Regulatory litigation in the European Union: does the U.S. class action have a new analogue?

• Author: Strong, S.I.
• Position: Introduction through B. Regulatory Litigation as a Function of Need 1. Litigation as a Necessary Form of Regulation a. Litigation as a form of regulation, p. 899-923

The United States has long embraced the concept of regulatory litigation, whereby individual litigants, often termed "private attorneys general," are allowed to enforce certain public laws as a matter of institutional design. Although several types of regulatory litigation exist, the U.S. class action is often considered the paradigmatic model for this type of private regulation.

For years, the United States appeared to be the sole proponent of both regulatory litigation and large-scale litigation. However, in February 2012, the European Union dramatically reversed its existing policies toward mass claims resolution when the European Parliament adopted a resolution proposing to create a coherent European approach to cross- border collective redress. Given certain conceptual similarities between cross-border collective redress and global class actions, the question logically arises as to whether the European Union is in the process of embracing a form of regulatory litigation.

This issue is of great importance not only to European audiences who may have to recalibrate their thinking about what constitutes "regulation" within the European sphere, but also to American audiences who will have to consider how the new European procedures affect the ability of U.S. courts to bring European parties into global class actions. Although many of the issues may appear to be procedural in nature, the more interesting--and challenging--analyses arise as a matter of regulatory law.

This Article is the first to consider the European resolution from a regulatory perspective, using a combination of new governance theory and equivalence functionalism to determine whether the European Union has adopted or is in the process of adopting a form of regulatory litigation. In so doing, the Article considers a number of issues, including the basic definition of regulatory litigation, how class and collective relief can act as a regulatory mechanism, and the special problems that arise when regulatory litigation is used in the transnational context. The Article also includes a normative element, providing a number of suggestions on how European authorities--who are still in the early stages of drafting the relevant procedures--can better achieve the regulatory and other objectives set forth in the resolution. Through these means, the Article makes a significant contribution not only to the domestic understanding of regulatory law, but also to the increasingly important field of transnational regulation. Audiences in both the United States and the European Union, as well as readers from other countries, can benefit greatly from this analysis.

1. INTRODUCTION

   For decades, Europe and the United States have been characterized as representing opposite ends of the spectrum with regard to their approach to regulation. (1) The United States has traditionally been seen as embracing a mixed model of shared public-private authority, with individual litigants being permitted, if not encouraged, to act as "private attorneys general" and enforce various public laws in an otherwise highly deregulated market environment. (2) European nations, on the other hand, have been painted as preferring a more formal regulatory model that includes a large number of legislative and administrative enactments that deny both the need and opportunity for any sort of "private" regulation through litigation. (3)

   While these stereotypes may still exist in the popular mindset, "[c]omparative studies of developments in regulatory law and policy in Western states over the past three decades have shown a widespread movement away from a top-down approach in public governance to an increasingly hybrid interaction of public and private actors." (4) This is intriguing, not just from an academic perspective, but also as a practical matter, since it suggests that European nations may be adopting what could be seen as a more Americanized model of regulation. (5) However, it is dangerous to read these developments too robustly, since the mere fact that other nations are increasing the role of private actors in their regulatory schemes does not necessarily mean that those jurisdictions are adopting U.S. regulatory methods and mechanisms per se. (6)

   One area of particular interest involves the use of large-scale litigation to achieve certain regulatory ends. This technique, often referred to as "regulatory litigation," arises when a "diffuse set of regulators," including "private citizens, public regulatory bodies, nongovernmental organizations, and private market agents[,] ... regulate social harm" (7) by "us[ing] litigation and the courts to achieve and apply regulatory outcomes to entire industries." (8)

   One of the best known forms of regulatory litigation is the U.S. class action. (9) While the regulatory elements of class action litigation give rise to few issues in domestic disputes, the device's regulatory potential has caused a number of difficulties in cases involving multinational classes. (10) For example, U.S. judges not only have to consider how regulatory efforts initiated by private actors in U.S. courts should or will be considered in countries that only allow traditional forms of regulation, (11) judges also have to take into account what the legal, political, and economic ramifications of these so-called "regulatory mismatches" will be at both the national and international levels. (12)

   These tasks obviously go far beyond what trial judges are usually expected to do. (13) Nevertheless, U.S. courts are being asked to address these sorts of issues with increasing frequency, since the forces of globalization are not only driving up the number and diversity of mass multinational injuries but also the number of ways in which those injuries can be said to affect U.S. parties and U.S. interests (and hence attract the jurisdiction of U.S. courts). (14)

   The situation has become even more complicated in recent years because the United States is no longer the only country in the world to provide for large-scale litigation in its domestic courts. (15) Over the last ten years, numerous countries in both the common law and civil law traditions have adopted various forms of class and collective redress as a matter of national law. (16) While some of these procedures provide for opt-out representative relief in a manner similar to that reflected in U.S. class actions, other devices differ significantly as a matter of both form and function. (17)

   Given Europe's traditional antipathy toward both regulatory litigation and U.S. class actions, it might seem as if Europe would be the last region in the world to embrace any type of collective relief. (18) As it turns out, sixteen of the twenty-seven European Member States now provide for some form of large-scale litigation as a matter of national law, (19) with collective relief also being made available in a number of specific subject matter areas as a matter of European law. (20) However, the most significant development in this field comes as a result of a resolution adopted by the European Parliament in...