Last month, I got to experience what I consider a career highlight: I was invited to speak on “Perfecting the Class Action” at  Middle Temple.  The spiel I gave would be familiar to readers here (it was a basic description of the Rule 23 class action, and a quick summary of the current controversies surrounding its reform), but what made the event really special was the distinguished company I was in, each of whom was speaking on how class action reform is progressing in different areas.  As I’ve done with other conferences I’ve attended, I thought I would share some of the highlights from the presentations.

There were four other speakers: Alexander Layton, QCIanaka Tzankova, the Honorable Wallace Jefferson (Ret.), and Diana Wallis.

  • Alexander Layton (who told me the blog was “delightfully polemic”) represented the British viewpoint, and gave an excellent overview of the current state of collective redress in the United Kingdom.  There are no opt-outs class actions (barring the recently-carved exception for antitrust claimants, which has yet to be tested).  That leaves the primary form of collective redress in the UK as theGroup Litigation Order, and its close cousin, the Special Purpose Vehicle.  Group Litigation Orders are similar to opt-in class actions.  They developed as a response to unwieldy insurance cases, and they retain a number of case-specific features.  The primary challenge in a GLO is finding the claimants (what is often referred to here as “book building,”) and ensuring adequate funds (litigation funding is not allowed for these cases).  The Special Purpose Vehicleis a concept borrowed from investing and corporate law—it’s essentially a one-time, single-purpose corporation formed for the sake of a transaction or a case—but it’s finding some success in front of British Courts.
  • Dr. Tzankova, who has litigated a number of collective actions in the Netherlands, talked about the three different methods of securing collective redress there: litigation foundations, power-of-attorney foundations, and settlement foundations.  While each has certain benefits, each also runs into specific issues.  The litigation foundation is easily certified, but is only available for injunctive or declaratory relief (much like a Rule 23(b)(2) class action).  It makes settlement more difficult, and encourages parallel lawsuits.  The power of attorney foundation is a method of collecting assignments of claims and assembling them in a Special Purpose Vehicle, but it’s limited by the law of assignments, and often requires labor-intensive book-building.  Finally the settlement foundation can streamline a claims process, but requires a willing defendant; so it only works when settlement looks very likely already.
  • Judge Jefferson spoke in his capacity as Treasurer of theAmerican Law Institute, and offered an account of its role in drafting the increasingly-influential Principles of Aggregated Litigation.
  • Finally, former Member of European Parliament (and current head of the European Law InstituteDiana Wallis spoke on the ELI’s role in the emerging debate over collective redress in Europe.  Her primary thesis (which makes sense for a pan-European organization) is that the greatest challenge for European collective redress is thelack of any mechanism for cross-border collective claims.  The ELI has put forward a Statement on Collective Redress and Competition Damages, which recommends an opt-out class action for when EU law is breached, but so far the European Parliament has not taken action on it.  (You’ll also note that the Statement is heavily indebted to Dr. Tzankova’s scholarship.)

So, all of this is interesting to comparative legal studies nerds like myself, but what is the takeaway for the American class action lawyer?  One thing that each of these perspectives highlights is the particular genius of Rule 23: by creating a representative action, it did eliminate the costly and difficult process of assigning claims that litigants in most other countries face.  But it also provides an excellent response to those who would argue that a less expansive Rule 23, one that is held to the same substantive limits as other laws, would spell the death of collective redress.  There are other methods out there, and many of them are successful.  Keeping Rule 23 within its prescribed limits will not kill the class action; nor will it create a corporate-ruled dystopia, unless, of course, we want to consider Europe to be one.