Day 1: Foundations of Class and Mass Tort Actions

The Global Class Actions & Mass Torts Conference by Perfect Law LTD took place on 27-28 April 2023 at Westminster Central Hall, London. The event brought together over 200 eminent practitioners, academics, funders, experts, and service providers in the class actions and mass torts space from the US, Canada, the UK, Australia, and across Europe.

The conference was kicked off with welcoming words from the conference board members Professor Christine Riefa of University of Reading, Ariel Flavian of Herzog Law, and Eric Cramer of Berger Montague. They set the tone of the conference by pointing out that class actions in European jurisdictions as a tool to facilitate access to justice are still new, and much opportunity exists to learn from each other, in particular from jurisdictions with more experience, such as the US, Canada, and Australia.

Chaired by Eric Cramer, the first panel discussed the conditions for class certification in different jurisdictions. Sir Marcus Smith, President of the UK Competition Appeal Tribunal (CAT), highlighted the need for the CAT to ensure the manageability of the cases it certifies. This is the central motivation behind the Pro-Sys test, which the CAT increasingly relies on, as evidenced by the CAT’s Gormsen v Meta decision. Professor Rachel Mulheron of Queen Mary University of London noted that certification is not an absolute necessity, as the Australian experience shows. She pointed out that the courts have broad powers to manage class actions and can address issues as they arise; thus, certification should not be handled too restrictively. Professor Ianika Tzankova of Tilburg University explained that certification in the Netherlands requires claims organizations to be representative of the claimholders on behalf of which they act, as illustrated by the recent TikTok decision. Meeting this requirement implies significant bookbuilding efforts, despite the opt-out nature of the mechanism. All panelists agreed with Sir Marcus Smith’s warning that, while much refinement of the certification criteria is still needed and cases suitable to proceed as class actions should be selected carefully, one should be cautious that “perfect does not become the enemy of good.”

Professor Christine Riefa chaired panel two on the role of the class representative. Justin Gutmann, himself a (proposed) class representative in several UK collective proceedings, shared his perspective and stressed the need for the class representative to fill multiple roles, in particular being the face of the case and communicating with the public at large. Els Bruggeman of Euroconsumers added that the role requires significant project management, IT, and accounting capabilities. She explained how consumer organizations need to bring these skills to the table so that they can effectively use class actions in their mission to “empower the people, improve the market.” Klaus Rotter of Rotter Rechtsanwälte explained how class representatives are selected in different types of collective proceedings in Germany. An open question remained about the proper remuneration for the class representative, given that, on the one hand, the role requires significant effort but, on the other hand, the class representative should ideally not be driven by financial self-interest but act in the interest of the whole class and be perceived as objective.

Panel three, chaired by Robert Hanna of Augusta Ventures, discussed the funding of class actions. Robyn Griffin of Huntington National Bank explained how class actions can be financed by third-party litigation funding and law firm funding; while the former is typically non-recourse and provided for specific cases, the latter is a type of recourse loan, much like general corporate loans, provided to law firms against the future (contingency fee) income stream of the law firm as collateral. In law firm funding, law firm partners are often asked to give personal guarantees, so as to keep them committed. Elena Rey of Brown Rudnick expects that with increasing familiarity with financing arrangements and standardization of financing documents, the funding process will become more efficient. In contrast, Leeor Cohen of Burford Capital pointed out that, despite increasing standardization of deal documents, many transactions are heavily negotiated and require tailor-made solutions. In addition, in an environment with raising interest rates, which means that capital becomes more expensive, only those who have special expertise in deploying it will be successful. He expects that several asset managers with general investment strategies who dabbled in litigation financing will likely retreat from the market. The panel agreed that, given the restrictions on contingency fees for lawyers in Europe, third-party funding will continue to play a key role in the development of the class action landscape.

Janet Netz of applEcon chaired panel four on damage quantification. Peter Davis of Brattle reported that, given the early stage of development of the UK class actions regime, quantification experts have mainly been tasked with identifying and explaining the methodologies with which they intend to assess damages at later stages. Enno Eilts of Oxera stressed that for the actual analysis, data is “the life-blood of the economists’ work.” The amount and type of data that can be made available through pre-trial discovery varies dramatically between different jurisdictions such as the US, the UK, and Germany. Tasneem Azad of Kroll also emphasized the importance of data availability. Technical solutions facilitate the handling of large data sets; the real challenge often lies in interpreting incomplete and inconsistent data. Damage quantification methodology is key in class actions generally and has become even more important with the CAT’s decision in Gormsen v Meta. In that case, the CAT applied the so-called Pro-Sys test, which demands that a case can only be certified if the expert methodology is convincing and provides a clear blueprint for trial.

Panel five dealt with the settlement of class actions, chaired by Greg Coleman of Milberg. Stuart Carson of Stewarts points out that the UK class action regime, being still in its early days, has yet to see class action settlements. However, as courts currently are deciding key issues, parties will be able to take guidance from those decisions, which will facilitate future settlements. Sabrina Lombardi of McKenzie Lake confirmed that, in Canada, settlement rates increased once courts indicated how they view important issues. Machteld de Monchy of De Brauw Blackstone Westbroek reports that also in the Netherlands, the new WAMCA regime is currently being tested, and settlements have yet to occur. But an advantage here is that the new WAMCA refers to the old WCAM provisions, under which several settlements have been approved. The million- (or, indeed, billion-) dollar question in class action settlements is how courts can be swayed to approve them. While always the best possible outcome for class members must be sought, settlement inevitably involves compromise. It is thus important to keep in mind that, when assessing settlements, “fairness, not perfection,” is required.

Jeremy A. Lieberman of Pomerantz led panel six on cross-border class actions. Jeremy Sher of DLA Piper emphasized that, for businesses, class actions are a global risk and thus require a global strategy. Often, the U.S. is where the exposure is highest, and the impact is felt most immediately, but copy-cat suits are likely to follow in other jurisdictions soon thereafter. Han Jongeneel, Judge at the District Court of Amsterdam, set out the rules governing the jurisdiction of Dutch courts in WAMCA cases, illustrated by recent decisions in the cases against Volkswagen and the Fiat Chrysler Automobiles group. He also discussed the so-called scope rule, which requires that WAMCA cases have a sufficient connection to the Dutch legal sphere. While formally an admissibility requirement, critics argue that the scope rule is a jurisdictional requirement in disguise, which would be incompatible with the Brussels I bis Regulation’s harmonized rules. The question of the scope rule’s compatibility with EU law might thus likely end up before the European Court of Justice sooner or later. Caroline Taylor of Milberg pointed out that forum shopping should not be perceived negatively; rather, it is part of the lawyer’s job to identify the best jurisdiction for a client’s claim. When suing in several jurisdictions, careful consideration must be given to the question of whether to file all claims at once (to put pressure on defendants) or to follow a staggered approach (which allows one to learn from earlier cases and apply that knowledge in later ones). As recent events such as the truck cartel or the Diesel emissions scandal have shown, mass harm events rarely stop at national borders. Inter- and multinational class actions will thus be an important topic in the years to come, with thorny issues of private international law yet to be answered, in particular once the EU Representative Action Directive has been implemented in all EU Member States.

Day one ended with the all-judges panel seven, chaired by Robert Dow, Judge at the United States District Court for the Northern District of Illinois and counselor to Chief Justice John Roberts at the US Supreme Court. Silvia Barison, Judge at the District Court of Venice, stated that the introduction of class action regimes across Europe will require judges to “let go of traditional ways of doing things to make class actions work.” Fabian Reuschle, Judge at the Regional Court of Stuttgart, gave an overview of the collective redress developments in Germany, including the Capital Market Test Case Act, the Declaratory Test Case Act, and the current implementation of the Representative Action Directive. Han Jongeneel, Judge at the District Court of Amsterdam, mentioned the judge’s difficult role in selecting exclusive representatives under the WAMCA, which will likely need to be grappled with in the near future. The WAMCA’s rule which allows to stop class actions at the outset if they are “manifestly unfounded” has not been used so far, and it is unlikely that it will be an easy way for defendants to avoid litigating serious claims against them. The panel’s discussion has shown that judges play a key role in class actions. They need to balance the need to pragmatically manage the proceedings to move the cases forward efficiently and, at the same time, make sure the interests of class members are protected at all times.

Anton Burri,^[1] Johannes Nickl,^[2] Adrianus van Heusden^[3]

[1] Faculty of Law, University of Lucerne, Switzerland.

[2] Faculty of Law, Heidelberg University, Germany.

[3] Rotterdam Institute of Law and Economics, Erasmus University Rotterdam, The Netherlands.

Foto Credit: Philip Pankhurst