Theoretical Inquiries in Law

- - — 2018-01-28

Introduction

Arthur R. Miller Keynote Address - The American Class Action: From Birth to Maturity

Elizabeth Chamblee Burch Publicly Funded Objectors

Shay Lavie Tiered Certification

Brian T. Fitzpatrick Can and Should the New Third-Party Litigation Financing Come to Class Actions?

Zachary D. Clopton The Global Class Action and Its Alternatives

Alon Klement and Robert Klonoff Class Actions in the United States and Israel: A Comparative Approach

Brigitte Haar Regulation Through Litigation — Collective Redress in Need of a New Balance Between Individual Rights and Regulatory Objectives in Europe

Fabrizio Cafaggi Towards Collaborative Governance of European Remedial and Procedural Law?

Catherine Piché Class Action Value

Vicki Waye and Vince Morabito When Pragmatism Leads to Unintended Consequences: A Critique of Australia’s Unique Closed Class Regime

Robin Hui Huang Rethinking the Relationship Between Public Regulation and Private Litigation: Evidence from Securities Class Action in China

Agustín Barroilhet The Regime Politics Origins of Class Action Regulation

Editorial Board

- - — 2018-01-28

Editor in Chief:

Alon Klement

Guest Editors:

Alon Klement

Shay Lavie

Associate Editor:

Yael Braudo

Junior Editors:

Jamie Savren

Yuval Spitzer

Assistant Editors:

Alon Abramovich

Evyatar Ayalon

Rohan Beesla

Maya Covalove

Efrat Fadida

Sama Haddad

Maya Haran

Simon Kotlerman

Rosa Lisnyansky

Varsha Mohan

Khawla Nassar

Lee Tel-Ari

Shir Tiran

Noga Zamir

Managing Editor:

Marie Madvil

Introduction

Yael Braudo — 2018-01-28

Keynote Address - The American Class Action: From Birth to Maturity

Arthur R. Miller — 2018-01-28

Publicly Funded Objectors

Elizabeth Chamblee Burch — 2018-01-28

On paper, class actions run like clockwork. But practice suggests the need for tune-ups: sometimes judges still approve settlements rife with red flags, and professional objectors may be more concerned with shaking down class counsel than with improving class members’ outcomes. The lack of data on the number of opt-outs, objectors, and claims rates fuels debates on both sides, for little is known about how well or poorly class members actually fare. This reveals a ubiquitous problem — information barriers confront judges, objectors, and even reformers. Rule 23’s answer is to empower objectors. At best, objectors are a partial fix. They step in as the adversarial process breaks down in an attempt to resurrect the information-generating function that culture creates. And, as the proposed changes to Rule 23’s handling of objectors reflect, turmoil exists over how to encourage noble objectors that benefit class members while staving off those that namely seek rents from class counsel. The U.S. class-action scheme is not the only one that relies on private actors to perform public functions: citizens privately fund political campaigns, and private lobbyists provide research and information to lawmakers about public bills and policies. Across disciplines, the best responses to those challenges have often been to level up, not down. This Article therefore proposes a leveling up approach to address judges’ information deficit such that they can better perform their monitoring role. By relying on public funds to subsidize data collection efforts and nonprofit objectors’ information-gathering function, we can disrupt private class counsel’s disproportionate influence.

Tiered Certification

Shay Lavie — 2018-01-28

This Article proposes a thought-experiment with regard to the administration of class actions. It is almost axiomatic that class actions are determined through a single “certification.” However, class actions can be certified through a tiered certification, e.g., a preliminary certification on a more lenient standard, followed by a full certification. Flattening the certification process allows a richer set of solutions to familiar dilemmas. Currently, a noncertified class does not bar subsequent certification attempts. Focusing on this problem, this Article demonstrates that tiered certification is a superior solution — members of a class that passed the first certification but not the second receive at least minimal procedural protection and thus could be precluded from serial certification attempts. More generally, tiered certification can better handle several species of collective litigation, which can be referred to as semi-class actions. Collective proceedings, whose certification costs are greater than their social benefit, do not justify a comprehensive class treatment. But to the extent that these cases entail some modest social value, they deserve to pass a less onerous, preliminary certification. The Article discusses cases that fit this pattern, for instance prospective, class-wide relief for technical regulatory violations.

Can and Should the New Third-Party Litigation Financing Come to Class Actions?

Brian T. Fitzpatrick — 2018-01-28

In the United States, there has been tremendous growth in a form of third-party litigation nancing where investors buy pieces of lawsuits from plaintiffs. Many scholars believe that this new nancing helps to balance the risk tolerance of plaintiffs and defendants and thereby facilitates the resolution of litigation in a way that more closely tracks the goals of the substantive law. In this Article, I ask whether these risk-balancing virtues of claim investing carry over into class action cases. This is a question that has not yet been addressed by scholars because many think it is not possible for nanciers to buy pieces of class action lawsuits in the United States. But I show that such investments are neither impractical nor unethical; indeed, it appears that they are already here. It is therefore worth considering whether the investments confer the same social bene ts they do in other cases. I argue that although class members do not need a risk transfer device in class action cases because they are almost always risk-neutral in light of their small losses, their lawyers do need such a device. Although this does not necessarily mean that claim investing is socially desirable overall in class actions, the social costs that have thus far been identi ed with claim investing seem modest compared to the bene ts.

The Global Class Action and Its Alternatives

Zachary D. Clopton — 2018-01-28

The “American-style” class action, when combined with private rights, is an important tool of American regulatory policy. And just as American regulation has global reach, the global class action is not unfamiliar to U.S. courts. Yet, global U.S. class actions are facing ever-stronger headwinds. In addition to the recent retrenchment of class actions and international litigation generally, U.S. courts have raised additional barriers to global class actions in particular. This Article’s rst goal, therefore, is to document these developments and their consequences for regulation. Against this backdrop, this Article also reviews the options available to foreign lawmakers, foreign courts, foreign litigants and litigation funders, and foreign public enforcers. Foreign lawmakers may provide alternatives to global U.S. class actions; foreign courts and foreign litigants may explicitly or implicitly coordinate to approximate global class resolution; and foreign public enforcers may achieve the goals of global regulatory litigation while avoiding some of its legal impediments. Finally, this Article evaluates these various foreign responses from an institutional perspective, with special attention to the institutional incentives for lawmakers and law enforcers.

Class Actions in the United States and Israel: A Comparative Approach

Alon Klement — 2018-01-28

Unlike most countries, the United States and Israel have employed the class action procedure for decades. This Article compares the two countries’ class action regimes and examines how the device has evolved in those countries. It examines the current procedures, as well as proposed reforms. It also compares class action statistics in the two countries relating to lings and outcomes. We demonstrate the many common features between the United States and Israeli class action procedures. As we illustrate, these common features have led to robust class action practices in both countries. At the same time, there are profound differences between the types of class actions led and their outcomes. Thus, while Israel has many more class actions than the United States on a per capita basis, the cases are much less consequential from a monetary and subject matter perspective. We explore possible explanations for these observations. Furthermore, this study identi es features — utilized by the United States and Israel — that can serve as models for other countries that are adopting or amending their own class action regimes.

Regulation Through Litigation — Collective Redress in Need of a New Balance Between Individual Rights and Regulatory Objectives in Europe

Brigitte Haar — 2018-01-28

The EU Collective Redress Recommendation has invited Member States to introduce collective redress mechanisms by July 26, 2015. The claim of the well-known reservations concerns the potentially abusive litigation and potential settlement of not well-founded claims resulting from controversial funding of cases by means of contingency fees and from “opt-out” class action procedures.

The Article posits that apart from that claim, at bottom there may be some danger that the European Commission and private interest-groups may try to pursue the enforcement of their regulatory agendas in this way at the expense of individual claimants’ interests. However, in contrast to the situation in the United States, the need to complement regulatory enforcement by collective action may not appear as strong because of the relatively strict regulatory control and enforcement, which may explain EU Member States’ longstanding reluctance to adopt collective proceedings due to their concern for plaintiffs’ individual rights. Therefore, a comparative analysis is carried out to see to what extent individual rights as opposed to regulatory goals are taken into account in the different newly revised systems in place across Europe.

As an interim result, the Dutch settlement procedure for mass damage claims, the English Group Litigation Order and the German test case procedure turn out to be relatively well-suited to dealing

with mass damage claims. At the same time, none of them can quite reach an optimal balance between individual rights and regulatory goals and therefore each of them is subject to criticism. That is why the further question is raised as to how far these procedures could complement each other, thus contributing to the enforcement of individual rights without overregulating markets in Europe.

Towards Collaborative Governance of European Remedial and Procedural Law?

Fabrizio Cafaggi — 2018-01-28

This Article examines consumer law enforcement in the EU. It shows how the effectiveness of collective and individual redress is intrinsically linked to the interplay between administrative and judicial enforcement and alternative dispute resolution (ADR). It addresses the trends and the contradictions of EU enforcement policies and their impact on national systems by looking at the role of general principles and fundamental rights, in particular Article 47 of the European Charter of Fundamental Rights (CFR). It concludes with policy recommendations concerning how the various consumer enforcement mechanisms should be coordinated at the EU and national level to ensure comprehensive and effective protection in compliance with fundamental rights.

Class Action Value

Catherine Piché — 2018-01-28

This Article attempts to clarify a proposition of certain Canadian authors that while class actions represent a signi cant part of our court activities, they may not truly be compensating our citizens. I argue that leading up to the present study, we did not know for certain whether a class action was an effective mechanism to compensate class members. Through empirical data collected up by the Class Actions Lab from the past twelve years from cases led in the province of Quebec, District of Montreal, analyzed through the lens of a collective approach to compensation, I demonstrate that Quebec citizens are in fact being compensated by class actions.

When Pragmatism Leads to Unintended Consequences: A Critique of Australia’s Unique Closed Class Regime

Vicki Waye — 2018-01-28

In an effort to ensure access to justice, Australian courts have fashioned a unique hybrid opt in-opt out process known as “closed classes.” The rationale that underlies closed classes is to prevent free-riding that may undercut the position of funders and class action law rms reliant upon entering into agreements with a critical mass of class members. However, multiple closed classes also pose problems for respondents seeking the comfort of nality. To secure settlement and thus ultimately bene t participating class members, Australian courts have formulated a procedure whereby the closed class is opened and nonparticipating class members are invited to either register their claims or opt out so that thereafter those who do not register and those who opt out are effectively precluded by res judicata from making further related claims. We argue that Australian courts’ support of closed classes, while driven by pragmatism, has produced unintended consequences. Many relate to the ethical dilemmas faced by class action law rms and litigation funders seeking to advance the interests of participating class members over and above those of nonparticipating class members. The Full Federal Court has recently approved an alternative common fund approach. However, questions remain as to whether Australian courts are appropriately equipped to measure and compare the alternative transaction costs associated with the current and proposed approach, and whether they are appropriately equipped to determine the commercial rectitude and fairness of litigation funding agreements.

Rethinking the Relationship Between Public Regulation and Private Litigation: Evidence from Securities Class Action in China

Robin Hui Huang — 2018-01-28

China has a civil procedure for collective litigation, which is dubbed Chinese-style class action, as it differs from the U.S.-style class action in some important ways. Using securities class action as a case study, this Article empirically examines both the quantity and quality of reported cases in China. It shows that the number of cases is much lower than expected, but the percentage of recovery is signi cantly higher than that in the United States. Based on this, the Article casts doubt on the popular belief that China should adopt the U.S.-style class action, and sheds light on the much-debated issue concerning the relationship between public and private enforcement of securities law. The Article also discusses the future prospects of securities class action in China in light of some recent developments which may provide its functional equivalents, including the regulator-brokered compensation fund and public interest group litigation.

The Regime Politics Origins of Class Action Regulation

Agustín Barroilhet — 2018-01-28

This Article highlights that when procedural rules are legislated and there is substantial coordination between the executive and legislative branches, procedures with potential structural impact are weighted against alternative means of policymaking and implementation. This makes many Continental law countries, parliamentary countries, and countries governed by solid national majorities with substantial control over elected branches, and in general places where power is less fragmented, less likely to encourage American-style class actions. This is manifested in legislative choices of a private enforcement regime for class actions, which, when allowed, is designed to be subordinate to or to piggyback on the enforcement of preexisting bureaucracies. The theory is illustrated with the enactment of class actions in Chile, which is a civil law country that has experimented with class actions since 2004.

Theoretical Inquiries in Law

Table of Contents

Editorial Board

Introduction

Keynote Address - The American Class Action: From Birth to Maturity

Publicly Funded Objectors

Tiered Certification

Can and Should the New Third-Party Litigation Financing Come to Class Actions?

The Global Class Action and Its Alternatives

Class Actions in the United States and Israel: A Comparative Approach

Regulation Through Litigation — Collective Redress in Need of a New Balance Between Individual Rights and Regulatory Objectives in Europe

Towards Collaborative Governance of European Remedial and Procedural Law?

Class Action Value

When Pragmatism Leads to Unintended Consequences: A Critique of Australia’s Unique Closed Class Regime

Rethinking the Relationship Between Public Regulation and Private Litigation: Evidence from Securities Class Action in China

The Regime Politics Origins of Class Action Regulation