January 11, 2008
Italy's New Class Action Law
My utmost thanks to Jon Eskelsen, of the U.S. Chamber Institute for Legal Reform, for passing along the text of Italy’s new class action law that went into effect on December 21, 2007. The law amends Italy’s Consumers’ Code, article 140, and gives certain associations capacity to sue collectively for tort liability, unfair trade practice, and anti-competitive behavior (antitrust violations). The law doesn’t specify the availability of collective procedures to redress securities class action claims, but as I’ve noted elsewhere, suing for fraud in secondary open market transactions is much closer to a tort than a contract claim. This is, of course, in contrast with face-to-face transactions that are typically contractual in nature. Consequently, it seems that by opening the door to tort liability, Italy may also open the door to securities class actions. As always, I’d certainly be interested in any comments (on or off the blog) to the contrary. At any rate, it appears that 453.3 provides what we might classify as a combined certification/motion to dismiss procedure. Section 453.6 sets up a Camera di Conciliazione (conciliation committee) picked by both the plaintiff association and the defendant (each picks one lawyer) plus a lawyer appointed by the chief judge. I’m also told that the government will revisit class legislation in early 2009. The text of the bill is below and it takes effect on July 1:
452. The provisions contained in paragraphs 452 to 456 introduce and regulate the collective redress action intended to protect consumers, which is seen as a new general tool of protection in the context of the national measures aimed at regulating the consumers’ and users’ rights, in line with the principles introduced by Community law in order to increase the levels of protection.
453. The following article shall be added after Article 140 of the Consumer Code (Legislative Decree no. 206 dated 6th September 2005):
“Article 140-bis (Collective redress action) - 1. The associations referred to in Article 139, paragraph 1 and the other parties referred to in paragraph 2 of this article do have legal capacity to sue in order to protect the collective interests of consumers and users by resorting to the court of the place where the company has its offices, in order to request the ascertainment of the right to be compensated for damage as well as in order to request that the defendant be ordered to return any due amounts to the individual consumers or users within legal relationships relating to agreements entered into pursuant to Section 1342 of the Italian Civil Code, or as a consequence of tort liability, unfair trade practice or anti-competition behaviour, providing that such unlawful acts damage the rights of a plurality of consumers and users.
2. The associations and the councils which duly represent collective interests have legal capacity to sue under paragraph 1 above. Those consumers and users who intend to benefit from the protection afforded by this article must notify the promoter in writing of their intention to join the class action. The promoter may be informed of this even during the appeal and up until the hearing scheduled in order for the parties to specify their conclusions. Any individual consumer or user who wishes to file claims having the same subject matter may in any case intervene in the action brought pursuant to paragraph 1. The commencement of the class action referred to in paragraph 1 or the fact of joining it afterwards shall interrupt the statute of limitations pursuant to Section 2945 of the Italian Civil Code.
3. At the first hearing the court, after having heard parties and gathered brief information (to any necessary extent), shall declare the admissibility or inadmissibility of the claim by way of an order that may be challenged before the Court of Appeal, which shall rule in Chambers. The claim is declared inadmissible when it is clearly groundless, when there is a conflict of interest, or whenever the judge does not ascertain the existence of any collective interest deserving protection pursuant to this article. The judge is entitled to postpone the assessment of the admissibility of the claim when preliminary investigations concerning the same subject matter are underway before an independent authority. Should the judge declare the admissibility of the claim, then the party who has promoted the class action is ordered to duly advertise the content of the claim, and actions are also taken for the continuation of the proceedings”.
4. Should the Judge accept the claim, he or she shall also sets the criteria to be used in order calculate the amount to be paid or given back to the individual consumers and users who have joined the class action or who have intervened in the proceedings. The Judge shall also establish the minimum amount to be paid to each consumer or user should this be possible on the basis of the documents at his or her disposal. Within 60 days of the service of judgment, the company shall make its offer for payment by way of a written deed to be served upon any entitled party and to be filed with the clerk’s office. Any form of proposal accepted by the consumer or user shall be enforceable.
5. The decision that brings the proceedings referred to in paragraph 1 to an end shall also produce legal effects on those consumers and users who have joined the class action. Those individual consumers or users who have not joined the class action or who have not intervened in the proceedings under paragraph 1 shall continue to have their right to bring individual actions.
6. Should the company fail to make its offer within the term referred to in paragraph 4, or should its offer remain unaccepted after 60 days of its service, the chief judge of the court having jurisdiction pursuant to paragraph 1 shall appoint a sole Camera di Conciliazione (conciliation committee) in order to set the amounts to be paid or given back to consumers and users who have joined the class action or who have intervened pursuant to paragraph 2, and who request so. Camera di Conciliazione is composed by a lawyer duly indicated by the those who have brought the class action and by a lawyer indicated by the summoned company, and it is chaired by a lawyer appointed by the chief judge of the court, chosen from among those entered in the special register for higher jurisdictions.
Camera di Conciliazione shall set, by way of minutes to be signed by its chairman, the terms, methods and amounts to be paid in order to compensate the individual consumers and users for damages. Said minutes shall be enforceable.
Alternatively, should the party who has promoted the class action and the defendant jointly request so, the chief judge of the court shall order out-of-court settlement before one of the conciliation bodies referred to in article 38 of Legislative Decree no. 5 dated 17th January 2003, as subsequently amended, operating in the same municipality as that of the court. The provisions set forth in articles 39 and 40 of Decree no. 5 dated 17th January 2003 (as subsequently amended) shall apply to any compatible extent.
454. The provisions referred to in paragraphs 452 to 456 shall become effective after one hundred and eighty days of the date of this law coming into force.
455. The following shall be added in article 50-bis, paragraph 1 of the Italian Code of Civil Procedure, after number 7):
“7-bis) in the proceedings referred to in article 140-bis of the Consumer Code (Legislative Decree no. 206 dated 6th September 2005)”.
456. In the Consumer Code (Legislative Decree no. 206 dated 6th September 2005, as subsequently amended), the title of Part II of Chapter V shall be replaced as follows: “Access to justice”.
Registration for Southwestern Law School Asbestos Symposium
On Friday, January 18, 2008, Southwestern Law School is hosting a symposium entitled, Perspectives on Asbestos Litigation. Here's the press release, and brochure: Download southwestern_law_school_asbestos_symposium_brochure.pdf For further information about the conference, see my prior posts here and here. Attendees may register in advance by contacting the Student Affairs Office of Southwestern Law School at (213) 738-6716. We look forward to an engaging and informative day with a remarkable slate of speakers, and hope you will be able to join us.
January 10, 2008
Vioxx Settlement Update
As the first January 14 deadline looms, the Wall Street Journal reports that "it looks highly likely enough plaintiffs will sign on to seal the deal." Here are a few key excerpts from the article:
More than 28,000 of the estimated 60,800 claimants have submitted registration information so far, according to Andy Birchfield, a partner with Beasley, Allen, Crow, Methvin, Portis & Miles, P.C. in Montgomery, Ala., and one of the plaintiffs' attorneys who negotiated the settlement. He believes the rest will do so by Jan. 15.
. . .
A more crucial deadline comes Feb. 29, when the estimated 45,000 plaintiffs with heart-attack and stroke cases that qualify for the settlement must enroll. To validate the pact, at least 85% of those must enroll. Mr. Birchfield says a strong turnout next week would indicate that threshold will be met.
But law firms representing thousands of plaintiffs have filed court papers contesting the clause that would require lawyers participating in the settlement to recommend it to all clients who qualify. They say it violates professional-ethics codes that require lawyers to give every client their "independent professional judgment." One of these motions, filed by lawyers from Missouri and Illinois, is scheduled for a hearing Jan. 18 before U.S. District Judge Eldon E. Fallon of New Orleans, who is overseeing the settlement. Another motion by lawyers from Kentucky and Indiana hasn't yet been set for a hearing.
. . .
Some plaintiffs are concerned their lawyers have been co-opted into recommending the deal.
Virginia Pickett, a 55-year-old former blackjack dealer, says she suffered a heart attack in 2002 after having used Vioxx for three years. She says she lost her job after the heart attack and has paid more than $200,000 in medical bills. Ms. Pickett, of Baltimore, estimates the settlement would pay her about $530,000, but says she is entitled to three times that. "I won't be browbeaten into taking this settlement," she says.
The law firm that represents her, Levin Simes Kaiser & Gornick LLP of San Francisco, recently sent her a letter stating its "strong recommendation" that she participate, detailing the challenges she would face taking on Merck in court.
A letter very similar to the one sent by Levin Simes is posted at officialvioxxsettlement.com, a Web site sponsored by the lead plaintiffs' firms, leading Ms. Pickett to suspect her lawyers didn't take her particular situation into account. "If they tell me they won't represent me because I'm dropping out, that is malfeasance," she says.
Partner William Levin says his firm is familiar with each client's case. He says the firm recommends that clients take a "hard look" at the settlement, but that it will stick by any who object. "We're happy to continue representing anyone who doesn't go forward with the deal," he says.
It is impossible to gauge the precise number of hold-out plaintiffs, or to determine if there are enough to scotch the deal. A small band of them have formed discussion groups online to share information. The Fort Lauderdale-based Kelley/Uustal Law Firm, which doesn't have significant experience with Vioxx cases, has offered to represent plaintiffs who opt out, and has been retained by fewer than 10 so far.
The full article is available here (subscription required). Wall Street Journal Law Blog also has a post today titled "Are Reports of Vioxx Litigation's Death Exaggerated?" It concludes:
Even if the all-or-none clause is eventually dropped, analysts believe the settlement deal would still leave Merck better off as long as the vast majority of cases settle. Says Peter Bicks, a product liability lawyer who isn’t involved in the Vioxx litigaiton: "If you get this down to less than 1,000 cases, [Merck] can manage that."
I haven't seen any recent figures on the number of foreign plaintiffs. Should you see any, let me know!
Italy's First Class Action Suit Targets Banks
Reuters reports that Italian consumer group Adusbef plans to bring a class suit against Italian banks for calculating compound interest on the initial loan plus interest that accumulates when the money is due. Apparently this practice is known as "anatocism." According to Italy's National Report (posted on Stanford's website on the Globalization of Class Actions), "Italy does not have any form of group litigation as a general procedural tool for the protection and the enforcement of rights and interests shared by a group of individuals equally affected by the same mass wrong or harm." But the report does acknowledge that there are a few "collective actions" (suggesting that perhaps the use of "class action" by Reuters is a bit hasty) that address certain subjects and can be filed by consumer associations, such as Adusbef. Granted, the report notes that there are roughly six bills proposing collective actions pending before Parliament.
January 9, 2008
Vioxx Settlement Discussion Panel
The American Enterprise Institute hosted a two hour long panel discussion about the Vioxx Settlement last Monday. Panelists included Andy Birchfield (attorney), John Calfee (American Enterprise Institute), George Cohen (UVA), Ted Frank (American Enterprise Institute), Mark Hermann (attorney), and Richard Nagareda (Vanderbilt). The video is available through C-Span’s archives. Thanks to Drug and Device Law for the tip.
W.R. Grace's Bankruptcy Trial
W.R. Grace, a company that initially registered on many civil procedure professors’ radars after its role in A Civil Action, will begin its bankruptcy trial on January 14. Amidst its creditors are a number of asbestos claimants. Peg Brickley of the Wall Street Journal reports:
If the answer from U.S. Bankruptcy Judge Judith Fitzgerald is $700 million or a little more, Grace and its shareholders are safe and on their way out of bankruptcy, with enough value to cover the asbestos-damage bill and have something left over for shareholders.
But if Judge Fitzgerald estimates asbestos liabilities at levels argued by plaintiffs' lawyers, Grace is destined to become the property of people damaged by its toxic products, and shareholders will be out in the cold.
Experts for the asbestos camp say Grace's liabilities are at least $3.7 billion. "If the asbestos experts are even close to right, then the equity in this company is severely at risk, or it will simply be wiped out," said Roger Frankel, a lawyer for asbestos creditors.
Investors are betting heavily that Grace -- bankrupt for more than six years and under criminal indictment for allegedly covering up its asbestos troubles -- will be the Chapter 11 case where phony claims are finally exposed, and "junk science" trashed.
Speculators pounce on every court filing, and are paying $25 a share for the stock -- an unusually high amount for a company in bankruptcy. That is a vote of confidence for the company and the litigator spearheading Grace's hard-fought bankruptcy case, one lawyer said.
January 8, 2008
2007 Choice of Law Survey
Symeon Symeonides (Willamette) has posted his annual choice of law survey, Choice of Law in the American Courts in 2007: Twenty-First Annual Survey, on SSRN. Here’s the abstract:
This is the Twenty-First Annual Survey of American Choice-of-Law Cases. It covers cases decided by American state or federal courts from January 1 to December 31, 2007, and reported during the same period. Of the 3,676 conflicts cases meeting both of these parameters, the Survey focuses on the cases that deal with the choice-of-law part of conflicts law, and then discusses those cases that may add something new to the development or understanding of that part. The Survey is intended as a service to fellow teachers and students of conflicts law, both within and outside the United States. Its purpose is to inform rather than to advocate.
The following are among the cases reviewed in the Survey:
A California Supreme Court decision involving recordings of cross border communications and another California case raising issues of cross-border discrimination in managing a web site; a product-liability decision of the New Jersey Supreme Court backtracking from its earlier pro-plaintiff decisions, and several other cases continuing to apply the pro-defendant law of the victim's home state and place of injury; several cases arising out of the events of September 11, 2001, and a few cases involving claims of torture (by them and us); the first guest statute conflict in years, as well as a case eerily similar to Schultz v. Boy Scouts of America, Inc.; two cases in which foreign plaintiffs succeeded, and many more cases in which US plaintiffs failed, to obtain certification of a nationwide class action; a case involving alienation of affections and one involving palimony between non-cohabitants; several cases involving deadly combinations of choice-of-law, choice-of-forum, and arbitration clauses; three cases involving the paternity or maternity of children born after artificial insemination, in three different combinations (known sperm donor, unknown sperm donor, and unknown egg donor); a case involving the child of a Vermont civil union and holding that DOMA does not trump the Parental Kidnapping Prevention Act; a case involving the constitutionality of a Missouri statute affecting out-of-state abortions of Missouri minors; and one US Supreme Court decision allowing federal courts to dismiss on forum non conveniens grounds without first affirming their jurisdiction, and another decision exonerating Microsoft from patent infringement charges arising from partly foreign conduct.
The AALS Section on Conflict of Laws hosted a program last week on Choice of Law in Aggregate, Complex and Mass Tort Litigation: Accommodating Policy, Procedure and Practicality, which featured Elizabeth Cabraser, Ed Cooper, Linda Silberman, Judge Scheindlin, and Symeon Symeonides (who unfortunately could not attend). The program will be published in Roger Williams University Law Review.