With Vigour and Zeal

Written about for some time now, those provisions in the Companies Act 2006 relating to the derivative claim are finally about to come into force shortly, from 1 October.

DLA Piper UK LLP’s Andrew Dodd is squarely in the camp of those predicting the codification is not to lead to more claims. Fellow residents include Simmons & Simmons, Edwin Coe LLP and yours truly (see previous post) among others. Dodd’s latest article on the topic was in FTfm, the weekly fund management section of the Financial Times, last week. A quote:

The likelihood is, nonetheless, that directors will not face a proliferation of claims. Those responsible for drafting the 2006 Act made it abundantly clear that they did not wish, or envisage, there to be any greater degree of litigation as regards directors’ duties than there is now.

The 2006 Act expressly provides that the new codified directors’ duties should be interpreted and applied by reference to existing legal case law and principles. This should act as a brake on any significant change.

Dodd, with associate Matthew Daly, had previously published on directors’ duties and liabilities and derivative actions in the Company Secretary’s Review and Commercial Litigation Journal.

What when where: A reminder, Legal Week’s Litigation Forum 2007 takes place next week, Wednesday 19 September at London’s Renaissance Chancery Court (programme and registration form).

The American Bar Association earlier this month hosted a webcast, entitled Class Actions in a Global Economy: Investor Claims Against Non-U.S. Issuers. Munger, Tolles & Olson LLP’s James C. Rutten moderated the panel, consisting of Lynda J. Grant (Labaton Sucharow & Rudoff LLP) and Richard A. Martin (Heller Ehrman LLP) among others. The 75 minute recording may be purchased through the ABA Web Store from today.

The US Chamber of Commerce’s Institute for Legal Reform and National Chamber Foundation jointly host a half-day forum on 1 August in Washington, DC under the heading Lawsuits and Global Competitiveness: Is the U.S. Litigation System a Beacon or Barrier to Foreign Investment? (event details, or view the live webcast)

What follows here is a wrap up of a few recent articles and posts, including on the UK Companies Act 2006, the ‘f-cubed’ class and national Enrons.

Alan Karter of Simmons & Simmons comments in the FT’s blog Alphaville on the Companies Act 2006 and the statutory directors duties and derivative action:

The worry is that the new shareholder derivative action is so clear that people are bound to want to take advantage of it. There’s a huge temptation to use the stick because it’s there and because it’s new. It remains to be seen whether this combination (of statutory general duties of directors and shareholder derivative action) will be used […] Most business people regard litigation as a tool of last resort in the UK. It will be interesting to see if litigation around these issues starts to be used in the UK as a tool more in the American style.

Edwin Coe LLP seems to be clearer and more decisive on what effect the Act, which comes into force in October this year, will have on directors duties and derivative actions in particular:

The Act undoubtedly heralds significant changes but these changes do not in any way match shareholders’ rights in the US and it is highly unlikely that we will see any substantial growth in shareholder litigation as a result of the new provisions. (source)

WV&Z agrees with Edwin Coe on this point. Some things change and some things don’t. It’s the things that don’t - the ‘loser pays’ principle is one, the lack of availability of the contingency fee arrangement is another - that make it all in the end remain the same as it was. (Also see this previous post.)

Two interesting articles on foreigners in the US, by John C. Coffee Jr and Quinn Emanuel Urquhart Oliver & Hedges LLP, entitled ‘Foreign Issuers Fear Global Class Actions’ and ‘Foreign Plaintiffs and Class Members in U.S. Class Actions’ respectively.

Two notes on the Coffee article: he refers to a ’series of recent reports’ on capital markets competitiveness, one of which is by the (not therein expressly named) so-called Paulson Committee: Prof Coffee served as a consultant to the committee; Prof Coffee was retained by Royal Dutch Shell Plc to provide “the court with a brief memorandum outlining the extraterritorial reach of the United States’s federal securities laws” (but not to “address the merits of the dispute between the parties in the U.S. litigation”). (declaration, an annex to the court petition) In re Royal Dutch/Shell Transport Sec. Litig. and the Shell Settlement is one of the examples given.

Schiffrin Barroway Topaz & Kessler LLP has struck up its third alliance, with Isreali firm Man-Barak Advocates & Solicitors (press release, and see SLW) which already had an alliance with City firm McFaddens LLP, and it welcomes economist Peter Kraneveld in an advisory role, as does State Street Global Advisors. (source)

And finally, each country its own Enron, via Best in Class (and Lies Damn Lies).

What when where: Legal Week’s Litigation Forum 2007 takes place in London on 19 September. The two panel sessions of most interest here are ‘Class action: friend or foe?’ which pits Cohen Milstein Hausfeld & Toll PLLC’s Rob Murray of the firm’s London office against, among others, Andrew L. Sandler of Skadden Arps Slate Meagher & Flom LLP, and ‘Litigation funding models’ which includes representatives from IM Litigation Funding and NERA Economic Consulting. (programme and registration form)

Though it actually warrants far larger exposure (and scrutiny) than given here now, for now just two notes on proceedings involving Vivendi Universal SA, as it then was (Vivendi SA; Euronext: VIV), namely on the SEC settlement and the class certification in the securities action.

The deadline to file your claim to share in the $51 million SEC settlement is in two days, Tuesday 12 June. See the Vivendi SEC Settlement website for the notice, proof of claim form and more information and to file your claim online. (Note that the eleven countries on the home page of the site seem to indicate language only. The eligibility criteria do not include requirements of citizenship or exchange of purchase.)

Ross Dixon & Bell LLP’s D&O Liability alert of 28 March has a review of the class certification, the court having certified the class as purchasers of the United States, France, England and the Netherlands. “Recognition in England, Your Honour? Is that England the constituent country, or England and Wales together which share the same legal system under English law? Your Honour, are all citizens of the United Kingdom of Great Britain and Northern Ireland, the sovereign state, included?” (In re Vivendi Universal SA Securities Litigation, No. 02-5571 (SDNY))

With thanks to Eric J. Belfi of Labaton Sucharow & Rudoff LLP for his submission of the class certification decision at the time and an update this week, earlier this week the review of the decision has been denied and so the class as certified remains. Also see the US Chamber of Commerce’s amicus brief, in which its affiliate the National Chamber Litigation Center argues that “there should be a virtual certainty of preclusive effect before a class including foreign members should ever be certified”.

What’s more: Steve W. Berman of Hagens Berman Sobol Shapiro LLP and James Quinney of Herbert Smith LLP give the only presentation on class actions at the International Litigation and Fraud conference in London, 26 and 27 June. Key note speaker is Mr Justice Langley of the Royal Courts of Justice. (programme with registration form or book online)

The main post on the settlement is still pending (see previous post), but with thanks to The Race to the Bottom, in the interim a third note.

Earlier this month, Lead Plaintiffs PSERS and SERS (represented by Lead Class Counsel Bernstein Liebhard & Lifshitz LLP) have filed two motions in opposition of the settlement in the original US case pending in New Jersey District Court, opposing the severance and dismissal of the opt-out plaintiffs’ claims and in support of enjoinder of Shell and the Opt-Out Plaintiffs from seeking approval of the settlement in the Amsterdam Court of Appeals.

Shell (Robertson Freilich Bruno & Cohen LLC) and the Opt-Out Plaintiffs (Grant & Eisenhofer PA) each have filed motions in response. The University of Denver Sturm College of Law’s Corporate Governance section (with which The Race to the Bottom is affiliated) offers all four motions.

What’s more: though this is of course the shortest of short notices and hot on the heels of the IBA/ABA’s European class action conference of last week in Rome, Global Pensions hosts a conference in London tomorrow on the same topic under the title Class Action Forum 2007. (programme) The speakers are predominantly from plaintiffs’ firms Berger & Montague PC, Bernstein Litowitz Berger & Grossmann LLP and Murray Frank & Sailer LLP.

One presentation of note is on the Shell settlement as case study presented by Gerard W.R. Fehrenbach, a senior adviser with pension fund PGGM, one of the Opt-Out Plaintiffs.

The International Bar Association and the American Bar Association present a conference on European class actions in Rome’s Grand Hotel Plaza on the 24th and 25th of May, next week. (programme including registration form)

The conference, entitled Class actions at a crossroads: Europe’s choice between its own and the American model, focuses on the current status and legislative developments of class and collective actions here and on comparison with the US model.

Key note speaker is Meglena Kuneva, European Commissioner for Consumers (invited) and other speakers, drawn from a mid-Atlantic pool of academics and practitioners, include:

• Elizabeth J. Cabraser (Lieff Cabraser Heimann & Bernstein LLP)
• Professor John C. Coffee (Columbia University School of Law)
• Patricia Hynes (Allen & Overy LLP)
• Judge John G. Koeltl (SDNY)
• Xavier Nyssen (Dechert LLP, Paris)
• Nicola Walter Palmieri (General Counsel, Parmalat SpA)
• Sherrie R. Savett (Berger & Montague PC)

WV&Z will be there to cover the event.