Class Action Regime Research Articles

The important role of civil class actions in the enforcement of corporate criminal law

Recent experience in civil litigation, particularly with opt-out class actions against corporations for competition law offences, has highlighted the efficiency of ‘dual enforcement’ as a strategy for fighting corporate crime. The success of the opt-out class action regime has resulted in innovation and developments that have pushed the boundaries of competition law, involving cases that are traditionally considered matters of environmental, data or consumer protection law. However, although private litigation can overcome the deterrence deficit associated with criminal enforcement by deferred prosecution agreement, and is an increasingly important tool in the fight against corporate crime, the Supreme Court’s recent decision in the PACCAR case has created uncertainty in the third-party litigation funding market, upon which these class actions rely. Given the woefully inadequate funding afforded to public enforcement agencies, including the UK’s Serious Fraud Office, there is a clear economic case for the availability of dual enforcement, and thus an urgent need for Parliament to enact amending legislation, with retrospective effect, to reverse the PACCAR decision. Furthermore, the dual enforcement model should be extended to enable individuals to enforce consumer protection law through opt-out class actions. This would avoid the current situation in which claims are being framed as competition law infringements, such that success may well turn on the finest of distinctions. Lacking the various constraints associated with the criminal law, this extension would also enable the private enforcement of various types of corporate misconduct that, viewed through alternative the lens of the criminal law, are tantamount to fraud.

Revisiting class action litigations against corporations in Nigeria: Lessons from the US experience

Class actions remain one of the most plausible mechanisms to aggregate and ventilate corporate grievances in court effectively. Despite its advantages, including recurrent corporate malfeasance, the class action procedure in Nigeria is limited in scope. This article uses a comparative analysis methodology and the class action regime in the United States (US), which is general in nature under Rule 23, to interrogate the application of the procedure in Nigeria. It argues that Nigeria’s extant class action legal framework is limited in scope since it focuses only on intellectual property infringements. By comparatively analysing the application of Rule 23 in the US in bankruptcy, competition, securities, and human rights cases, the article submits that introducing a general class action framework is imperative in Nigeria. Consequently, this article suggests using legislation, courts, public enlightenment strategy, and guidelines for attorney fees to introduce, strengthen, and implement a general class action regime in Nigeria. This would engender corporate behavioural change, encourage policy regulation, bolster the use of class action by legal practitioners, and facilitate access to court.

The Devil is in the Scale: Revisiting the Commonality Requirement in Charter Class Actions

Even a cursory look at the literature reveals scant agreement among experts on the future of Charter class actions. In no small part, this uncertainty can be attributed to the divergent views among the courts concerning the proper contours of the commonality threshold for aggregate Charter proceedings. While the doctrinal narrative of Thorburn suggests that Charter rights are individual in nature and, thus, are not easily amenable to collective redress, the counter-narrative delivered by Good posits that in order for a Charter class action to pass the commonality hurdle of certification “it does not have to resolve all issues that may exist in terms of establishing liability.” Although it is easy to see Thorburn and Good as thesis and antithesis, the subsequent Charter class actions such as Murray can hardly be portrayed as a synthesis. Hence, uncertainty over the commonality standard reigns.
 Taking these observations as its guiding thread, this article makes a case for revisiting the commonality requirement in Charter class actions and argues that “over-individualization” of Charter rights that has been imputed into the analysis by Thorburn is unjustified on both descriptive and normative levels. Descriptively, such “over-individualization” is misguided because it semantically overpowers the analysis which, if properly conducted, would often reveal either no need for individual fact-finding at all or the possibility to follow the resolution of common issues with individual mini-trials. Normatively, overreliance on individualized inquiries as part of the commonality analysis is misguided because it misconstrues the very nature of the class action regime.

The South African Class Action Mechanism: Comparing the Opt-In Regime to the Opt-Out Regime

In Mukaddam v Pioneer Food (Pty) Ltd 2013 2 SA 254 (SCA), Nugent JA stated that, once the class is confined to claimants who choose positively to advance their claims and are required to come forward for that purpose, he can see no reason why they are not capable of doing so in their own names through joinder – they do not need a representative to do so on their behalf. The members who choose to opt in to the class action will thus be identifiable. If that is the case then, according Nugent JA, joinder may be the appropriate procedural device. A problem evidenced by this approach is accordingly that, by suggesting that joinder is the appropriate procedural device where all the claimants are identifiable, rather than a class action, the court essentially attacked the viability of the opt-in regime of class action litigation.
 The preferential treatment afforded by our courts to the opt-out class action regime is further reinforced by the finding of Nugent JA that the opt-in class action regime can be utilised only in exceptional circumstances. As exceptional circumstances had not been proved, he found that a class action was not the most appropriate way to pursue the claims. He accordingly suggested that joinder was a viable option to pursue the claims.
 The opt-in class action regime requires individual class members to take positive steps to participate in the class action. In other words, class members are required to come forward and opt into the class action, failing which they will not be bound by or benefit from the outcome of the litigation. Support for the opt-in regime is essentially premised on the belief that individuals who are unaware of the litigation should not be bound by its outcome. The opt-out class action regime, on the other hand, automatically binds members of the class to the class action and the outcome of the litigation unless the individual class members take steps to opt out of the class action. Support for the opt-out regime is essentially based on the view that the opting-in requirement could undermine one of the primary purposes of class action litigation, which is to facilitate access to justice.
 The Constitutional Court in Mukaddam v Pioneer Foods (Pty) Ltd 2013 5 SA 89 (CC) held that Nugent JA was wrong to find that an applicant in an opt-in class action is required to show exceptional circumstances. However, the court did not provide reasons for its disagreement. The issue relating to exceptional circumstances in opt-in class actions was dealt with in two sentences. The Constitutional Court also failed to deal with the nature and status of the opt-in class action compared with opt-out class actions in South African law.
 The note will accordingly consider when, if at all, it is appropriate to use the opt-in class action regime compared to the opt-out class action regime.
 

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.

The United Kingdom’s New Opt-Out Class Action

On 1 October 2015, a sea change in English civil procedure occurred, when the UK’s first opt-out class action regime took effect. Its drafting choices occurred against a backdrop of considerable comparative jurisprudence from Australia, Canada and the United States. For example, the regime’s flexible standing provisions avoid difficulties that have arisen in class action regimes in other jurisdictions, by enabling a class action to be brought either by a directly affected class member as representative or by a suitable representative who has no cause of action. On the other hand, the preliminary merits criteria which the class representative will need to prove are far-reaching and more onerous than those implemented elsewhere. In the first certification decision delivered under the regime—a moment of history created on 31 March 2017—the Competition Appeal Tribunal has made it plain that comparative insights will be highly relevant. This article analyses that milestone event, by examining this first decision in light of the drafting choices made under the UK regime, whilst also suggesting further ways in which comparative law may be helpful on key interpretive words and phraseology in cases to come.

An Empirical Study of Australia's Class Action Regimes, Fifth Report: The First Twenty-Five Years of Class Actions in Australia

March 2017 marked the 25th anniversary of Australia’s first and most important class action regime. In light of this important milestone, this fifth empirical report contains a detailed description of some of the major class actions that have been filed, and some of the most important developments that have been witnessed in Australia’s class action landscape, over the last 25 years. In addition, data is provided with respect to, among others, the volume of class action litigation in Australia’s four class action courts, the outcomes of resolved class actions, the average duration of settled class actions, the types of substantive claims that have been pursued in class actions, data on the extent to which litigation funders have been involved in class actions and data on closed classes and competing class actions since the ground-breaking ruling of the Full Federal Court of Australia in October 2016, with respect to common fund orders.

Can class members appeal class action settlements? A study from British Columbia

It is widely recognized that the review of settlement agreements executed by the formal parties to class action litigation—the representative plaintiff and the defendant—represents the most important and challenging task that judges presiding over such litigation face. In order to facilitate this judicial task the views with respect to proposed class action settlements are sought from those persons who will be bound by such compromises despite having had no involvement in the settlement negotiations and in the conduct of the litigation itself: the class members. If the trial court approves the settlement despite the filing of objections to the settlement (or aspects of the settlement) by one or more of the affected class members, can these dissatisfied class members or objectors seek the intervention of an appellate court? This general question has been considered by American appellate courts on numerous occasions. But in Canada this question has been considered only in Quebec and in a somewhat indirect manner, given that it has been held in that province that settlement approval orders are not appealable regardless of whether the appeal is filed by the representative plaintiff or one of the class members. The aim of this article is to explore the major issues that will need to be grappled with when the intervention of Canadian appellate courts will be sought by dissatisfied class members. This study will be undertaken with respect to British Columbia, which has Canada’s third longest-running class action regime.

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). …

Liability for costs when class representatives change in Australia's federal class actions

ABSTRACTUnlike most orthodox litigation, class actions bind persons, generally called class members, who are not formal parties to the proceedings. As a result of this unique or sui generis nature of class action litigation, courts presiding over this type of litigation are frequently required to determine issues or questions (a) with respect to which little or no guidance has been provided by both the class action regime in question and the rules of court governing orthodox litigation and (b) that raise competing interests and values and have a significant impact on the ability of class actions to attain crucial aims, such as access to justice, that they were designed to secure. One of the issues or questions that brings to the fore the scenario depicted above is what impact will a change among the class representatives have on the ability of the defendants to recoup some of their legal costs, incurred before the change among their adversaries, if the outcome of the class action is in their favour. This important dimension of class action litigation will be canvassed with respect to Australia's federal class action regime which is one of the world's oldest and most vibrant class action regimes. This evaluation will be undertaken by employing the findings stemming from the first empirical study of this regime, which the author is currently conducting.

An Empirical Study of Australia's Class Action Regimes, Third Report: Class Action Facts and Figures - Five Years Later

This is the third report stemming from an empirical study of Australia’s class action regimes that was commenced in 2009. This report provides data with respect to the first 22 years of operation of Australia’s federal class action regime; that is, the period from 4 March 1992 to 3 March 2014. In particular, it provides data with respect to the total, average and median number of class actions; the duration of those proceedings that were resolved as at 1 October 2014; the types of substantive claims that have been advanced on behalf of the class members; the number of class actions that have been supported by commercial litigation funders; the total and average number of legal disputes that have been the subject of class actions; the most important law firms that have represented class representatives; and the outcomes of these class actions.

An Empirical Analysis of Appeals by Class Members in Australia's Federal Class Actions

Australia was one of the first countries to emulate the United States by introducing class actions. But, unlike their American federal counterparts, the drafters of the three class action regimes that are in operation in Australia chose to deal expressly with and regulate the ability of class members (who are bound by, but not formal parties to, the class action litigation) to file an appeal, where the class representative is unwilling or unable to take such a step, from judicial orders that are adverse to their interests. Despite the fact that the ability to file an appeal represents one of the most significant powers available to Australian class members to ensure that their interests are protected in the litigation (without the involvement of the class representatives), these appeal mechanisms have not been the subject of critical analysis by Australian scholars. The aim of this paper is to address this lacuna in the legal literature by reviewing the aims, essential features and operation of the provision that governs the ability of class members to file appeals in Australia's longest running class action regime, which has been regulating class actions in the Federal Court of Australia since March 1992. For this purpose, the findings that have emerged from the first-ever empirical study of this regime, which the author recently conducted, are employed. References are also made to the corresponding provisions found in the two other Australian class action regimes, which operate in the Supreme Courts of Victoria and New South Wales, and to the American and Canadian experience with appeals by class members.

The Morrison Case as a Window to Institutional Investors’ Motives in Securities Class Actions

A growing body of legal literature suggests that securities litigation in the United States has little economic benefit, both from the perspective of compensation and with respect to deterrence. In light of the costs entailed with securities class actions and the transfer of losses to innocent group of shareholders, one would expect that financial institutions would seek to limit the scope of these suits. However, a recent study conducted by the Securities and Exchange Commission (the “SEC”) with respect to the Morrison case reveals that the inclination of institutional investors is quite the opposite. The paper analyzes the puzzling comments of institutional investors to the SEC’s study and suggests possible explanations to their support of broader class action regime.

Class Actions against Multiple Respondents

The class action regime introduced by the Commonwealth Parliament, through the addition of a new Part IV A to the Federal Court of Australia Act 1976 (Cth), involves the issue of a proceeding that may be brought in pursuance of the provisions of Part IV A, against more than one respondent. The impact on the multiple respondent suits of the judicial interpretation of the three requirements which must be complied with before aspiring representative plaintiffs may avail themselves of the Part IV A regime.

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.