With Vigour and Zeal

Author: Werner R. Kranenburg

  • Litigation funding to drive euro-class actions

    Legal Week has published the results of its latest Legal Week/EJ Legal Big Question survey, namely on the topic of class actions in Europe. The headline conclusion: “The UK legal community is united in the belief that US-style class action litigation is set to take off throughout Europe, with product liability cited as a key growth sector.” The second area of law cited behind product liability (cited by 52% of respondents) is shareholder claims (36%).

    On the latter area in particular, Anna Pertoldi of Herbert Smith LLP is quoted as saying:

    Shareholder actions could be an area for increased group litigation in Europe, but we will have to see how it pans out. With the new Companies Act coming into force in the UK, and new funding methods becoming available, people may be encouraged to have a go and test the waters.

    Note how she is apparently not squarely in the other camp then but appears to be so on the issue of the derivative claim and the Companies Act 2006 (see previous post). Two more quotes:

    John Whittaker, Clyde & Co LLP:

    If class actions are given a platform through proactive law firm initiatives, it is likely that claimants will seize the opportunity to litigate their claims.

    Matthew Newick, Clifford Chance LLP:

    Across Europe there are government moves to facilitate class actions [for example, in Denmark], with specialist firms setting up shop [Cohen Milstein Hausfeld & Toll LLP in London] and increasing investor activism as well as interest in third-party funding, which, if it takes off, could be a key driver for class action growth.

    The survey also shows that 72% of respondents are in favour of the concept of litigation funding. Herbert Smith is reportedly (Legal Week) considering offering access to litigation funding to its clients, indirectly joining the ranks of funder IM Litigation Funding and funding broker Calunius Capital LLP.

    (One error Legal Week continues to make however: Skadden Arps Slate Meagher & Flom (UK) LLP has not launched a class action defence practice in London, see previous post.)

    What when where: Mark Wells of Calunius Capital and Susan Dunn of IM Litigation Funding will be joined by Sam Eastwood (Norton Rose LLP) to discuss litigation funding at the Masterclass session of The Lawyer‘s Private Litigation Conference, which overall has an emphasis on litigation relating to competition. The conference takes places on 28 – 30 November 2007 at the Melia White House in London. (programme and registration form)

    Topics discussed include (speaker or selected speakers in brackets):

    • ‘How should private enforcement develop in UK & Europe?’ (Vincent Smith, Cohen Milstein Hausfeld & Toll; Nicolas Bessot, European Commission – DG Competition),
    • ‘Comparison of class actions in the UK, Europe & the US’ (Mike Pullen, DLA Piper UK LLP), and
    • ‘Settlement options’ (Simon Morgan, Simmons & Simmons), as well other topics by Howrey LLP, Freshfields Bruckhaus Deringer and Irwin Mitchell among others.

  • Class action civil justice reform in Denmark

    From 1 January 2008, new legislation will come into force in Denmark that will introduce the class action procedure (GruppesøgsmÃ¥l) as part of the country’s reform of civil justice.

    Jens Rostock-Jensen of Danish law firm Kromann Reumert gives a very brief overview of the new rules in his guest column in Schiffrin Barroway Topaz & Kessler LLP‘s Summer 2007 Bulletin. For a more extensive discussion, see this article (in English; in Danish) from the Law Department of Denmark’s Ministry of Justice.

    Noteworthy here is the rationale of the Standing Committee on Procedural Law’s (RetsplejerÃ¥det) findings and recommendations, in the article under the heading ‘Class actions under Danish law in general’. A quote:

    The Standing Committee on Procedural Law finds that rules on class action will ensure that more people will have real access to the courts and that that form of action will thus facilitate the satisfaction of justified claims. Against this background, the Standing Committee on Procedural Law recommends that rules on class actions be introduced in Danish law.

    The Standing Committee on Procedural Law is aware that there may be a certain risk that access to class actions is “abused” to pressure enterprises and others to accept unjustified claims. When drafting the detailed rules on class actions, the Standing Committee on Procedural Law has therefore emphasised the importance of avoiding this risk by laying down a number of conditions for bringing class actions, including that the court must approve the case as being suited for a class action as well as a number of ‘control mechanisms’[.]

    For the Bill itself (in Danish), see here.

    Rostock-Jensen predicts that “[a]lthough there are no limitations on the nature of the claims that are suitable for class action, it is expected that in the beginning it will first and foremost be consumer claims organised by the Consumer Ombudsman that will use this new method of processing a claim.”

  • Counting down to Companies Act’s D-Day

    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).

  • WV&Z will return shortly

    It’s almost two months since the last post here, during which time I have prepared for and taken the New York bar exam and the MPRE, with many thanks to those of you who wished me well.

    Now that the exams are behind me, please bear with me; posting will resume shortly. In the mean time, as always, your submissions of suggestions and material are most welcome (contact me). To subscribe – it’s free and easy! – and receive any future post from the next one onward, please see here.

  • What when where: f-cubed, competitiveness

    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)

  • In re GSK, after Paxil comes Avandia

    Drugs have landed GlaxoSmithKline Plc (LSE, NYSE: GSK) in the docket, again. Two years ago it was securities fraud claims surrounding Paxil – in the UK marketed under the name Seroxat – two weeks ago it was the drug Avandia. See the 2005 action’s press release and the 2007 action’s complaint (07 Civ. 5574, SDNY).

    Plaintiffs’ Counsel: Scott + Scott LLC (2005) and Kaplan Fox & Kilsheimer LLP (2007)

    The current status of the earlier action, In re GlaxoSmithKline Sec. Litig. (05 Civ. 3751, SDNY) filed in May 2005, is that the second amended complaint was dismissed in October 2006: “Plaintiff has failed to state a primary violation of the securities laws under section 10(b). Without a primary violation, there can be no secondary, or derivative, violation under Section 20(a). Accordingly, Plaintiff’s Section 20(a) claim is also dismissed.” (cited in In re NTL Sec. Litig.) An appeal had been filed with the US Court of Appeals for the Second Circuit. (Also see GSK’s 2006 Annual Report, p.163 (165 of 192).)

    After having read the complaint in the current action (filed 11 June), for more information see the following GSK communications:

    • press release in response to New England Journal of Medicine editorials (5 June)
    • press release regarding data from RECORD study in relation to Avandia (5 June)
    • statement of Moncef Slaoui, PhD, GSK Chairman Research & Development in testimony before the House Committee on Oversight and Government Reform (6 June)

    A GSK spokesperson has, in line with its policy not to comment on individual lawsuits, submitted the following in response to a request for comment concerning the current action:

    We will vigorously defend our medicine. GSK has acted responsibly, transparently and with the best interest of patients in mind. Any fair examination of the company’s record will show that GSK has been transparent in its efforts to thoroughly study the safety and effectiveness of Avandia, and to widely communicate that information to governments, regulatory authorities, scientific peers, physicians and others in a variety of ways.

    The proposed Class Period is the period between 27 October 2005 and 21 May 2007, inclusive. The deadline to apply for Lead Plaintiff status is 10 August 2007.

  • Wrapping it up, 20 June 2007

    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)

  • In re Vivendi Universal SA: SEC, class cert

    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)

  • Debating derivative actions in Legal Week

    This week’s Legal Week – its monthly Global edition – contains an article of mine, Werner R. Kranenburg‘s Debating derivatives, on US derivative actions against non-US corporations. What follows here are sources used, including two previous WV&Z posts which in turn include links to certain court documents, acknowledgements and annotations to the article.

    A selection of the sources I have used, listing mainly the papers:

    I wish to gratefully acknowledge Brian P. Murray of Murray Frank & Sailer LLP, Adam Savett of Securities Litigation Watch and Stefan Winheller of Winheller Rechtsanwälte for their respective contributions of material. Any errors or omissions are of course my own and you are kindly invited to contact me with any feedback.

    And finally some notes and updates: In the final paragraph of the article I state that the two plaintiffs in the BP action are American Depository Receipt holders; it would have been more accurate to have stated that the two filing plaintiffs are ADR holders. As discussed in a previous post on the action (as above), they were later joined by the London Pension Fund Authority, a UK shareholder. The defence argued the ADR and standing issue in its notice of removal of the action to Alaska district court (here, p.7).

    The latest news in the case is that both the motion to dismiss and the motion for reconsideration of the motion to dismiss were denied, on the 17th and 30th of May respectively.

    (Subscribe to WV&Z here; Days left: 51, so posting will become lighter and more irregular still)

  • A (third) note on the Shell Settlement

    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.