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Archive for September, 2012

Editor’s Note – This article, co-authored by my colleague Tina Amin, is a joint submission to CAB and the BakerHostetler Class Action Lawsuit Defense Blog.  Please visit our firm’s blog for more riveting class action-related content.

Today is Talk Like a Pirate Day, which is always a reminder of the Alien Tort statute (“ATS”), an arcane law that was originally enacted in 1789 in part to combat piracy.  In recent years, the ATS has been used as a tool for bringing class actions seeking to redress alleged international civil rights abuses arising out of a wide range of conduct including genocide, torture, slavery, apartheid, and environmental contamination.  In a recent ATS case, Kiobel v. Royal Dutch Petroleum, Case Nos. 06-4800-cv and 06-4876-cv, Nigerian plaintiffs alleged that the defendant company collaborated with the Nigerian government to commit extrajudicial killing, torture, crimes against humanity, and arbitrary arrest and detention.  In its September 17, 2010 decision, the Second Circuit became the first appellate court to reject the proposition that a corporation can be liable under the ATS for such alleged complicity.

On October 17, 2011, the Supreme Court originally accepted Kiobel, No. 10-1491, to address the issue whether a corporation can be liable under the ATS for alleged complicity in human rights abuses by a foreign government.  Oral argument in the Supreme Court was held on February 28, 2012.  A week later, the Court requested supplemental briefing on two related issues.  The first is on the broader issue of whether the U.S. courts have extra-territorial jurisdiction to adjudicate disputes about human rights abuses that occurred entirely outside U.S. borders.   The Court also asked “under what circumstances” the ATS “allows courts to recognize a cause of action” for extraterritorial violations.  The supplemental briefs were filed this summer.

Kiobel has broad potential implications for the future of international class actions in the U.S. courts.  The case is the second in the last three years to raise questions of extraterritorial application of U.S. federal law, along with the Morrison v. National Australia Bank, No. 08-1191, June 24, 2010, which limited the jurisdiction of the U.S. courts over certain international securities class actions.  To date, no federal appeals court has decided an ATS case based solely on an analysis of extraterritoriality, and the courts have assumed the extraterritorial reach of the law since it was resurrected from obscurity a few decades ago.  A ruling for the defendant in Kiobel could be a further sign of a trend closing the doors of the U.S. courts to international class actions and other international disputes.  If this occurs, expect to see additional developments in the area of collective multi-party procedure in other countries, as parties begin to seek redress elsewhere.

Oral argument in Kiobel is set for October 1, 2012.

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Reuters contributor Alison Frankel authored an insightful column published August 20, 2012 entitled Foretelling the End of Money-for-Nothing Class Actions, that touches on issues similar to those raised by Brian Wolfman in two recent articles summarized in this August 15 CAB post.  In her column, Frankel comments on a recent trend, particularly in data privacy class actions, where large fee awards are requested in settlements for which no meaningful relief is provided to class members.  Oftentimes, the fee awards are justified by the value of prospective injunctive relief or by the fact of a large cash payment to charity in the form of a cy pres award, but not by any direct benefits to the class members themselves.

Frankel predicts that we have seen the “high point” in what she terms “money-for-nothing” class action settlements, pointing to a growing skepticism among judges who are asked to approve them.  While it remains to be seen if this prediction will come true, Frankel’s article, like Wolfman’s articles, should at least give pause to class action attorneys who are willing to sell out a class for personal gain: you may be getting away with this now, but at some point the courts will begin to look beyond the desire to clear their dockets and begin to question the societal value of these settlements.

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The United States Supreme Court has granted certiorari to decide whether a plaintiff’s stipulation to seek less than $5 million in damages can deprive the federal courts of jurisdiction to hear the case under the Class Action Fairness Act of 2005 (“CAFA”). The specific question presented in Standard fire Insurance Company v. Knowles is as follows:

Last Term, this Court held that in a putative class action “the mere proposal of a class … could not bind persons who were not parties.” Smith v. Bayer Corp., 131 S. Ct. 2368, 2382 (2011). In light of that holding, the question presented is:

When a named plaintiff attempts to defeat a defendant’s right of removal under the Class Action Fairness Act of 2005 by filing with a class action complaint a “stipulation” that attempts to limit the damages he “seeks” for the absent putative class members to less than the $5 million threshold for federal jurisdiction, and the defendant establishes that the actual amount in controversy, absent the “stipulation,” exceeds $5 million, is the “stipulation” binding on absent class members so as to destroy federal jurisdiction?

For copies of the cert petition and other briefs, and the opinion below, see the SCOTUS Blog page for the case:

http://www.scotusblog.com/case-files/cases/the-standard-fire-insurance-co-v-knowles/

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