Reflections on the 5th International Conference on the Globalization of Class Actions

When Christopher Hodges and I organized the first International Conference on the Globalization of Class Actions in 2007 our goal was simple: to collect and disseminate information about the adoption and use of class actions and group litigation procedures worldwide. Conference planners, of course, always hope their efforts will be well-received but we were blown-away by the response to ours: lawyers in different parts of the world contacted us to volunteer to write reports on what was going on in their countries, and the conference attendees couldn’t seem to stop talking about differences and similarities among their respective approaches to mass injuries and mass financial losses. We learned a great deal from the conference discussions and papers (eventually published as THE GLOBALIZATION OF CLASS ACTIONS, available from Amazon) about the formal rules for class and group proceedings. But notwithstanding everyone’s eagerness to share information, we didn’t learn much about how these procedures are being used “on the ground” nor about the factors that are shaping their use or their outcomes.

The 5th International Conference found us a bit further along in our effort to understand the class and mass litigation phenomenon. A group of 14 scholars from 12 countries (Australia, Belgium, Brazil, Canada, Chile, China, England, Germany, Israel, the Netherlands, the US, and Taiwan) are conducting a collaborative qualitative research project, investigating recent class and mass litigation cases in their respective countries, using a common research protocol. At the conference there was only time for some of these scholars to present brief snippets of their findings in the form of “vignettes” that were used to ground the panel discussions. The positive responses to these vignettes suggest that there will be an enthusiastic audience for our planned book, which will focus on the factors that shape class and non-class mass litigation. However, we are still far from understanding the consequences of the adoption of class action and aggregative procedures.

This fifth conference did bring some trends into sharper focus for me:

First, whatever the original reason for their adoption, class action procedures in most parts of the world seem to be used most by corporations and institutional investors seeking compensation for violation of securities and cartel (anti-trust) regulations, not by individual consumers. This empirical observation is at sharp variance with the notion championed by the US Chamber of Commerce that the adoption of class actions presages the establishment of a “claims culture.” One of the most telling moments at the conference for me was when Ms. Femke van ‘t Groenewout, Senior Advisor to PGGM Investment, a leading Dutch pension investment manager, expressed seeming bewilderment that her selective involvement in securities litigation in order to secure compensation for pension fund members and promote good corporate governance could be perceived as part of such a “claims culture,” a term usually reserved by litigation opponents to describe greedy and unprincipled plaintiffs. In my view, we cannot yet be certain of the balance of costs and benefits of adopting class action proceduress. But policymakers considering whether to adopt or extend such procedures ought to know who in fact is using these procedures in the jurisdictions that provide for them and not be guided by political rhetoric.

Second, third-party litigation financing, which was just gaining steam when we met in 2007, has reached “lift-off” with the discovery by investors of its attractiveness as an uncorrelated risk, and is now probably unstoppable. Both the number of funders and their financing models are proliferating. In particular, the expansion of claims assignment/purchasing is transforming litigation into an investment vehicle with profound consequences for litigation dynamics and outcomes. I found Richard Murray’s (the Geneva Association) insights on this topic, presented during the closing roundtable discussion, most thought-provoking.

Third, there is an enormous gap between common law and civil law judges with regard to willingness to “take charge” of complex multi-claim multi-party litigation. Common law judges, represented at the conference by US District Court Judge Lee Rosenthal and the Honorable Sir David Steel of the English High Court of Justice, seem sure of their authority as well as their responsibility to manage class and mass litigation efficiently, including organizing the lawyers who lead the litigation for plaintiffs and defense. Civil law judges, represented at the conference by the Honorable Ivan Verougstraete, former President of the Belgian Court of Cassation,  seem uncomfortable at the thought of riding herd on the lawyers before them and uncertain of their authority to do so. Given the conventional notion among US civil procedure scholars that civil law judges manage their cases more efficiently than common law judges I found this divergence quite interesting. The difficulty at least some civil law jurisdictions find in meeting the challenge of mass cases was brought home to me by Prof. Axel Halfmeier’s (Frankfurt School of Finance & Management) description of the Deutsch Telekom case: despite the adoption of the “model case proceeding” (KapMuG) to streamline the resolution of shareholders’ claims the judges assigned to the DT litigation are apparently still required to handle each individual case file numerous times, perhaps in part explaining why the litigation is still unresolved some 10 years after its inception.

— Deborah Hensler, Stanford Law School / Tilburg University