The 5th Annual Conference on the Globalization of Class Actions and Mass Litigation was even better than advertised. It was an engaging and enlightened gathering of the world’s top experts in the areas of class, collective, and mass litigation. And what better environment to have a conference on developments in international law than at the beautiful and historic Raad van State in the Hague. I can’t say enough about the great job that Professors Deborah Hensler, Christopher Hodges, and Ianika Tzanokova did in putting this year’s conference together.
The individual sessions all followed a similar general presentation format, which was very effective. Each panel presentation was focused around a case study based on the facts of a real case or set of cases. An academic would present the case study and generally introduce a set of issues flowing from that case study. A panel of practitioners, judges, and industry or consumer experts would then discuss the application of the problem in different geographic regions, political or judicial frameworks, or other contexts. The idea was focus the discussion on what is actually happening “on the ground” in the areas of class actions and mass litigation, which was a welcome perspective to those of us for whom what’s happening on the ground is what matters the most. The panels were diverse enough to offer a variety of viewpoints, but the topics were well-matched to the experiences of the panelists so that the presentations had continuity and a clear focus.
In the interest of not having to wait another week to post my thoughts on all of the sessions (and in not having a single post of such length that it will put some of you to sleep), I’ll be posting them separately over the next week or so. Here are my notes of the first session:
Session 1: The Challenge of Mass Communications: Problem or Opportunity?
The case study for this session was presented by Professor Ianika Tzanokova of Tilburg University, who also hosted the conference. The panel was chaired by Mr. Michael Seymour, International Director of Crisis & Issues Management, Edelman, and the panelists were Mr. Arnold Croiset van Uchelen, Senior Partner AllenOvery LLP, Mr. Ben Knüppe, Trustee of DSB Bank/Former CEO of Dexia Bank, Mr. Jan Maarten Slagter, Director Dutch Retail Shareholder Association (VEB) and Mr. Stephan Holzinger, Holzinger Associates Nederland.
The case study was of the Dexia investment products litigation in The Netherlands, mass litigation that was influenced greatly by media exposure. The litigation involved financial products called securities lease products, in which customers of Dexia’s predecessors in interest would loan money to consumers to fund investments, a scheme that worked well until the market downturn of the late 1990s. Dexia had been the subject of a TV program in Holland that resulted in tens of thousands of angry customer calls to the station that broadcast the program. Ultimately multiple special purpose consumer associations were set up for the purpose of aggregating, and ultimately settling, claims. Throughout the course of the litigation, both the defendant and the competing plaintiffs’ groups had to deal with complex and challenging public relations issues.
Understanding the panel’s discussion requires a basic review of how mass or collective actions are litigated in The Netherlands (and other European civil law jurisdictions). Dutch law allows consumer associations to represent the interests of consumers, but only to the extent that individual consumers affirmatively consent to the representation. Essentially, as Arnold Croiset van Uchelen explained, the system is one that relies on assignments and powers of attorney. When mass claims arise, as they did in the Dexia case, this means that consumer or plaintiff groups compete to round up members, and then compete for the court’s and the defendant’s attention based on the number of claimants that they purport to represent. One of the practical problems tends to be that victim’s advocates make claims to the media about how many of the claimants that they represent, in the interest of attracting attention to their cause. Certainly, many of these claims are legitimate, but the opportunity exist for a particular advocacy group to exaggerate the number of claimants that it represents in the hopes of gaining media attention and, ultimately, negotiating leverage.
Speaking from the industry perspective, former CEO of Dexia, Ben Knüppe presented a simple and direct argument about how to deal with the problem of media communications in European mass actions. The media is always looking for the simple message. The most radical position tends to get the most press, and as a result, the media often presents the view of fringe groups rather than the more reasonable views of the majority (as an aside, it stuck me how apt this commentary is in describing American politics). However, it is impossible to regulate how the media will portray the litigants’ competing messages. So, in Mr. Knüppe’s view, the system is in need of reform to regulate who should be permitted to represent plaintiffs’ interests in mass litigation.
Jan Maarten Slagter offered the unique perspective of someone who represents consumer interests but who has also been a member of the media. He defended the media by saying that the media always tries to get to “a truth” but pointed out that there are always multiple truths to a story due to differing perspectives. He then offered some specific guidance to organizations representing plaintiffs’ interests: A plaintiff’s organization has to play a difficult and subtle game. It’s important to be the first out of the gate in getting media exposure. You must show strength in the position of your argument, but you have to be careful to manage expectations. And when a consumer group achieves a settlement with the defendant, it often has to deal with competing groups and objectors. In this context, he noted that it is important to take the “wind out of the sails” of these competing interests by showing to the media, and ultimately the public, that you have negotiated the best deal.
Arnold Croiset van Uchelen talked about the roles of different types of media in mass litigation. Commenting on the role of social media, he noted that it plays an important role in modern litigation because unlike traditional media, it allows for two-way conversations between the media and the public. However, echoing one of Ben Knüppe’s points, he cautioned that it also tends to allow the most radical elements to come to the forefront. After commenting that the media tends to side with the plaintiffs in mass litigation because the media “loves misery,” he focused on the potential positive role of traditional media in mass litigation. He argued that the traditional media could play a stronger role in pointing out distinctions between competing plaintiffs’ groups in order to better serve the public about their choices in obtaining representation. Later in the presentation, one of the panelists gave an example of a TV station asking consumer groups to provide information about their organization and financing.
Stephan Holzinger had some good advice for those who represent defendants in mass litigation. Most fundamentally, he remarked on something that should be obvious but that may not be the first instinct for many defendants, “you run best with the truth.” He also counseled for the need for defendants to engage the media proactively in high-profile litigation as a way to head off problems with other interests, such as employees, suppliers, shareholders, and competitors. As a specific example, he pointed to Taco Bell’s successful public relations campaign in response to a would-be class action suit accusing it of consumer fraud for not using 100% beef in its tacos. Ultimately, Taco Bell was able to turn the lawsuit into a successful advertising campaign.
Public relations expert Michael Seymour anchored the panel with some comments about the dynamics of media impact on public perception. He found it interesting that several of the other panelists had commented about “using” the media in the context of litigation. He noted that in understanding traditional media, you have to consider that it must always move fast and that it always has only the partial attention of its audience. He added that social media tends to be effective because people have the most trust in “someone like myself” and that social media creates the impression of a more intimate, one-on-one communication (in case you’re wondering, I wrote this post just for you, seriously). Seymour offered a few specific points that a party to high-profile litigation should consider in developing an effective PR strategy. The first is to walk the fine line of advocating your position in the case without going too far in vilifying your opponent, since you may well find yourself sitting across the negotiating table later. Slagter echoed this point counseling plaintiffs to always be mindful of the “end game” in litigation in developing their media strategy. Seymour’s second piece of advice to litigants is to understand the “shape” of the case, i.e. how the case will develop and how long each phase will likely take.
There were several interesting questions posed during the Q&A portion of the presentation. One question involved what happens in the middle of the case, after the initial media exposure has died down but before a final resolution. Knüppe noted that in the Dexia case, opposing counsel was very good about not leaking information to the press during negotiations that led to a final settlement. However, in order to maintain a flow of information during the negotiations, periodic newsletters were sent to concerned shareholders to advice them on the status of the case.
Another series of questions asked about the relationship between media and the judiciary. First, the panel was asked to what extent courts in different jurisdictions may take into account media publicity about a case in their decision making. The general consensus was that the media should not impact judicial decision making, but panelists provided examples of instances where courts either commented on media exposure in their judgments or admitted after a case that media exposure had been on their minds at the time of the decision. Second, the panel was asked to what extent it is appropriate for a judge to make use of media in case management. This question generated a discussion about a key distinction between truly representative class actions in the United States and mass actions in Europe. In the United States, the court has an obligation to ensure that absent class members are provided information about the case and to take on an affirmative role in managing the delivery of that information. In Europe, by contrast, the role of communicating with individual consumers is left to the firm or association that the consumer selects as his or her representative, and if the court has any role at all, it is merely to ensure that attorneys represent who they say they represent.
Oxford Professor Christopher Hodges had an interesting observation to wrap up the session. He talked about the media’s social responsibility in seeking an ultimate truth with regard to high-profile litigation rather than simply reporting on the allegations being made. He pointed as an example to litigation claiming that infant vaccinations caused autism. He noted that although the litigation had been based on a medical hypothesis that was later debunked, the initial media attention that had been given to the plaintiffs’ claims generated among some segments of the public a fear of vaccinations that continues to have serious negative public health consequences, long after the litigation.