With Vigour and Zeal

Author: Werner R. Kranenburg

  • Fulbright’s Fifth

    Fulbright & Jaworski LLP today published its latest Annual Litigation Trends Survey Findings, its fifth such report, alongside the data used for the report. (Also see the UK and US press releases.) The survey covers mostly US (251) and UK (100) respondents.

    One of the findings is that “more U.K. companies are facing a U.S. class action: 11% this year, compared with 5% in 2007.” (Report, p.47) But “[g]roup actions in the U.K. against companies are… down this year.” (p.47) Litigation partner Melanie E. Ryan in the UK press release: “The low absolute number of U.K. businesses facing class/group actions is reflected in the Civil Justice Council’s recent proposal to reform the class actions system in England and Wales. If the proposals of the Civil Justice Council are accepted in their entirety, there will be a fundamental change in the class action landscape.” (More specifically on the CJC and its recommendations in a forthcoming post.)

    Concerning “legal areas where subprime matters are anticipated”, the report concludes that “[t]he main area of concern for all those who answered the question is securities litigation, securities class actions and other government actions.” (p.41) ‘Securities class actions’ ranks second with 40% of the response. The number of ‘all those who answered the question’ is just 15 though, out of the 358 respondents in all. (Data, table 65)
    Of the 40% of those 15 participants in the question, 5 are in the US and 1 is in the UK. WV&Z would like to know who that is, so answers on a postcard please!

    If the report, data and press releases aren’t enough for you, register here for Fulbright’s webcast (Tuesday 28 October, 5.30pm – 6.30pm GMT) on its findings or browse here for the first four reports.

    What’s more: In the post above the links to the report and the data lead directly to these documents. When going to Fulbright’s website however, there is no direct route. One has to register first, before moving on to a page that links to these documents. Post-publication the firm has therefore requested to provide you with this registration page, www.fulbright.com/litigationtrends37.  With your registration data Fulbright “will be better able to target our audience for next year’s report. We also survey the individuals who have participated the previous year in next year’s campaign.” So there’s your chance to make it to the Sixth.

  • Fortis SA/NV group litigation forthcoming

    On the 9th of October last year it was announced that a consortium of three banks had won control over ABN Amro Holding NV of the Netherlands. (FT) Just shy of a year later, one of those three banks, Fortis SA/NV (Euronext: FORA/FORB), has been displaced by the Ministry of Finance of the Netherlands.
    (press release) (The other two consortium banks are The Royal Bank of Scotland Group Plc (LSE: RBS) and Banco Santander SA (Bolsa de Madrid: SAN).)

    After too many developments to mention here during that year, on the 3rd of october the Dutch State took control of all Fortis assets in the Netherlands, including the Dutch units of ABN Amro that Fortis had acquired. Total consideration: €16.8 billion. Price Fortis paid for its share of ABN Amro: €24 billion. On the 6th, BNP Paribas (Euronext: BNP) paid €14.5 billion in cash and shares for almost everything else outside of the Netherlands, a sale orchestrated by the government of Belgium. (press release) And on the 8th, two websites popped up: FortisAction.com and Beduveld.nl (in Dutch).

    Both websites aim to unite ‘hoodwinked’ – or ‘beduveld’ in Dutch – Fortis shareholders and organise legal action. FortisAction.com is an initiative by Euroshareholders, a confederation of 32 European non-profit shareholders associations. Beduveld.nl is an initiative by Beursduivel.be and Belegger.nl, two shareholders websites ultimately owned by Sanoma Oyj (NASDAQ OMX: SAA1V). Any shareholder can sign up via these websites to be kept informed of their respective developments. Beduveld.nl has retained the firm Modrikamen on behalf of its group, which has made the first legal move. Modrikamen put out this statement (in Dutch) and filed a case to enjoin Belgium from proceeding with the asset sale to BNP Paribas.

    Euroshareholders has indicated at a press conference today (Monday 13) it will launch its own action in a Dutch court within a fortnight seeking a judgment in particular on whether shareholder approval should have been sought for the BNP Paribas transaction. (Reuters, DJN, AFP/Yahoo!) To be continued…

  • More class action resources

    One of the resources WV&Z has actually already used deserves more credit and a separate mention. In addition to its long-established Stanford Securities Class Action Clearinghouse, Stanford has created the Stanford Global Class Actions Exchange. Whereas the former only provides information on US federal class action securities litigation, the latter sets its sights on any form of collective litigation outside the US. GCAX includes several country reports, statutes, commentary and the contact details of mostly academics who specialise in research in the class action area of law.

    Bruce Carton has also branched out. When at Garden City Group he maintained the GCG blog Best in Class. This blog unfortunately ceased to exist (and has been removed from the GCG website entirely) since he left the company. Over summer he maintained his own blog, Unusual Activity, which is now inactive and will be folded into his latest venture Securities Docket. Securities Docket, the Global Securities Litigation and Enforcement Report, aggregates securities litigation data from various sources and provides its own editorial content, updated throughout the day. (GCAX and Securities Docket are in the newly created Resources links section too, on the right.)

    And finally a newcomer, ClassActionBlawg.com run by Baker & Hostetler LLP partner Paul G. Karlsgodt. This blog covers all types of class actions, including securities and derivative actions. WV&Z pays special attention to the posts tagged ‘International Class Action Law’.

    Welcome (back) to all of you!

  • Parmalat SpA’s latest settlement

    Today Parmalat SpA (Milan: PLT) announced it has settled the securities class action pending against it (SDNY). It will issue 10.5 million shares – ‘new’ according to AP, ‘existing’ according to WSJ – worth approximately €24 million to the class. (press release, Forbes and see the FT, WV&Z archives)

    The Guardian quotes Lead Counsel Grant & Eisenhofer PA‘s Stuart M. Grant:

    “We are very pleased with the settlement reached with the company, bringing total investor recovery obtained so far in the Parmalat case to approximately $90 million. […] We will also continue to press claims against other defendants whom we allege defrauded investors over a period of years prior to Parmalat’s ultimate collapse in 2003.”

    So it’s not over yet for the class, nor for Parmalat that still is involved in other legal procedures of its own.

  • Country focus: Italy

    The laws have changed in Italy to allow for class actions (azione collettiva risarcitoria) from 30 June this year. Since it’s been in the works for years, a lot has been written about it already. WV&Z offers a few resources to get up to speed, starting with material produced by practitioners:

    Prof Elisabetta Silvestri of the University of Pavia has written an extensive guide (report, supplement) on the legislation and its history (with thanks to GCAX). Also see this 2005 paper by two Italian professors on Parmalat (about which see the next post too). From the abstract:

    [After a description of Parmalat’s frauds and governance, w]e subsequently analyse the causes of under-enforcement and the reasons why Parmalat generated litigation in the US rather than Italy. Drawing from economic analysis, we explain the role of private enforcement and consider the benefits of class actions. In this respect, we emphasize the importance of discovery and pleading rules. We also find that the interplay between public and private enforcement is missing in Italy and argue, by way of conclusion, that US securities regulation was transplanted into Continental Europe without sufficient modernisation as to civil procedure in the area of mass claims and complex litigation.

    But is a change in the law enough? What about the judges presiding over these cases? These two papers examine just that:

    • Do Corporate Law Judges Matter? Some Evidence From Milan (link)
    • Off the Books, but on the Record: Evidence from Italy on the Relevance of Judges to the Quality of Corporate Law (link)

  • What when where: four in four

    In the next four weeks there are no less than four conferences to go to, one a week. They are, in chronological order:

    • Conference on Securities Litigation, 28, 29 April, London (programme)
    • Corporate Governance and Responsible Investment, 6, 7 May, Copenhagen (programme)
    • Global Shareholder Activism Conference, 15, 16 May, Paris (programme)
    • Pension Fund Investment World Nordic 2008, 19, 20 May, Stockholm (programme)

    London is more geared toward the topic of securities litigation for a legal practitioner audience, Copenhagen and Stockholm are more about corporate governance for investors and Paris is a mix of the two. (Also see this previous post.)

  • Wrapping it up, 19 April 2008

    Three items of note this time, one bulletin, two articles.

    Lovells LLP‘s class action practice has published its latest bulletin (April 2008). Several members of the practice contribute to it, a number writing about the respective European and US jurisdictions in which they practice. Contributions cover the latest developments in France and the possibility of its adoption of a group litigation procedure, the scope of Germany’s KapMuG and the European Commission and ‘collective redress’.

    The first article is entitled Aggregate Litigation across the Atlantic and the Future of American Exceptionalism, by Prof Richard A. Nagareda, lecturer at Vanderbilt University School of Law. (With thanks to the Drug and Device Law blog.) From the abstract:

    This article analyzes the emerging phenomenon of trans-Atlantic civil litigation on an aggregate basis – chiefly, though not exclusively, by way of class actions. European systems have shown a growing receptiveness for aggregate litigation, but treatments of this development have consisted largely of description. This article offers an analytical framework with which to anticipate the structural dynamics of transnational aggregate litigation in the twenty-first century.

    For a quick reference of recent ‘developments in aggragate litigation’ in Europe, see the table from page 19 (20 of 47).

    In the second article, in the The Times newspaper, Edwin Coe LLP‘s David Greene politely warns ‘Hands off our claimants, please’. ‘Is there a head of steam building up to introduce US-style class action to Britain? Consumers will not be so lucky.’ Greene, partner and head of litigation, discusses among other things the export of cases by way of the US plaintiffs’ bar’s efforts ‘recruiting claimants in the UK’ and the corresponding growth of UK claimants’ participation in US actions. (In WV&Z’s view, ‘participation’ is moving to be and, once appointed, acting as lead plaintiff and not the just filling out and filing of a settlement claim form.) Cited cases include Vivendi, GSK and the English case MAN v Freightliner (opinion). He then goes on to discuss the flipside, the barriers of the development of ‘US-style class actions’ over here – ‘loser pays’, lack of contingency fees and ‘simply the state of the law’.

    Edwin Coe is the firm that represents 6,000 – the number is growing – private shareholders in the nationalised mortgage lender Northern Rock Plc. (Also see this article.) WV&Z waits with bated breath for that case to commence.

  • Converium class includes SWX, NYSE

    The post I wrote on 16 January 2007 about Converium Reinsurance Co being partially granted and partially denied its motion to dismiss the class action pending against it following its IPO never did find its way here. It was in the earliest days of WV&Z and on the basis of the case I actually went on a tangent about disclosure and the Transparancy Directive and never did finish the post properly. So, nudged by SLW (this post, with thanks), some of that material, the important stuff on the case itself, does find its way here now in updated form. (I’ll spare you the rest.)

    In her December 2006 opinion (via New York Law Journal), SDNY Judge Denise Cote dismissed the claims against former parent Zurich Financial Services and its underwriters UBS AG and Merrill Lynch International and certain claims against Converium Holding AG and three Converium officers, but not all. Even so, back then it was presented as if it was a dismissal (New York Law Journal, AFX News). (Converium was part of Zurich Financial Services before being spun off; it’s now known as SCOR Holding (Switzerland) AG, SWX: CHRN; NYSE: CHR) Far from that being the end, litigation of course continued on the basis of what was left, the Securities Act claims and the remaining Exchange Act claims. (Also see the consolidated amended complaint, September 2005.)

    Fast forward a good year and Judge Cote has partially granted and partially denied a motion to certify the class in the action. (SLW has the March 2008 opinion.) She specifically denies ‘to include foreign investors who purchased shares on a foreign exchange’ (WV&Z archives) but includes ‘United States residents who purchased Converium shares on the SWX [and] any person who purchased Converium ADSs on the NYSE’. See the opinion from page 7 for the discussion on subject matter jurisdiction over non-US purchasers on the Swiss exchange in this case.

    Notably, the certification denies Co-Lead Plaintiff Avalon Holdings Inc., an institutional investor based in Greece, being a member of the class. In response to SLW’s final observation then, WV&Z points to Avalon as most likely to lead that charge.

    What’s more: Also see Prof Samuel P. Baumgartner’s 2007 paper Class Actions and Group Litigation in Switzerland.

  • PwC’s 2007 Study, with a foreign flavour

    One of the main themes of PricewaterhouseCooper‘s 2007 Securities litigation study is in relation to foreign issues, involving both issuers and purchasers. In her introductory observation (page 1 of 77, all pages ‘of 77’), Grace Lamont, Partner and Leader of the Securities Litigation Practice, states among other things that ‘[w]ith the European Union and individual countries seemingly poised to consider collective litigation alternatives [to US class action litigation], 2008 could prove just as transformative in the foreign markets’.

    Skip to the chapter ‘What a difference a year makes’ (p. 56) and the article ‘Global class actions’ (p. 70, contributed by Allen & Overy LLP) for the analysis. (Also see the Gibson Dunn & Crutcher LLP contribution, p. 45)

    In short, the number of actions against foreign issuers is well up, to 27 from 14 in 2006. Of the 27, ten are European which is higher than the 2000 – 2006 average of 7. Settlement values too are up. The average settlement amount of the fifteen settlements was US$253.3 million (2006: US$149 million) or US$26.6 million (US$11.7 million) excluding outlier settlements. The Royal Dutch Shell Plc settlement (WV&Z archive) was not taken into account in these figures as that is a European settlement. (For the NAPF paper referred to on p. 66, see this previous post.)

    For last year’s study, see this previous post and for more commentary on this year’s, see the D&O Diary and The 10b-5 Daily.

  • White Paper for collective redress

    The European Commission has presented a White Paper on actions for damages, ‘suggesting a new model for achieving compensation for consumers and businesses who are the victims of antitrust violations’. One of the key recommendations is that of collective redress in particular for small value claims.

    ‘However, safeguards to avoid that such actions would lead to unfounded claims need to be put in place. In the field of antitrust, the Commission therefore recommends allowing only representative actions led, for example, by recognised consumer groups and actions in which victims can choose to participate, as opposed to class actions run by law firms for an unidentified number of claimants.’ (press release, related documents)

    The paper follows the Commission’s Green Paper (2005) on the same topic. (press release) See also SJ Berwin LLP‘s latest Community Week, today’s The Lawyer for an article by Weil, Gotshal & Manges LLP‘s Matthew Shankland and Competition Commissioner Neelie Kroes’ remarks on the White Paper.