For those of you interested in the forthcoming book, World Class Actions, here’s a quick update. The page proofs should be ready by the end of next week, and barring unexpected delay, we are still on pace for an early summer publication date. For those that haven’t yet heard about the book, it is a guide to class and collective action litigation around the world. Here’s a link to the Oxford University Press web page for the book where you will find a more detailed synopsis. I’ll continue to post updates as the publication date approaches.
Archive for March, 2012
Posted in International Class Action Law, Lawyers' Resources, tagged global class action, international class action, International Class Action Law, oup, oxford, transnational class action, world class actions on March 29, 2012 | Leave a Comment »
Posted in Class Action Trends, International Class Action Law, Other class action blogs, tagged international class action, canadian class action, australian class action, global class action, transnational class action, australia class action, class arbitration, AAA, israeli class action, 10b-5, foreign cubed, canada class action, dutch class action, netherlands class action, atca, morrison, national australia bank, f-cubed, international arbitration, stolt-nielsen, 10b, chevron, collective settlement, alien tort, dutch law, ecuador, kiobel, us class action on March 27, 2012 | Leave a Comment »
NOTE: The following is a copy of a post that I did for the recently-released Baker Hostetler Class Action Lawsuit Defense Blog. Be sure to check out the new blog for other fantastic class-action-related content!
Globalization has brought with it the growing problem of how to deal with mass disputes that transcend jurisdictional boundaries, as well as ever-increasing creativity among the members of the plaintiffs’ bar in bringing ever-larger class and mass actions. There is no single global court or other forum for bringing international or cross-border civil disputes, let alone disputes that involve allegations of mass harm. One of the key challenges for lawyers, policymakers, consumers, and businesses in the 21st century is how to efficiently resolve international mass disputes given the realities of globalization and the lack of any clear forum.
From the late 1990s through the first decade of this century, there were several trends favoring the U.S. courts as a global forum for litigating international disputes. However, recently, that trend has reversed, and the U.S. courts are becoming increasingly reluctant to entertain international class action litigation.
One of the hottest trends in securities litigation in the latter part of the last decade was what became known as foreign-cubed (or “f-cubed”) class actions, securities fraud class actions filed on behalf of foreign investors against foreign companies involving securities traded on a foreign exchange. The trend came to an abrupt halt, however, when the U.S. Supreme Court issued its decision in Morrison v. National Australia Bank Ltd., 130 S. Ct. 2869 (2010), holding that section 10(b) of the Securities and Exchange Act does not have an extraterritorial reach and only applies to securities traded on a U.S. exchange or other transactions that occurs within a U.S. state or territory. Although lower court decisions following Morrison, including a recent Second Circuit Court of Appeals decision, may breathe some life back into the idea of litigating a small subset of primarily foreign securities disputes in the U.S. federal courts, Morrison has generally closed the U.S. courts to foreign-cubed class actions.
Another promising avenue for litigating global mass disputes was international arbitration. A developing strategy was for plaintiffs who had signed form arbitration agreements to seek to compel arbitration on behalf of both themselves and others who had signed the same form of agreement. (Several arbitration associations have implemented specific rules for how class arbitrations should be conducted. Here is a link to the AAA Supplemental Rules for Class Arbitration). The Supreme Court put an end to this strategy when it decided the international price-fixing case, Stolt-Nielsen, S.A. v. AnimalFeeds Int’l Corp., 130 S. Ct. 1758 (2010). In Stolt-Nielsen, the Court held that a party to an arbitration agreement could not compel class-wide arbitration unless the parties had expressly agreed to allow class, rather than individual, arbitration.
In the human rights area, the U.S. Alien Tort Claims Act has increasingly been used as a tool to litigate international disputes involving alleged violations of international law over the past two decades. Several circuit courts of Appeals have even allowed actions under the ATCA to be brought against private corporations, under the theory that those corporations aided and abetted a foreign government or foreign official in committing human rights abuses. However, the Circuits split on the issue, and the Supreme Court accepted certiorari to resolve the split in the case of Kiobel v. Royal Dutch Petroleum, No. 10-1491. Following an oral argument held last month, the Supreme Court issued an order directing the parties to submit supplemental briefing to address the extent to which the ATCA should permit the exercise of extraterritorial jurisdiction at all over acts that took place within a sovereign jurisdiction other than the United States. Questions posed during oral argument, especially by the conservative wing of the Court, suggest skepticism about the allowing U.S. Courts to adjudicate human rights disputes that have nothing to do with the United States.
At the same time that avenues for global mass redress in the U.S. Courts have been closing, doors have been opening in other parts of the world. Class action law continues to develop in Canada and Australia. Israel has a class action procedure that closely mirrors U.S. law. Dozens of other countries in all corners of the world now have procedures allowing at least some form of mass redress. A very recent example is a class action law enacted in Mexico that permits a form of collective litigation that, while quite different from class actions in the United States, provides express mechanisms for seeking collective redress. In 2006, the Netherlands passed a law that allows mass settlements of claims (although it does not provide a procedure for litigating contested class claims), and arguably allows residents of other EU countries to be included. In other countries, the lack of a specific class or collective action procedure has not kept courts from fashioning remedies for mass redress.
The continuing lack of a single global forum for litigating mass disputes and the proliferation of new procedures permitting collective litigation abroad, are likely to have at least one near term practical impact. That is, the development of areas of law dealing with the enforcement of foreign class or collective action judgments. This has already become a reality in a huge environmental contamination case involving the drilling operations of a formal Chevron subsidiary in Ecuador. In 2010, a court in Ecuador entered an $18 million judgment in the case, and proceedings are ongoing in both the U.S. courts and in international arbitration proceedings relating to the enforceability of the judgment.
In a related vein, U.S. courts increasingly find themselves adjudicating disputes under 28 U.S.C. § 1782, which allows litigants discovery in the United States for use in connection with foreign proceedings (see this recent Second Circuit Court of Appeals decision interpreting the statute).
What does this all mean for potential litigants in global disputes? For any company or even small business that does business internationally, these developments highlight the necessity of keeping up with the constant changes in local laws as well as international trends. The procedures that might have been applicable, and arguments that might have been persuasive a year before, may no longer be viable, but new avenues and theories will have almost certainly taken their place.
The class action defense practice team at Baker Hostetler has a new blog, http://classactionlawsuitdefense.com. The blog will showcase the insights of our firm’s many capable class action defense lawyers and covers a wide-range of class-action-related topics. The blog already has around 20 informative posts from various members of our team. Check it out!
Posted in Class Action Trends, tagged bp, dukes, e-discovery, employment class action, esi, hedge fund, litigation funding, oil spill, parens patriae, ponzi, trustee, wal-mart on March 22, 2012 | Leave a Comment »
From time to time we will troll the class action blogosphere for news and information about our favorite class action topics. Here are just a few of the recent headlines from around the web.
Complex litigation as a commodity investment?
Hedge funds have traditionally been willing to explore new territory in the non-traditional investment sphere. At least some appear to be finding potentially attractive opportunities in so-called Litigation Funding Companies. LFC’s are often run by former lawyers–some with an investment or hedge fund background. They identify potentially profitable lawsuits and agree to fund the litigation (to a point) in exchange for a percentage of the settlement. Three Geeks and a Law Blog has an interesting multi-part series on this new trend. Read it here.
10 ways to defend class actions using Walmart v. Dukes
Andrew Trask, class action attorney at McGuire Woods and co-author of the Class Action Playbook recently put together a list of takeaways explaining how class action defense attorneys can use Wal-mart v. Dukes. His post links to a power point presentation he recently gave at DePaul University. It’s a quick read and worth checking out.
The BP litigation in the Deepwater Horizon Oil Spill off the Gulf Coast has settled for all claimants except the federal government. The Mass Tort Litigation Blog has been providing regular updates including this post discussing what’s known about the settlement. It appears the settlement will consist of two separate agreements. One will resolve economic claims while the other will resolve medical claims. The Blog cites news reports explaining that “either the settlement will be paid by the $20 billion fund BP created to compensate victims or the fund will close and be replaced by a court overseen claims facility.”
Irregular transaction was not enough to show a Bank had actual knowledge of an alleged Ponzi scheme.
Race to the Bottom contributor Susan Beblavi unpacks the Eleventh Circuit’s semi-recent opinion in Lawrence v. Bank of America, D.C. Docket No. 8:09-cv-02162-VMC-TGW, 2012 LEXIS 777 (11th Cir. Jan. 11, 2012). In that case, putative class action plaintiffs alleged the Bank of America substantially assisted in a Ponzi scheme operated by one of its account holders. The Eleventh Circuit upheld the District court’s dismissal of the case reasoning that even though BOA authorized numerous large transactions by the account holder, the bank wasn’t required to investigate them under Florida law. Moreover, the court found the purported red flags were too weak to infer that it was plausible that the bank had actual knowledge of the alleged scheme. Read more at the link below.
Parens Patriae actions, class actions?
The 9th Circuit holds that parens patriae actions under Nevada law are not class actions removable to federal court under CAFA, adding to a circuit split on the issue. For a succinct explanation, see Katherine Heckert’s post at the Carlton Fields Class Action Blog:
Walmart v. Dukes reasoning reverses class certification again
Skaddon’s Russell Jackson posts that the Louisiana Supreme Court has again reversed class certification due to problems of commonality and causation. Previously, the Louisiana high court adopted the U.S. Supreme Court’s common question analysis in Walmart v. Dukes to reverse class certification in Price v. Martin. In a recent per curiam opinion in Alexander v. Norfolk So. Corp., No. 11-C-2793, Slip op. (La. Mar. 9, 2012), the Louisiana Supreme Court cited Price for the proposition that class certification requires a rigorous analysis and significant proof of a common question. The case involved a chemical spill involving train cars. Hundreds complained of a bad smell and irritation to their eyes, throat and nose. This led to a class action that was certified by the trial court and affirmed by an appellate court. It turned out, each putative class member would need individual toxicology testing to determine whether they are among the minority of people who are susceptible to very low levels of the released chemical. The Louisiana Supreme Court ultimately reversed class certification based on the lack of predominance of common issues, and the need for individualized trials. Read more here.
The Perils of Electronically Stored Information
Todd Dawson’s post on Baker Hostetler’s Employment Class Action Blog illustrates just how badly things can go when a key “smoking Howitzer” document slips through defense counsel’s ESI review and ends up in the plaintiffs’ hands. In an FLSA Collective Action, the employer produced two million documents. Prior to the production, the employer’s attorneys used various search terms to identify privileged documents. Inevitably, one got through – a bad one. Even worse, the court concluded that the employer had waived privilege. Thus, not only did the plaintiffs’ counsel get to see the document, they got to use it as well. To see how this disaster could have been avoided, read more here.
Posted in Class Action Settlements, Commentary, tagged 2d cir, class action, class action settlement, compromise, fairness hearing, rakoff, sec action, second circuit, settlement, settlement approval on March 16, 2012 | Leave a Comment »
David Lat posted an article on the legal industry blog Above the Law yesterday that caught my eye. Lat’s post, entitled Benchslap of the Day: Second Circuit Rebukes Rakoff, discusses the Second Circuit Court of Appeals’ per curium decision granting a stay pending the appeal of the lower court’s refusal to approve the settlement in SEC v. Citigroup Global Markets Inc., No. 11-5227-cv (2d Cir., Mar. 15, 2012). Although the case is an SEC enforcement action and not a class action, I would argue that the following sentiment from the Second Circuit’s opinion applies with equal force in the class action context:
It is commonplace for settlements to include no binding admission of liability. A settlement is by definition a compromise. We know of no precedent that supports the proposition that a settlement will not be found to be fair, adequate, reasonable, or in the public interest unless liability has been conceded or proved and is embodied in the judgment. We doubt whether it lies within a court’s proper discretion to reject a settlement on the basis that liability has not been conclusively determined.
There is a corollary to this statement, which holds that a settlement does not have to fully compensate alleged victims in order to be fair and reasonable. Too often, I hear statements by the media, members of the public, and even lawyers and judges, that are critical of a class action settlement because it does not fully compensate the members of a class or because it does not force a defendant to fully pay for the alleged harm. As the Second Circuit panel’s opinion reminds us, a settlement is a compromise. Except perhaps in the rare case where liability has already been proven, it is not unfair or unreasonable that a class action settlement does not provide full relief for the alleged victims of some as-yet unproven wrong. You can bet that I will be citing this decision the next time I face that sort of argument in a class action settlement.
Posted in Class Action Trends, Reports and Surveys, Securities Class Actions, tagged class action, class action settlement, cornerstone research, pslra, reform act, securities class action, settlement trends, slusa on March 14, 2012 | 2 Comments »
Cornerstone Research has published a new study on trends in securities class action settlements concluding that the total number of securities class action settlements, the total amount of settlement dollars, and the average settlement value, fell to their lowest levels in 10 years in 2011. Michael J. de la Merced of the New York Times authored this article summarizing the study’s key findings and analyzing the potential causes of the decrease.
You May Be Entitled to a Substantial Award in a Class Action Settlement, Just Send Us All Your Personal Information and You’ll Get a Huge Check
Posted in Class Action News, Class Action Settlements, tagged argus, Buccino, Chiesa, class action administrator, class action notice, Edward Thompson, new jersey, new jersey attorney general, notice expert, notice program, scam, wentworth on March 8, 2012 | 1 Comment »
The Record staff writer Harvy Lipman authored this article today discussing the New Jersey Attorney General’s warning to consumers about a scam involving a fake class action notice. The official-looking notice directs recipients to send personal information in order to obtain settlement benefits in a fictitious securities case brought by a fictitious government official.
I have to wonder whether the emergence of fake class action notice scams will provide fodder for class action settlement objectors who argue about the effectiveness of a real class action settlement notice program. This is all the more reason to do something that I preach about regularly on CAB: always consider retaining a qualified notice expert as part of a class action settlement.
Whether the subject matter focus of your practice is consumer fraud, employment, insurance, environmental, securities, or antitrust, civil rights or something else altogether, it’s hard to be an effective class action lawyer unless you have a basic understanding of regulatory issues and practice.
So, while it’s not directly class action-related, may I recommend an upcoming CLE program that might be of great benefit. The program, titled Regulatory Advocacy: Your Role in Devising and Affecting a Positive Outcome for Your Clients in the Different Regulatory Spheres is sponsored by Colorado Bar Association CLE and the Colorado Bar Association Business Law Section, and is co-chaired by two of my Baker Hostetler colleagues, Rico Munn and Rick Levin. Rico is the former Executive Director of the Colorado Department of Regulatory Agencies, and Rick is a former in-house lawyer with significant experience in the areas of corporate compliance, financial services, and electronic trading platforms. The program is scheduled for April 6, 2012, and you can attend either in person or by live webcast. The esteemed panel of faculty includes top academics, regulatory officials, attorneys, and business leaders.
Here is a link to the Colorado Bar Association CLE website page for the program, where you can get more information and register.
Posted in Class Action Decisions, International Class Action Law, Securities Class Actions, tagged 10b, 10b-5, absolute activist, conduct and effects, ficeto, morrison, national australia bank, scotus, securities class action, securities fraud, transactional test, u.s. supreme court on March 6, 2012 | Leave a Comment »
The Second Circuit Court of Appeals issued a decision last week that confirms that there are still situations where primarily foreign securities fraud disputes may be litigated as class actions in the United States courts. The decision explores the contours of the US Supreme Court’s holding in Morrison v. National Australia Bank Ltd., 130 S. Ct. 2869 (2010) that § 10(b) of the Securities Exchange Act of 1934 does not have an extraterritorial reach. Here’s a link to the opinion, courtesy of the New York Law Journal: Absolute Activist Value Master Fund Ltd. v. Ficeto, No. 11-0221-cv (2d Cir., March 1, 2012).
Morrison recognized two situations in which a securities fraud claim would be sufficiently domestic in nature to be governed by § 10(b) and SEC Rule 10b-5. The first, not at issue in Absolute Activist, is where the security is traded on a US exchange. Absolute Activist addresses the second situation, which involves “domestic transactions in other securities.” The Second Circuit’s test for whether transactions are domestic is whether “irrevocable liability is incurred or title passes within the United States.” In simpler terms, if the parties become bound to effectuate the transaction in the United States, the transaction is a domestic one, but the transaction could also be domestic if title to the securities passes within in the United States, even if the parties became bound elsewhere. In reaching this conclusion, the panel rejected several other tests proposed by the parties, including tests proposed by the plaintiff that would have looked to the location of the broker-dealer or to whether the security was issued by a US company or was registered with the SEC, and tests proposed by defendants that would look to the place of residence of both the buyer and seller in the transaction or to whether a given defendant committed some affirmative act within the United States.
Unfortunately, given the fact-intensive nature of the test articulated by the Second Circuit panel, the decision leaves open the question of what specific facts might be sufficient to establish that irrevocable liability was incurred or title transferred within the United States. The panel held that the facts in the complaint were not sufficient to meet either requirement, but remanded with instructions to allow leave to amend. However, the opinion does offer some insight into what might be sufficient. In concluding that leave to amend would not be futile, the court held pointed to representations made by counsel at oral argument that there existed ”trading records, private placement offering memoranda, and other documents indicating that the purchases became irrevocable upon payment and that payment was made through Hunter in the United States.”
Posted in Class Action Trends, International Class Action Law, Other class action blogs, Reports and Surveys, Securities Class Actions, tagged australia class action, f-cubed, foreign cubed, international class action, mexican class action, mexico, mexico class action, morrison, national australia bank, securities class action on March 5, 2012 | Leave a Comment »
Kevin LaCroix, whose blog The D&O Diary is a premier source for the latest trends in securities-related class action litigation, has an excellent post out today discussing two key developments in an area that is very close to my heart, international class action litigation. The first part of LaCroix’s post discusses a recent publication from Asia-based International law firm King & Wood Mallesons discussing class action filings in Australia. According to the report, there are currently only about 14 class action filings filed on average in the Australian federal court, a number that represents less than 1% of all federal filings in that country (this figure does not include filings in the courts of individual states; both Victoria and New South Wales also have civil procedure rules similar to the federal rules).
The second part of the post addresses the potential implications of the recent enactment of a class action law in Mexico. LaCroix summarizes a recent Jones Day publication on the subject, then adds his own commentary. In particular, he makes an observation similar to one that international plaintiffs’ class action lawyers Michael Hausfeld and Brian Ratner make in the forthcoming book World Class Actions: that one of the potential implications of the US Supreme Court’s 2010 decision in Morrison v. National Australia Bank, which limited f-cubed securities class actions in the United States, may be an increase in litigation in foreign jurisdictions that allow for securities class actions or some other form of collective redress.