I’m on vacation until the end of next week, so the posts here at CAB may be sparse and short over the next 10 days or so, but here is a short news item that caught my eye. According to this article from the Hindu Times, the Indian Parliament is considering a bill that would allow U.S.-style class actions in securities fraud cases in India.
Archive for July, 2009
Securities Class Actions to Come to India?
Posted in Class Action News, International Class Action Law, tagged hindu times, india, india class action law, indian class action law, securities class action on July 29, 2009| Leave a Comment »
Stanford/Cornerstone Issue Mid-Year Report on Securities Class Action Trends
Posted in Class Action Trends, Reports and Surveys, Securities Class Actions, tagged class action report, Class Action Trends, financial crisis litigation, global financial crisis, securities class action on July 21, 2009| Leave a Comment »
As reported in this recent Financial Times article, the Stanford Law School Securities Class Action Clearinghouse and Cornerstone Research have issued a Mid-Year Report on trends in securities class action filings. Among the report’s key findings are that U.S. securities class actions against foreign companies are on the rise and that the financial industry continues to be the target of “unprecedented litigation activity,” trends that are not particularly surprising in the wake of the global financial crisis. Here is a link to the full report available from the Clearinghouse website.
Incentive Awards OK, But Not Incentive Agreements
Posted in Class Action Decisions, Class Action Settlements, tagged 9th circuit, class action incentive, class action settlement, class settlement, incentive agreement, incentive award, incentive payment, ninth circuit on July 16, 2009| 1 Comment »
In an opinion entered in April in Rodriguez v. West Publishing Corp., the U.S. Court of Appeals for the Ninth Circuit stated its disapproval of the practice of plaintiffs’ counsel entering into incentive agreements with putative class representatives, which required their attorneys to seek successively higher payment in the event of class settlements in successively higher dollar amounts. The court described the problem as follows:
Incentive awards are fairly typical in class action cases. See 4 William B. Rubenstein et al., Newberg on Class Actions§ 11:38 (4th ed. 2008); Theodore Eisenberg & Geoffrey P. Miller, Incentive Awards to Class Action Plaintiffs: An Empirical Study, 53 U.C.L.A. L. Rev. 1303 (2006) (finding twenty-eight percent of settled class actions between 1993 and 2002 included an incentive award to class representatives). Such awards are discretionary, see In re Mego Fin. Corp. Sec. Litig., 213 F.3d 454, 463 (9th Cir. 2000), and are intended to compensate class representatives for work done on behalf of the class, to make up for financial or reputational risk undertaken in bringing the action, and, sometimes, to recognize their willingness to act as a private attorney general. Awards are generally sought after a settlement or verdict has been achieved.
The incentive agreements entered into as part of the initial retention of counsel in this case, however, are quite different. Although they only bound counsel to apply for an award, thus leaving the decision whether actually to make one to the district judge, these agreements tied the promised request to the ultimate recovery and in so doing, put class counsel and the contracting class representatives into a conflict position from day one.
The court went on to approve the settlement, which called for the creation of a $49 million settlement fund to compensate a class consisting of aspiring lawyers who paid for BAR/BRI bar review courses from August 1997 through July 31, 2006. The court reasoned that although the incentive agreements were improper, there were two settlement class representatives who had not been parties to the agreements. However, the court remanded for a reconsideration of the attorneys fees to be awarded to the class counsel who had negotiated the incentive agreements and the possibility of an award to counsel for objectors who successfully objected to the incentive fee agreements.
Class Actions Finally Come to Italy
Posted in International Class Action Law, tagged european class action, International Class Action Law, italian class action, italy class action on July 9, 2009| Leave a Comment »
A Securities Docket post today tipped me off to this Reuters article discussing the enactment of “Italy’s first law establishing class actions.” The law will take effect January 2010 and will apply only to conduct occuring after the law’s effective date. At first, I wasn’t sure whether this April 1, 2008, ClassActionBlawg article announcing Italy’s first class action law was just very prescient or an April fool’s joke, but according to the Reuters article, “The law is part of the so-called development package promoted by Development Minister Claudio Scajola, which has been before parliament for nearly a year.”
Expert Testimony and the Rigorous Analysis Standard
Posted in Lawyers' Resources, Reports and Surveys, rule 23, tagged expert testimony, frcp 23, rigorous analysis, rule 23, white paper on July 9, 2009| Leave a Comment »
Economist David Gulley, Ph.D., of Navigant Consulting, has authored an informative white paper entitled Recent Trends in Rule 23 Class Certification Expert Analysis. Dr. Gulley’s article explores the expanding role of experts and increased scrutiny over expert opinion testimony in class certification proceedings in light of recent federal appellate decisions placing renewed emphasis on the rigorous analysis standard. See the Second Circuit’s opinion in In re IPO Securities Litigation and the Third Circuit’s opinion in In re Hydrogen Peroxide Antitrust Litigation. The paper is a great resource for both class action attorneys and experts who are asked to testify in class certification proceedings.
In Defense of the BigLaw Blog
Posted in Off Topic, Other class action blogs, tagged amlaw 10, amlaw 100, amlaw 50, biglaw, blawg, law blog on July 6, 2009| 3 Comments »
The guys at the Drug and Device Law Blog have a post outlining “six things we’ve heard” about why no lawyers from the ten most profitable law firms have blogs. Perhaps wisely, the’ve chosen to stay out of the fray by commenting further. I do not share their good sense. I’m completely unqualified to speak to what motivates lawyers at the 10 most profitable firms to do or not do anything, but I will say some things in defense of the benefits of blogging for big firm lawyers.
1. Lawyers at the most profitable firms are stupid:
“‘Profitable’ large law firms don’t see the need or the benefit of doing blogs. Clearly, if they are already doing well, why go to the trouble and work involved in blogging, when too many BigLaw lawyers still believe that the work will always be there. A mistake of course, but a perception nonetheless.”
I can offer no proof that this is a mistaken perception, but it does presuppose that the only reason to do anything is to make more money.
2. Lawyers at the most profitable firms are too busy:
“The reason they are so profitable is that everyone is working their heads off – nobody has time to blog.”
I started work at 8:21 a.m. today and finished at 11:06 p.m., with 30 minutes off to drive home and pick up a Chipotle burrito on the way, so don’t talk to me about being too busy to blog.
3. Lawyers at those firms won’t stoop to blog:
“They are so profitable that they don’t think they need to stoop to marketing (which is what they think blogging is).”
Could be. Blogging is the geekiest form of shameless self-promotion, unless you count Twitter. But it’s also a great outlet for self-expression and a place to share ideas with smart lawyers who share your interests.
4. Lawyers at those firms don’t want to give away their product for free:
“Lawyers at the top ten PPP firms wouldn’t want anyone at the firm to blog because they might divulge the firm’s precious secrets.”
Of course, how to bill 1000 hours for a 150-page brief and the complete history of the juridical link doctrine are secrets worth protecting, but think about how much more money you could make if you made a nickel for every person who clicked on your blog to learn about your firm’s precious secrets.
5. Lawyers at those firms lack the necessary skill set:
“Those high-profit firms are so profitable because they are very good at making money, but the skill sets required for being good at making money may not be the same as the skill sets required to blog.”
ClassActionBlawg.com is proof positive that blogging does not require a skill set.
6. Lawyers at those firms correctly believe that blogging is unlikely to yield a decent return on investment because of the nature of the firms, the work they do, and their clients:
“When your firm name is already well known and your reputation that well established, you wouldn’t add any value by blogging.”
This one is right on. That’s why you end up with so many law blogs written by nobodies who’ve never accomplished anything and who hope that by starting a blog, you’ll mistake them for someone famous. Like this one from some guy named Spence who doesn’t even own a proper suit for court: http://gerryspence.wordpress.com/. Or how about these two: http://www.becker-posner-blog.com/? They sound more like Becker-POSER to me.
Credit Crisis Litigation Trends
Posted in Class Action Trends, Reports and Surveys, tagged credit crisis, credit crisis class action, credit crunch, securities class action on July 1, 2009| Leave a Comment »
Jaclyn Jaeger of Compliance Week authored a comprehensive article published yesterday highlighting trends in credit crisis-related securities class action lawsuits. The article summarizes a June 15, 2009, NERA Consulting report entitled “An Update on the Credit Crisis Litigation: A Turn Towards Structured Products and Asset Management Firms.” Here is a link to the article, which in turn includes a link to a .pdf version of the NERA report.
The report finds that credit-crisis-related lawsuits exploded in 2008, increasing 172% over 2007. So far in 2009, filings appear to be continuing at a similar pace from 2009. The report also notes an increase in cases that name officers and directors as defendants and an increase in the percentage of cases filed by non-shareholder plaintiffs. Asset management firms and securities issuers and underwriters continue to be the target of the largest number of suits with only a small percentage of cases filed against mortgage lenders, home builders, insurers, and other defendants.
The filing statistics only tell part of the story, however. The report also provides preliminary statistics on the outcomes of cases, finding that almost two thirds of recent resolutions involved either an outright dismissal, partial dismissal, or voluntary dismissal. 15% resulted in settlements, while 21% survived motions to dismiss.
For anyone interested in tracking the litigation arising from the credit crisis, both the article and the NERA Consulting report are a worthwhile read.
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Juridical What?
Posted in Class Action Decisions, Class Action Trends, Commentary, tagged class certification, joinder, juridical link, standing on July 20, 2009| Leave a Comment »
Not two full weeks after I invoked the “juridical link” doctrine as an example of one of the most obscure legal concepts I could think of (see July 6, 2009 entry, In Defense of the Big Law Blog), a North Carolina Court has apparently applied the doctrine in allowing a class action to be brought against related defendants with whom the named plaintiff had no direct claim. Mack Sperling of The North Carolina Business Litigation Report has a thorough synopsis of the case, Clark v. Alan Vester Auto Group, Inc.
The juridical link doctrine developed as a rule allowing joinder of claims against related governmental actors, but plaintiffs sometimes try to invoke the doctrine as a mechanism to avoid the necessity of establishing separate standing to sue each of several defendants named in a class action. Under the unique circumstances in Clark, where a group of defendants had the same owner, management, and accountant and shared a common computer system and common policies, employees, officers, and sales processes, among other common features, the argument was successful. Other courts have declined to recognize the juridical link doctrine as an exception to standing, especially where there is no allegation of a conspiracy or concerted conduct between the defendants.
For more discussion of the history and courts’ treatment of the juridical link doctrine as an exception to standing, see Fernandez v. Takata Seat Belts, Inc., 108 P.3d 917 (Az. 2005).
For a list of words that rhyme with “juridical” see this link.
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