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Archive for February, 2009

As a class action defense lawyer in an Am Law 100 law firm, I usually don’t make it a practice to highlight the class action publications of competing U.S. firms, but Gibson Dunn & Crutcher‘s year-end class action report is such a great resource that I had to make an exception.  The report, published earlier this month, highlights statistical trends, key decisions, and key issues in class actions in both state and federal courts in 2008.  The report also analyzes the impacts of the Class Action Fairness Act (“CAFA”) on class actions in state  and makes predictions on trends and issues in 2009.   A copy of the report is available for public viewing at the firm’s website:

http://www.gibsondunn.com/Publications/Pages/Year-EndUpdateOnClassActions.aspx

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Many thanks to University of Missouri Law Professor Stacie I. Strong for the following tip about her article on international class arbitration.  If you’re interested in developments in either class arbitration or international class action law, this article is a must read:

Your readers may be interested in an article on international class arbitration that was published recently in 30 University of Pennsylvania International Law Journal 1 (2008). It touches on a lot of the issues that are discussed on the blog. The full title is “Enforcing Class Arbitration in the International Sphere: Due Process and Public Policy Concerns” and the SSRN link is found at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1330611

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According to the Daily Pilot and the California Chronicle, a California lawmaker has introduced a bill, AB 298, to allow defendants to file interlocutory appeals of class certification decisions.  The bill’s sponsor, Assemblyman Van Tran, has authored a guest blog post on The California Civil Justice Blog explaining the objectives behind the bill, which include helping the state’s economic recovery by promoting a better climate for business. 

It is unclear from the news articles or Tran’s blog post whether the bill would allow interlocutory appeal as of right or whether appeals would be discretionary, as they are under Rule 23(f), Federal Rules of Civil Procedure.  Either way, the goal of creating an economic impact of any significance by simply allowing class action defendants to appeal class certification decisions seems somewhat overly optimistic, even assuming that the bill has any chance of passage.  Previous class action reform bills introduced over the past few years have not fared well, according to the California Chronicle article.

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According to South Korean newspaper JoongAng Ilbo, families of five victims have filed a “class-action” against a confessed serial killer, seeking to recover more than a billion won.  The eye-catching amount sought in the case loses some of its “wow” factor when one considers that a billion won, translated into U.S. dollars, amounts to just over $700,000. 

Regardless of the amount at stake, the case is interesting because it illustrates the different ways in which the English term “class-action” is used in describing litigation in other parts of the world.  In the U.S., a “class action” is commonly thought of as a device allowing to take on powerful corporate or government abuses—or, depending on one’s perspective, to extort money out of powerful interests with deep pockets.  In South Korea, the procedural device reportedly has been used as a tool to stifle public protest and now, to seize the assets of an accused killer.

The author’s description of the serial killer case as a “class-action” appears simply to be a reference to the fact that it is multi-party case, as distinguised from a true representative action.  In the U.S., five plaintiffs would not be enough to meet the numerosity requirement under FRCP 23, and here, a similar case would more likely be brought as a wrongful death action, with the victims’ families either  joining together as plaintiffs or pursuing relief separately. 

Still, it’s hard to resist the temptation to imagine what the class notice might look like if class action were to be filed in the U.S. against a serial killer, “LEGAL NOTICE: If you or a family member have been chopped up and kept in a freezer, a class action lawsuit may affect your rights …”  Of course, here, the case would probably be brought against the freezer manufacturer.

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A February 12 article by Dune Lawrence on Bloomberg.com offers several keen insights into the legal and political challenges  facing a group of victims seeking collective relief in the Chinese courts for injuries caused by melamine-tainted milk last year.  The article quotes a Chinese lawyer whose thoughts echo those made in previous commentaries about the impact of the government’s preference for “admistrative” action over private remedies (see previous CAB entries dated January 21, 2009, November 9, 2008, and October 1, 2008),

China’s government prefers to take administrative action rather than let courts handle politically sensitive cases, according to Ed Lehman, the founder of Chinese law firm Lehman Lee & Xu. . . .  After the government organized compensation and sentenced two dairy company executives to death over the matter, “they think they’ve done what needs to be done,” he says.

The article notes, that despite the Chinese government’s reluctance to allow private remedies through collective action, Chinese law does allow for group lawsuits and there have been cases in which successful group actions have resulted in monetary recoveries.  So far, though, efforts to obtain a private remedy with the China’s Supreme People’s Court in the tainted milk case have met with silence.

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I just received my quarterly issue of the ABA Class Actions and Derivative Suits Committee (CADS) Newsletter.   The Winter 2009 issue features several articles on trends in international class action law, highlighted by Class Actions San Frontiers, an article authored by three Canadian panelists from a presentation of the same name from November’s ABA National Institute on Class Actions, David I.W. Hamer, Sylvie Rodrique, and Charles M. Wright.  The article outlines recent trends in litigation involving concurrent class action and mass tort litigation in the U.S. and Canada.

Unfortunately, the report is only currently available in paper form.   Presumably, an electronic version should be available soon to CADS members on the newsletter web page.

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I got the following query by email yesterday from Erik Cansler of Class Action Administration, Inc., probably my most loyal reader (maybe my only loyal reader), and got his permission to share with the world.  Unfortunately, I can’t confirm the story, but I can say that other reputable blogs, such as Overlawyered, seem to have picked it up, maybe for its entertainment value more than for its news-worthiness.  I’m hoping to convince Erik to contribute some guest posts for ClassActionBlawg.com, so stay tuned.

Paul,

I hope you’re doing well.  Over here at Class Action Administration we’ve been working on our usual variety of cases. Lately we’ve been seeing more settlements of California class actions brought under the Song-Beverly Credit Card Act, which prohibits merchants collecting personal information (like address and phone) from customers who pay with a credit card.

The California Civil Justice Blog is reporting a new twist. I thought I’d see if you’d heard of this, and if so, whether you’ve found it to be legit (the blog entry is at http://www.cjac.org/blog/2009/01/attorney-earns-gift-cards-inst.php):

A southern California attorney who brought a class action against a clothes retailer will be paid $125,000 for his legal services — in gift cards.

Yorba Linda attorney Neil B. Fineman brought a class action lawsuit against Windsor Fashions, alleging the company was committing routine violations of the Song-Beverly Credit Card Act, according to the Metropolitan News-Enterprise.

Per the settlement agreement, class members won’t receive cash, only a $10 gift card. Los Angeles Superior Court Judge Brett Klein also provided that Fineman will be paid his fee with “12,500 ten-dollar Windsor Fashions gift cards.”

It seems unlikely to me. What do you think?

Best Regards,

Erik Cansler

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Laptop Legal‘s “Class Action Thought for the Day” looks to West’s “Headnote of the Day” as food for thought for those considering the expansion of class actions in Europe and the former Soviet Union:

Purpose of a class action is to simplify the resolution of complex litigation, not complicate it.

Ah, if only West headnotes represented real life, I would have more time to blog.  As it stands, however, there is rarely anything simple in class action litigation.  For those who live in countries that have not yet adopted a U.S.-style class action model, the choice may be between overly complex litigation or nothing.  But, reformers looking for simplicity may be wise to consider the nothing option.

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Unless you’ve been living under a rock, you’ve probably already heard about the Second Circuit Court of Appeals’ opinion on class arbitration waivers in In re: American Express Merchants’ Litigation.  But in case you’re as out of the loop as I have been over the past week, the court has posted a copy of the slip opinion on its website, here.  (3/9/11 – The official link is no longer good.  However, you can still download a copy here courtesy of Michael J. Hassan’s Class Action Defense Blog.)

The court’s holding is summarized in this quote:

[W]e do not decide whether class action waiver provisions are either void or enforceable per se.  Rather, we are concerned solely with the class action waiver contained in the contract between the parties before us on this appeal. We conclude that, on the record before us, the plaintiffs have adequately demonstrated that the class action waiver provision at issue should not be enforced because enforcement of the clause would effectively preclude any action seeking to vindicate the statutory rights asserted by the plaintiffs.

Slip op. at 7.

In reaching this conclusion, the court addressed several threshold questions of note.  First, the court concluded that the issue of whether the class arbitration waiver was enforceable was a matter that could be decided by the courts rather than the arbitrator, since the issue was the enforceability of that provision, not whether the provision unambiguously required individual arbitration.  Id. at 18. 

The court went on to address the standard for proving that a class arbitration waiver would deprive a plaintiff of a substantive right conveyed under the federal antitrust statutes, recognizing that the plaintiff bears the burden of proving that the cost of pursuing individual relief would be prohibitively expensive.  Id. at 24-26.  In rejecting the trial court’s reasoning that the Clayton Act’s fee shifting provisions might allow an individual plaintiff to pursue vindication of his or her rights in an individual arbitration, the Second Circuit noted that expert witness fees and other litigation expenses would not be recoverable as costs to the prevailing party.  Id. at 29.  Finding that expert testimony would be essential to a successful claim in the complex antitrust case before it, the court found that the claims could not reasonably be pursued as individual actions given the cost involved.

The end of the opinion offers to “caveats”: 1) that the decision was not at all dependent on the characterization of the plaintiffs as “small merchants” or “small businesses” and that the only important consideration was whether a class action mechanism was the only way for the plaintiffs to vindicate their statutory rights; and 2) that the court was not holding class arbitration waivers per se unenforceable.  Id. at 34-35.

The opinion does not decide whether the arbitration provision itself is enforceable and whether the case would proceed as a class action in court or as a class arbitration proceeding.  The court noted that the plaintiffs had said that they would be amenable to proceeding in an arbirtration forum on a class action basis but that the defendant had said that it would reconsider its motion to compel arbirtration if the class arbitration waiver was struck down.  Id. at 36.

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