canada, including this gem: 

It’s a new phenomenon: Roving groups of lawyers searching for corporate conduct deleteriously affecting large groups of employees quickly move to find one employee willing to start a class action on behalf of all.

Many of these lawyers have little or no expertise in employment law.

Levitt’s description conjures images of Canada as the wild frontier of employment class action law.  Certainly, there are many examples of young lawyers who have hit it big in class action lawsuits in the U.S.   But the inexperienced class action lawyers roaming the country in search of class actions like 49ers speculating for gold have long since settled down to cultivate the fertile class action ground south of the border. 

The roving bands have settled into established firms and consortiums of trial lawyers with the expertise, resources, and influence to edge out even the most enterprising of young lawyers.  This often occurs behind the scenes through a process called “private ordering,” politely described in the Federal Judicial Center’s class action Pocket Guide for judges as when counsel competing for the role of lead counsel in a case agree amongst themselves to divide up responsibilities and fees.  Sometimes, however, the struggle becomes more public, as it did when several different groups of firms competed for the role of lead counsel in this recent case.  “Auctioning,” or competitive bidding for the role of class counsel, has also been used in some cases.

So, if you’re a young enterprising class action lawyer in the U.S., you may have to pay your dues a bit before you earn your first private jet.  And for those would-be prospectors thinking about heading north to stake your claims, in addition to a quality gold pan and a sturdy mule, you’ll need to submit an application to the National Committee on Accreditation.

For some online articles discussing the phenomenon of “entrepreneurial litigation” try these links:

http://www.austlii.edu.au/au/journals/MULR/2006/14.html#Heading131

http://www.rand.org/pubs/monograph_reports/MR969/MR969.ch10.pdf

http://www.law.harvard.edu/programs/olin_center/corporate_governance/papers/04.Halfteck.class-action.pdf

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To subscribe, Just click the link and you will be asked to provide your email address.  After that, you will receive an email from Feedburner to activate your subscription.  Once you have clicked the activation link in the email, you’ll be all set up to receive daily updates by email.

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Here are some blog entries from the week that was that might be of interest to class action practitioners:

Class Action Decisions

The Complex Litigator and The UCL Practitioner offer analysis of a recent California class certification decision addressing a variety of issues, including ascertainability of the class, evaluation of the merits in ruling on class certification, commonality and predominance:

http://www.thecomplexlitigator.com/2008/08/certification-d.html

http://www.uclpractitioner.com/2008/08/new-class-cer-1.html

Class Action Defense Blog provides a synopsis of a Second Circuit Court of Appeals decision upholding the district court’s order reducing a negotiated fee award from 8.5% to 3% in a securities class action settlement:

http://classactiondefense.jmbm.com/2008/08/class_action_defense_casesin_r_115.html

CAFA Law Blog summarizes a Massachusetts state court decision that looked to provisions of the federal Class Action Fairness Act (CAFA) in rejecting a coupon settlement, recognizing that while CAFA did not apply expressly in the state court proceeding, its provisions reflected “mainstream” concerns with coupon settlements:

http://www.cafalawblog.com/-case-summaries-judge-says-chew-on-this-in-disapproving-settlement-in-smokeless-tobacco-class-action.html

Mass Tort Defense reviews a recent decision by the United States District Court for the Eastern District of Missouri denying certification of a class of rice farmers claiming damages resulting from genetically modified rice contamination (synopsis also provided by Class Action Defense Blog, cited in last week’s CABWR):

http://www.masstortdefense.com/2008/08/articles/mdl-court-rejects-class-action-in-genetically-modified-rice-litigation/

Consumer Advertising Law Blog discusses a Fifth Circuit decision reversing class certification in a case involving allegations of unsolicited faxes in violation of the Telephone Consumer Protection Act (TCPA):

http://www.consumeradvertisinglawblog.com/2008/08/the-fax-of-the-matter-court-holds-that-consumer-protection-case-not-proper-for-class-certification.html

Florida Appellate Blog discusses a recent Florida state court decision addressing the practice of “picking off” a class representative by offering to settle for the full amount of his or her claim in an effort to moot the class action:

http://www.floridaappellateblog.com/2008/08/ucc-notice-requirements-and-picking-off-a-class-representative-is-not-condoned.html

Dispatch Monthly Magazine reports on a federal court’s decision to grant class certification to a class of police dispatchers in a case challenging department regulations for returning to work after sick or injury leave:

http://www.911dispatch.com/db/index.php?option=com_content&task=view&id=1996

HousingBath.com discusses the denial of class certification in a lawsuit filed against a condominium developer by purchasers seeking to void their contracts due to alleged defects in the building:

http://housingbath.com/2008/08/daily-soak-august-25.html

TortsProf Blog comments on an article from the Legal Intelligencer (reprinted at www.Law.com) discussing a ruling by the Third Circuit Court of Appeals reversing the dismissal, on preemption grounds, of a consumer class action against a manufacturer for alleged failure to warn about the dangers of mercury in tuna:

http://lawprofessors.typepad.com/tortsprof/2008/08/mercury-in-tuna.html

Class Action News

More from American Thinker, Death by 1000 Paper Cuts, National Review Online’s The Corner, Libertyville, Under the Dome, Spencer Blog, and LukeFord.net on Warren Buffett’s recent suggestion that contributors file a class action against John Edwards for concealing his extramarital affair (See ClassActionBlawg.com entry here)…

http://www.americanthinker.com/blog/2008/08/buffett_suggests_edwards_suppo.html

http://deathby1000papercuts.blogspot.com/2008/08/john-edwards-campaign-refunds-more.html

http://libertyville.wordpress.com/2008/08/25/buffet-calls-for-class-action-on-edwards/

http://corner.nationalreview.com/post/?q=YTIyMDI3ZGUzZmNkZGI0ZWE2ZWUzOGNlMDc4ZmMzNzg=

http://projects.newsobserver.com/under_the_dome/buffett_says_donors_should_sue_edwards

http://www3.allaroundphilly.com/blogs/delcotimes/gils/2008/08/buffett-on-edwards-sue-em.html

http://lukeford.net/blog/?p=3966

… with follow up from NewsBusters.org and Perfunction regarding efforts by Edwards to refund contributions to just one of his “Two Americas” (Spoiler: it’s the one with the class action lawyers in it, not the one with Buffett’s proposed class action plaintiffs):

http://www.newsbusters.org/blogs/p-j-gladnick/2008/08/25/web-scoops-msm-edwards-refunds-contributions-one-his-americas

http://perfunction.typepad.com/perfunction/2008/08/coda-john-edwar.html

Class Action Commentary

Legal Theory Blog summarizes an article by Vanderbilt Law Professor Richard A. Nagareda with the fairly self-explanatory title, “Class Certification in the Age of Aggregate Proof”:

http://lsolum.typepad.com/legaltheory/2008/08/nagareda-on-cla.html

Mass Tort Litigation Blog provides an abstract and link to an article by Michigan law student Patrick Luff criticizing the weighing of the costs and benefits that could result from certifying a class in making a class certification decision:

http://lawprofessors.typepad.com/mass_tort_litigation/2008/08/new-scholarship.html

Overlawyered comments on a curious case of forum shopping where plaintiffs’ counsel was successful in pursuing a nationwide class action filed in Oklahoma seeking to apply Texas law after a Texas court had previously rejected the same claims, holding that Texas law did not permit the type of nationwide class that the plaintiffs sought to pursue:

http://overlawyered.com/2008/08/the-inverted-federalism-of-grider-v-compaq/

Nonlawyer Commentary

See this www.eHow.com article for a non-lawyer’s perspective on the practical aspects of starting a personal injury class action lawsuit:

http://www.ehow.com/how_4491550_personal-injury-class-action-lawsuit.html

And if you are looking for one consumer’s viewpoints on participating in a class action settlement, see this entry from Queercents:

http://www.queercents.com/2008/08/22/are-class-action-lawsuits-worth-your-time-and-money/

Legal Ethics

Wage Law has posted a request from the California State Bar for public comment on a proposed ethics rule regarding “Offers of Settlement Conditioned on Client’s Waiver of Statutory Right to Seek Attorney’s Fees”:

http://wagelaw.typepad.com/wage_law/2008/08/public-comment-sought-on-proposed-ethics-rule.html

Class Action Trends

Apparently www.SueEasy.com is still alive and going strong, according to these entries from WebWare and MakeUseOf.com:

http://news.cnet.com/8301-17939_109-10020627-2.html?part=rss&subj=Webware

http://www.makeuseof.com/dir/sueeasy-file-complaint-class-action-lawsuit/

Class Action News

Sagwatch Blog reports on the setting of a trial date in a class action filed by former NFL players against the NFL Players Association seeking payments under a group licensing agreement:

http://blog.sagwatch.net/2008/08/25/sept-22-trial-date-set-in-players-inc-lawsuit/

International Class Action Law

Point of Law comments on a unique feature of British law that allows investors to purchase an ownership interest in litigation and examines the challenges of allowing a similar mechanism in the United States:

http://www.pointoflaw.com/archives/2008/08/beyond-continge.php

The D&O Diary comments on what NERA has called “the largest settlement in a class action securities case in Canadian history,” the relationship between the Canadian case and the U.S. subprime crisis, and its potential impact on trends in subprime litigation in the U.S.:

http://www.dandodiary.com/2008/08/articles/subprime-litigation/subprime-litigation-a-glimpse-of-the-end-game/

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I recently came across this interesting August 20, 2008, article authored by Nicholas Rummell at FinancialWeek.com, discussing a report issued that same day by the Corporate Library finding that CEO compensation tended to increase rather than decrease following a securities class action against the company.  The report appears to focus on compensation decisions following the mere filing of the lawsuit, as opposed to its resolution.  Also, as the Financial Week article points out, the report does not take into account cases filed after the stock option backdating scandal broke.

It is difficult to draw any clear conclusions from the article without reading the report itself (which is available for purchase at the Corporate Library website), but the implication seems to be that the financial impact of securities class action lawsuits is being borne by shareholders rather than the executives.  It would be interesting to see if the same trend holds true after there has been a large payout due to a verdict or settlement.

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