Class Action Reform Research Articles

Nikki Chamberlain's Submissions on Class Action Reform to the New Zealand Law Commission 2021 (Responding to Issue Paper 45)

The New Zealand Law Commission is reviewing Class Actions and Litigation Funding in New Zealand from 2020 - 2022. The NZLC produced Issues Paper 45 for consultation with stakeholders.

The Italian Class Action Reform: A Redesigned Tool beyond Consumer Law

Given the globalized scale of the current economic system, effective collective redress mechanisms represent a fundamental tool for consumers and citizens. While in the United States collective actions constitute a common instrument, in the European context their development has been more complex. After a Recommendation issued by the European Commission in 2013, several models have been adopted or reformed across Europe. The regulatory competition approach has been preferred in respect of the simple harmonization of the several national rules. In particular, the French system adopted a completely new tool, the action de groupe, in 2014, while in the UK an option for opt-out collective actions has been recently introduced. The debate over reform of collective redress has also flourished in Italy, leading to the adoption of Law No. 31 of 2019, which will enter into force in November 2020 and will completely redesign the Italian collective action model. This reform has broadened the scope of such a remedy, which has also been made available outside the consumer law field. Moreover, the opt-in system has been strengthened, by allowing adherents to join the claim after the decision on the merits issued by the court. The latter solution embodies a transplant of the action de groupe. In the meantime, the European Union has reawakened its interest in the collective redress field and has drafted a directive proposal, which was approved by the Council of the EU in November 2019. This article will analyse the new Italian reform in a comparative perspective with the French model. collective action; class action; collective redress; consumers; damages; tort law; Italy; Italian law; France; French law; reform; compensation; comparative law; European Union.

Cutting Class Action Agency Costs: Lessons from the Public Company

The agency relationship between class counsel and class members in Rule 23(b)(3) class actions is similar to that between executives and shareholders in U.S. public companies. This similarity has often been noted in class action literature, but until this Article no attempt has been made to systematically compare the approaches taken in these two settings to reduce agency costs. Class action scholars have downplayed the importance of the public company analogy because public companies are subject to market discipline and class actions are not. But this is precisely why the analogy is useful: because public companies are subject to market discipline, the tools they utilize to reduce agency costs are more likely to be efficient. This Article looks to those tools as inspiration for class action reform, proposing several novel ways to improve current practice.

An Evidence-Based Approach to Class Action Reform in Australia: Common Fund Orders, Funding Fees and Reimbursement Payments

The public release of the ALRC’s final report on class actions and litigation in late January 2019 was accompanied by the announcement by the Federal Attorney-General that, over the next two months or so, he will seek the views of stakeholders with respect to the 24 recommendations contained in this report. It is, of course, important that these consultations and assessments of the ALRC’s recommendations be based on an accurate understanding of the actual, as opposed to perceived, operation of Australia’s class action regimes. One of the two aims of this third report - in the An Evidence-Based Approach to Class Action Reform in Australia series - is to secure this desirable scenario with respect to two of the most controversial aspects of Australian class actions: (a) the percentages of class action settlements that are paid to commercial litigation funders with respect to their commissions or funding fees; and (b) the impact that the ground-breaking common fund doctrine enunciated by the Full Federal Court in October 2016 has had on the remuneration received by funders in successful class actions. The other purpose of this report is to provide data with respect to what are rapidly becoming common features of class action settlement agreements: what are generally-referred to as reimbursement payments to lead plaintiffs and occasionally to sub-group representatives and active/sample class members.

Cutting Class Action Agency Costs: Lessons from the Public Company

The agency relationship between class counsel and class members in Rule 23(b)(3) class actions is similar to that between executives and shareholders in U.S. public companies. This similarity has often been noted in class action literature, but until this Article no attempt has been made to systematically compare the approaches taken in these two settings to reduce agency costs. Class action scholars have downplayed the importance of the public company analogy because public companies are subject to market discipline and class actions are not. But this is precisely why the analogy is useful: because public companies are subject to market discipline, the tools they utilize to reduce agency costs are more likely to be efficient. This Article looks to those tools as inspiration for class action reform, proposing several novel ways to improve current practice.

An Evidence-Based Approach to Class Action Reform in Australia: Closed Class Actions, Open Class Actions and Access to Justice

In May 2018 the Australian Law Reform Commission (“ALRC”) released a discussion paper on class action proceedings and third party litigation funders. It contained the proposal that the federal class action legislation should be amended to provide that all federal class actions should be initiated as open class actions. I have reviewed the descriptions of represented groups - provided in the originating applications and statements of claim - with respect to all the federal class actions filed before 30 September 2018. In this report I will provide some of the major data and findings that have emerged from this review, in the hope that it will be of some assistance - to the ALRC, the Commonwealth Attorney-General and/or other interested persons and entities - in determining whether the ALRC’s proposal, that all federal class actions should be commenced as open class actions, should be retained in the ALRC’s final December 2018 report and, if so, in identifying the major issues and challenges that will need to be addressed in implementing this recommendation as well as its likely impact.

An Evidence-Based Approach to Class Action Reform in Australia: Competing Class Actions and Comparative Perspectives on the Volume of Class Action Litigation in Australia

2018 is the most crucial year for the future of class actions in Australia. The Victorian Government is currently considering a report on the litigation funding industry and certain aspects of Victorian class actions recently completed by the Victorian Law Reform Commission. The Australian Law Reform Commission will be completing in December 2018 its review of litigation funders and certain aspects of the federal class action regime. Empirical data is required to ensure that these reviews, and the assessment of the recommendations that come out of these reviews, are based on an accurate understanding of Australia's class actions landscape. This is the main aim of this and other empirical reports that will be released over the next 12 months.

Class Action Reform: The Law Commission of Ontario Review of theClass Proceedings Act

IN 2013, the Ontario government announced that it had asked the Law Commission of Ontario (the LCO) to engage in a comprehensive review of the Ontario Class Proceedings Act, 1992 (1) and experiences with that legislation since it came into force in 1993. The LCO was created in 2007 by an agreement among the Law Foundation of Ontario, the Attorney General of Ontario, Osgoode Hall Law School of York University, the Law Society of Upper Canada and the Ontario Law Deans. Its mandate is to make the law more effective, relevant and accessible, to clarify and simplify the law, and to see how technology might be used to increase to justice. This ongoing review is likely to culminate in recommendations for reform of the Ontario class proceedings regime. Given Ontario's status as a leader in this area, the LCO's recommendations and any subsequent action taken by the Ontario government may //influence reforms in other Canadian provinces and territories as well. This is an important moment for class actions in Ontario (and potentially in Canada more broadly). While many accept that class actions will be part of the litigation landscape in Canada for the long term and are an appropriate procedural vehicle in some cases, they also come with some costs. The LCO has the opportunity to consider whether the current regime strikes the right balance between the benefits and costs of a class action regime. (2) The overarching objectives of the CPA are to promote to justice, judicial economy and behavior modification. With respect to the first and perhaps most important of these objectives, the Supreme Court of Canada has expressly stated that access to requires to just results, not simply to the legal process for its own sake. (3) While many writers in this area focus their remarks on the importance of substantive justice for claimants (class members), some Ontario courts have emphasized the obvious--that defendants, as well as plaintiffs, are entitled to to justice, (4) in other words, to just outcomes. However, certain aspects of the Ontario regime, including low certification standards, asymmetrical certification appeal rights (including the ability of plaintiffs to reframe their case for certification on appeal), a sometimes unbalanced application of the loser pays costs regime, and the increasing availability of third-party litigation funding, have led to the perception that Ontario is a very class action-friendly jurisdiction, and raise questions about whether it is fairly achieving its substantive to justice objectives, properly understood. As in the United States, the certification of a class proceeding in Ontario can result in significant pressure to settle the class's claims, even where they are seriously flawed or meritless. (5) Since the objective of the legislation is to just results, one should look not only at the merits decisions but also at the settlements in assessing whether a class action regime is meeting that objective--providing to justice to both plaintiffs and defendants. One should consider whether defendants are being or may be pressured to settle class proceedings for reasons unrelated to, or on terms disproportionate to, their merits. These pressures may arise from the sheer size of the damages exposure, the enormous costs of defense (which include both legal expenses and diverted employee time), potential effects on shareholder value, and reputational pressure. One must also consider whether businesses are incurring substantial and inordinate unrecoverable costs (both out of pocket and in employee time), and courts expending excessive time, to have class actions that should never have been brought dismissed on their merits, as well as the broader potential economic impacts of companies' being exposed to or incurring these unnecessary costs (e.g. increased prices for customers, lower stock prices for current shareholders, and less or delayed innovation). …

President's Page:IADC Global Connection: A 95-Year-Old Evolves

Be brave. Take risks. Nothing can substitute experience.Paulo Coelho - Brazilian authorIn our 95th year, the IADC is enjoying a year of firsts. Our willingness to adapt and evolve is why we have and why we remain the premier global legal organization for attorneys devoted to the representation of corporate and insurance interests. The secret of success of any organization - or individual for that matter - is the ability to adapt to change, to embrace that change, and to leverage that change into success while staying true to the fundamentals that allowed the organization or individual to succeed in the years before. The IADC has lived that truth this year, and I hope you have or will soon be able to witness the exciting and dynamic evolution of the organization at one of our many events.I am composing this article sitting in the Guarulhos International Airport in Sao Paulo, Brazil after just having attended the lADC's inaugural Latin America Regional Meeting. If, like me before this visit, you have not had the great pleasure of enjoying the warmth and hospitality of our members in the region, you must consider coming here very soon. Like the IADC, Latin America is rapidly evolving with a vibrant energy, while honoring its proud heritage. At our inaugural meeting, we enjoyed the company of our members and guests from Chile, Argentina, Brazil, Uruguay, Germany, France, and the United States. We all enjoyed socializing and finding the common denominators that bind us all, while learning about our unique cultures and interests. We also benefited from a series of presentations on the rapid changes in class action and arbitration law in Chile, Peru, Argentina, and Brazil. Our hosts, Fernando Serec and his many partners at the TozziniFreire firm, ensured a successful inaugural with their expert hospitality.But Sao Paulo was not the first for our year. It began in Sydney. In October, we held our inaugural meeting for members from Australia and New Zealand. Just as in Sao Paulo, our members enjoyed a day of signature fellowship and education about recent legal developments in the region. Our Aussie hosts, International Committee Chair Colin Loveday and former Board member Stuart Clark, executed a perfect inaugural, and I look forward to our Australian/New Zealand Regional Meeting next year down the Hume Highway in Melbourne.In both South America and Australia, we have begun a tradition of going to our members on each of their continents that I look forward to seeing continue into the next 100 years of our organization's proud history.Earlier this month, we also supported the U.S. Chamber of Commerce's Institute for Legal Reform and the Canadian Chamber of Commerce's inaugural event on Class Action Reform in Toronto, Canada. …

Should Congress Repeal Securities Class Action Reform?

The Private Securities Litigation Reform Act of 1995 was designed to curtail class action law-suits by the plaintiffs bar. In particular, the high-technology industry, accountants, and investment bankers thought that they had been unjustly victimized by class action lawsuits based on little more than declines in a company's stock price. Prior to 1995, the plaintiffs' bar had free rein to use the discovery process to troll for evidence to support its claims. Moreover, the high costs of litigation were a powerful weapon with which to coerce companies to settle claims. The plaintiffs' bar and its allies in Congress have called for a repeal or modification of the PSLRA. This paper evaluates the operation of class action lawsuits before and after the act. The hard evidence does not support repealing the PSLRA. In fact, securities class actions are being filed at a record pace. And although a higher percentage of these lawsuits is being dismissed now than before the act, the ones that survive lead to larger settlements. The PSLRA raised the standard required before plaintiffs' attorneys could drag a defendant company through the expense of discovery. The lawsuits that meet this higher standard are likely to be less frivolous and are consequently worth more in settlement negotiations. The combination of higher settlements and a smaller percentage of such cases getting to trial suggests that the class action lawsuits under the PSLRA are doing a more cost-effective job of deterring corporate fraud. This conclusion is bolstered by the fact that post-PSLRA complaints have more particularized allegations that are more highly correlated with factors related to fraud. In short, the PSLRA is working well, although not as well as intended, and there do not appear to be grounds to either repeal or significantly amend it. A better course for reform would be to change the damages remedy in securities fraud class actions to focus on deterrence.

Admonishing a Drunken Man: Class Action Reform

Admonishing a Drunken Man: Class Action Reform

Beyond 'It Just Ain't Worth It': Alternative Strategies for Damage Class Action Reform

In this article we explore alternative strategies for class action reform aimed at improving the cost-benefit ratio of a damage class action regime. Our analysis draws on RAND's recently completed study of contemporary damage class action practice and on the extensive theoretical literature on entrepreneurial litigation. Our goal is to identify mechanisms for enhancing the system's capacity to screen out non-meritorious suits, while preserving access for meritorious actions. While recognizing other concerns related to class actions (such as agency problems between class counsel and class members, and ethical issues), we do not address these problems except as they pertain to the question of screening. Similarly, we do not attempt to discuss the full range of proposals that have been put forward to address the various perceived problems relating to damage class actions, but instead focus on those proposals that are most relevant to the question of screening. The first two strategies we consider would attempt to enhance the system's screening capacity directly, at the front end of the litigation process, by applying a cost-benefit test at the time of certification, or by requiring class members to decide whether to participate at the inception of litigation. We conclude that it is unlikely that judges could apply a cost-benefit test fairly and consistently, and that an opt-in requirement might screen out as many meritorious suits as non-meritorious actions (if not more). The next two strategies would attempt to enhance the system's screening capacity indirectly, at the back end rather than the front end. The first and relatively non-controversial back-end strategy relies on judges to use more vigorously their authority to scrutinize class action settlements and fee award requests. By better calibrating the benefits to class members and financial rewards to class counsel, more rigorous judicial management would drive out bad class actions while maintaining access for meritorious lawsuits. The theoretical literature on entrepreneurial litigation and RAND's case study investigations provide the grounding for this strategy. While we believe that increased judicial scrutiny could substantially improve the system's screening capacity, relying solely on judicial discretion for regulatory purposes has some obvious weaknesses?particularly in our federal system, in which parties who cannot satisfy one judge may simply depart that jurisdiction for another whose judges are more congenial. Hence we consider a different and more controversial approach to re-calibrating incentives to file and settle non-meritorious suits: adopting loser-pays attorney fee-shifting for certified damage class actions, with liability on the plaintiffs' side borne by class counsel. Although critics of class actions have proposed other manipulations of financial incentives, such as auctions, to improve the cost-benefit ratio of damage class actions, those who support the use of representative litigation in at least some circumstances have generally rejected fee-shifting out of hand. Our analysis suggests that such a version of loser-pays might have some positive effects on the damage class-action regime by increasing the costs of bringing non-meritorious suits, while at the same time somewhat increasing the benefits of pursuing meritorious cases. The many practical problems associated with integrating this approach into American class action practice, however, raise questions about its practicability, and it is unclear whether the posited improvements in the cost-benefit ratio would be large enough to merit seeking solutions to these knotty problems. Hence we conclude by urging further attention to judicial regulation, while inviting more serious scholarly consideration of fee-shifting strategies.

Procedural Versus Substantive Controls of Mass Tort Class Actions

Abstract Class certification in a mass tort case confers extraordinary negotiating power even where the underlying claim is meritless. This power stems from the prospect that claims of a large‐numbered class might reach a jury that might render a large aggregate judgment under our vastly looser tort law standards. The power is so extreme that all mass tort claims certified as classes appear to settle, rather than litigate to judgment. Recommendations for class action reform have been solely procedural since Rule 23 has been implemented without substantive review of the underlying claim. This article shows that recent reform efforts in fact attempt to impose substantive controls on mass tort class actions through procedural means, efforts that necessarily will remain inadequate. The various problems attending mass tort class actions can only be effectively addressed if courts are given power to substantively review the underlying merits of a claim prior to class certification.

Class Action Reform, "Qui Tam", and the Role of the Plaintiff

This article uses the model of qui tam litigation as a tool to understand class action litigation. Starting with an examination of current class action practice, the article demonstrates how class actions have moved away from the format of traditional individual litigation. Departures from traditional procedural rules have been justified as deterring corporate misconduct, yet these departures are frequently criticized as reducing victim compensation and creating agency problems. The article goes on to consider proposals for class action reform. Existing reform proposals tend to take one of two forms: either they propose remodeling class litigation so that it more closely resembles traditional litigation, or they propose more dramatic departures from traditional procedural rules in order to enhance the deterrence effect of the class suit. The latter reforms, based on the private attorney general model, move class litigation closer to government enforcement litigation. A significant reason for the conflict between these approaches stems from disagreement about whether class actions should focus on victim compensation or deterrence of misconduct. The article argues that, before either approach to class action reform is adopted, class litigation should be understood as offering a third possibility: a hybrid litigation form that combines the attributes of the public and private models. Using the model of qui tam suits, the article attempts to break down the conceptual barrier between public and private litigation. Finally the article examines the implications of this approach. The article suggests that reconceptualizing class litigation as a hybrid offers the potential for coordinating the litigation efforts of the government and the private bar. In addition to creating potential litigation efficiencies, this model allows class litigation effectively to pursue both compensation and deterrence.

THE DILEMMA OF CLASS ACTION REFORM

This paper argues that the limits of class litigation have now been reached, in Quebec and the USA,' and that reform of class action procedures cannot extend those limits. The dilemma of class action reform is that any significant reform will be dissuasive, limiting rather than extending the rate of class litigation. Since the effectiveness of existing class action legislation is increasingly subject to doubt,2 the conclusion should follow, for those not having embarked on the class action experiment, that there are more fruitful measures of social reform and social justice. One may therefore oppose class actions and remain optimistic as to the future of humanity.