This is the sixth and final installment of a multi-part post summarizing last week’s 5th Annual Conference on the Globalization of Class Actions and Mass Litigation. Click these links to see the summaries for Session 1, Session 2, Session 3, Session 4, and Session 5.
Paths to (Mass) Justice
To wrap up the conference, Dr. Sam Muller, Director, Hague Institute for the Internationalization of Law, led an all-star panel of academics, lawyers, and industry executives in a discussion about where we are heading over the next five years in global class, collective, and mass litigation. The panel included program co-organizer Professor Deborah Hensler, international plaintiffs’ lawyer extraordinaire Michael Hausfeld (who more than ably filled in for Professor Hodges), Mr. Robert W. Hammesfahr, Managing Director Claims & Liabilities, Swiss Reinsurance Company Ltd., Mr. Richard Murray, The Geneva Association, Special Advisor on Liability and Legal Affairs and Liability Dynamics Consulting LLC, Mr. Daniel Girard, Partner Girard Gibbs LLP, and Mr. Martijn van Maanen, Partner BarentsKrans.
This is the only presentation not framed by a particular case study. However, the panel did focus on a common question, what are we likely to be discussing at the 10th annual conference on the globalization of class actions?
Dr. Muller began the discussion with some general themes and questions that both summed up the conference generally and framed the last panel’s discussion. They included:
- Whether the internationalization of class action law will continue;
- Whether we will see an increasing divide between public and private mechanisms for the enforcement of collective interests;
- What will be the impact of social media and changes in mass communication?
- Is globalization and the development of systems of collective redress driving changes to the legal profession or the legal profession driving changes to mechanisms for collective redress?
Pointing to the example of the development of competition law in the EU, Hausfeld remarked that changes in policy are happening on their own but that they are not happening quickly. He argued that it is up to the legal profession to change policy through practice; in other words, through litigation brought by counsel and through court decisions. Hausfeld also made a key observation based on a recurring theme throughout the conference: the engine of change in the development of private enforcement mechanisms is, at least in the near future, likely to come from large corporations and institutional investors, rather than from consumers or popular political pressure.
Hensler predicted that the future will be more of the same. The development of collective enforcement mechanisms will not go away because the scale of commerce drives the scale of mass harms, and globalization is increasing the scale of commerce. Moreover, citizens are more likely than ever to want redress for injuries. In modern societies, people are no longer willing to blame God for their misfortunes. Hensler predicted that the transformation into a truly international system of collective redress will take 25 years, not 5 years.
Hammesfahr was optimistic about change. He noted that “where there’s a vacuum, the law will fill it,” and that therefore, the growing need for systems of collective redress will require reforms in even those countries that are most politically resistant to change. There has to be a remedy for harms, and the younger generation will not accept delays in avenues to redress in the same way as previous generations. However, he also predicted that Europe will find its own solutions for the problem of mass harm without copying the U.S. model of class actions.
Murray observed that what was discussed in the 2011 conference as being a practical reality was foreseen during the first global class actions conference in 2007, but was still being debated. For example, 5 years ago in Europe, people were saying that “we don’t do that here,” but now, Europe has begun to recognize the need for private enforcement mechanisms for collective harms. Murray made a variety of other observations and predictions, including
- There has been a significant growth in the scale and economic consequences in things that require aggregation.
- There has been a change in the nature of litigation globally. It used to be unique, to be avoided. In the past few years, we have become compensation driven rather than fault driven.
- In the future, litigation will be investment driven rather than party driven, and there will be a transformation of litigation funding to litigation ownership. Litigation will become an investment of choice.
- There will be more climate change and catastrophe-related litigation in the coming years. There will be a convergence of liability and reparations processes, a socialization of the humanitarian loss compensation system. This will be driven by huge need for redress, combined with someone to blame for mass harm.
Girard was more pessimistic about significant developments in global collective redress, based in large part on events in the United States over the past several years.
He divided aggregated litigation into 2 types of cases:
- “Train wrecks” – cases with a very high public profile, and a clear sense of public injustice. This, he said, “is good work if you can get it.”
- Private regulatory actions – i.e., mass lawsuits based on a private right of action that challenge conduct not widely recognized as being wrong. This category would include many current class actions in the United States, such as those involving alleged deceptive trade practices and dangerous products.
While policymakers will almost certainly agree on the need for collective redress in the first category of cases, the second category is quite a bit more challenging, and there is a greater potential for abuse. The resolution of cases in category 2 is quite a bit different than the deal brokering that goes on in category 1.
Girard pointed out how the recent trend in the United States has been to restrict class actions. But, he went on, plaintiffs’ lawyers are nothing if not creative and persistent. In the end, he predicted that we will see things swing back into an equilibrium, since “the law will tend toward justice.” However, he admitted that we may have seen the end of the fully empowered private attorney general in the United States.
Girard concluded with a word of wisdom for policymakers in Europe. As you are being urged toward a system like the American system, he said, keep in mind that lighter regulatory framework was intended to come with it a strong right of private enforcement.
Van Maanen was much more positive about change. Using competition law as an example, he said that in the past, the it was economical for defendants to form cartels. Now, however, corporations are taking on the role of ally with plaintiffs. This will drive a push toward private enforcement in Europe. He noted that there is some level of competition between European countries in the development of systems of collective redress. For example, he observed that with its resistance to collective action legislation, the UK has fallen behind the Netherlands in recent years. He concluded with the observation that a challenge for policymakers will be in developing a system that will make it more profitable for corporations to comply with the law.
In the Q&A session, the panelists were asked whether we are moving toward coordination or competition between jurisdictions, and if so, are we going to a race to the bottom or a race to the top? In Hensler’s opinion, we are in a period of competition. In the short term, there is an incentive to maintain a system of multiple forum choices. Murray agreed, and commented that “we will do the right thing after we try everything else.” Girard returned to the theme that the United States is a microcosm of the world. He pointed to example of the so-called reverse auction process discussed by Judge Vaughan Walker earlier in the conference and pointed out how competition helped to reduce attorney’s fee abuse.
Other topics addressed in the Q&A included the role of social justice. Hensler commented that social media will have an effect on litigation, as it did during the recent Arab Spring movement. Hammesfahr discussed the potential impact of social justice movements with respect to catastrophic events claims. He observed that if the civil justice lawyers are going to have a role, they will have to look at transaction costs and efficiencies.
A final, and perhaps fitting, point (unfortunately, I did not note which panelist made it) had to do with the different way that European law is developing in comparison to the system of class actions in the United States. In Europe, the prevailing view has been to consider anything but the “American horror story.” In developing systems of collective redress, European systems haven’t built on the U.S. system, they’ve rejected it, but they are working toward a completely different system intended to solve some of the same problems.
In closing out this series of posts, I want to reiterate how impressed I was with both the content and organization of the conference. The organizers say that they are uncertain whether this will continue to be an annual event going forward, but I hope that the demand will convince them otherwise.