Monday, September 14, 2009
Eran Taussig has posted the paper Broadening the Scope of Judicial Gatekeeping: Adopting the Good Faith Standard in Class Action Proceedings.
This paper suggests that using the concept of "good faith", as is used in Israeli class action proceedings, could resolve some of the shortcomings in U.S. class action proceedings. There is a vast literature about the abuse of the class action procedure in the United States. Among other problems, scholars lament the extensive filing of meritless class actions in order to extort unwarranted settlements and the so-called "sweetheart settlements", in which class counsel colludes with the defendant to settle meritorious claims for far less than they are worth, in exchange for fees in excess of those he would have expected had the parties proceeded to trial. Yet, there are no satisfactory solutions to the abuse of this procedure. This paper addresses this gap by describing and evaluating a solution that originates outside the United States. Unlike Rule 23, the recently enacted Israeli Class Actions Law includes a good faith requirement as one of the prerequisites to certification. This requirement is used to scrutinize the motives of the representative plaintiff and the class counsel. Israeli Courts will not certify class actions which have been instituted for collateral or illegitimate purposes such as extortion or harming a competitor. The paper suggests that the application of good faith in the U.S. could resolve some of the more significant flaws in the American class action mechanism. In making this argument, the paper also considers both the larger legal and socio-political contexts - specifically the role that litigation plays in the American and Israeli societies.