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Archive for the ‘Other class action blogs’ Category

An article posted by my colleagues Judy Selby and Zack Rosenberg in the BakerHostetler Class Action Lawsuit Defense Blog raises some important issues for any company that could find itself the target of a class action lawsuit.  With the proliferation of data privacy and other consumer class actions, that’s just about any company these days.  The article, titled Courts Are Liberally Construing Litigation Insurance Coverage for Class Action Defenses and So Should Defendants, addresses the important issue of liability insurance covering class action lawsuits.  

I’m often surprised in speaking with in-house attorneys and risk management personnel that they are unaware of the extent to which their current insurance coverage might protect them if they were ever sued in a class action, and that they have not considered certain types of specialty lines insurance, such as cyber risk insurance, that might protect them from potentially catastrophic liability and defense costs arising out of a class action.  This is an especially important consideration for companies in industries that aren’t frequently targeted in class actions, because those companies may not think about the benefits of insurance protection until it’s too late.

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I’ve been meaning to post a link to a new class action-related blog authored by my law partner, Deborah Renner.  Deborah is as knowledgeable about class actions as anyone I know, and she’s always up on the latest trends.  She has a background that uniquely pairs the practical and academic aspects of class actions, having taught class action law at Fordham Law School in addition to her many years as a class action defense litigator.  Deborah is primary editor of the firm’s blog, Class Action Lawsuit Defense, but she also recently launched her own personal blog, Renner on Class Actions, where she offers astute insights and in-depth analysis into a variety of class action issues and trends.  Be sure to check it out.

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Brian Wolfman, Co-director of the Institute for Public Representation at Georgetown University Law Center, has two excellent recent posts on Public Citizen’s Consumer Law and Policy Blog that provide food for thought on the need for class action reform, and the best way to achieve reform if it is needed.

In the most recent of the two articles, Paying the Lawyer’s Expenses in Class Actions, Wolfman discusses the social importance of allowing plaintiffs’ attorneys to recover their reasonable costs incurred in successfully pursuing a class action settlement or judgment, but discusses a recent case in which two attorneys from a prominent plaintiffs’ firm were sanctioned for having claimed reimbursement for fancy dinners and first class airline tickets.  Wolfman warns about the negative impact that this type of conduct has on public perception of class actions, and makes the valuable point that even minor abuses of the system for personal gain threatens to bring scrutiny to the class action mechanism more generally, which limits access to justice that class actions may provide in meritorious cases.

In an earlier article, Important 7th Circuit Decision Rejecting Shareholder Derivative Suit, Wolfman applauds Judge Frank Easterbrook’s opinion throwing out the settlement of a shareholder derivative suit after finding that the underlying suit lacked merit and should be dismissed.  Wolfman makes the point that rather than approving a settlement that provides little or no benefit to class members on the grounds that the merits of the claims are weak, the better solution from a public policy perspective is to dismiss the case entirely.  He sums up this point concisely, “[a]n obviously meritless case should not benefit the lawyers and no one else.”

The two articles illustrate two important conceptual principles on which many consumer advocates and corporate interests may find themselves in complete agreement: First, it is the potential for abuse of class actions, and not the class action mechanism itself, that often provides the basis for legitimate criticism.  Second, courts can preserve the fairness and integrity of class action mechanism without the need for systematic reform simply by applying common sense restraints in the face of clear abuse.  I think that both of these points are correct as a matter of principle, and they are both eloquently illustrated by Wolfman’s posts.

My only question is whether the idea of preventing abuse through the application by the courts of common sense constraints, while pure in theory, is truly realistic in practice.  It only works to the extent that all judges will act as carefully and thoughtfully as the judges in the two cases highlighted above.  If courts do not dismiss all frivolous cases when a defendant files a motion to dismiss, what choice does a defendant have as a practical matter but to consider buying peace on the best terms possible, which often means paying off the lawyers at the expense of a class that the defendant doesn’t believe was harmed anyway?  And, if some courts continue let frivolous claims proceed in the hopes that the parties will settle, or turn a blind eye to small excesses in fee and cost petitions, then basic human nature says that some (but certainly not all) plaintiffs’ lawyers will continue to commit these abuses, and some (but not all) defense lawyers will play along to serve their own interests.  In the end, the cynic will question whether relying on the diligence and intellectual honesty of the judiciary and the professional integrity of the bar is a realistic path to reform.

On the other hand, for those of us who are practitioners and not policymakers, professional responsibility, appeal to reason, diligence, and intellectual honesty are the only tools we have at our disposal at maintaining the integrity of the judicial process.

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Anyone who is a regular reader of the blawgosphere will be familiar with Mark Herrmann, former contributor to the Drug and Device Law blog (which is still capably run by Jim Beck) and current contributor to a regular column on Above the Law entitled Inside Straight.  Herrmann’s work on that column attracted the attention of ABA Publishing, which collected many of Herrmann’s Inside Straight columns in a single bound volume, aptly titled Inside Straight.  So, essentially you now have the privilege of paying $24.95 for something that you could get for free, legally, on the Internet.  Why, you ask, should you do it?  Within about one hour of having received an advance copy of the book, one of my partners absconded with it, and I haven’t seen it since.  That might be a clue as to its value.

The subtitle of the book, Advice about Lawyering, In-House and Out, That Only the Internet Could Provide fairly sums up its subject matter.  It’s a book about the stuff that you don’t learn in law school (sorry to have to break the news to all those law schools out there touting their “experiential learning” curricula), like how to impress partners and clients.  Plus, the book is organized in a way that preserves the user comments from the original ATL posts, so it offers additional interactive content that only the Internet could have provided. 

Herrmann’s book, and the column more generally (he’s still writing it), are an extremely useful resource for helping to answer questions of associates and young partners about the often murky dynamics of life in a big law firm, both in terms of dealing with other lawyers within the firm and in dealing with the in-house lawyers who tend to be our clients.  I’ve been able to point lawyers to his column several times just in the last few weeks in answering a question about why I think an issue should be approached a particular way.  Just this past Friday, I pointed an associate to Herrmann’s most recent column, discussing the need to provide actual legal advice rather than simply referring a client or partner to the source, in trying to explain my criticisms of portions of a legal memo.  Unlike that conversation (for the associate at least), Herrmann’s column has the advantage of being engaging and funny, which actually makes it even more useful since it makes it more likely that the advice will sink in!

In short, I would encourage everyone to shell out the mere $24.95 it takes to get Herrmann’s insights in a glossy bound volume.   At minimum, give his ATL column a try.  If you do, it’ll be hard to resist ordering a copy of the book too.

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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.

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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!

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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.

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