What Are People Trying to Do in Resolving Mass Issues, How Is It Going, and Where Are We Headed?
| Author | Christopher Hodges |
| Published date | 01 March 2009 |
| Date | 01 March 2009 |
| DOI | 10.1177/0002716208328679 |
| Subject Matter | Articles |
some intriguing issues that emerge from the national
reports. At first sight, class actions exist to provide a
solution to mass issues raised in courts. What are liti-
gants, their lawyers, and the courts trying to do here?
How successful have they been? Might there be other
ways of solving mass issues, and what are those alter-
natives? Is the position static or dynamic? If the lat-
ter, where are things heading? What will happen
next?
What Are
Keywords: class action; collective redress; models,
policy; excess; abuse; settlement; funding
People Trying
to Do in
Resolving Mass In the article that begins this volume,
Deborah Hensler has identified that strong
tensions can exist in mass dispute resolution,
notably between the actors (such as claimant
Issues, How Is groups and defendants and the lawyers for each
side, illustrated in human rights or consumer
It Going, and
versus business scenarios) and those who are
responsible for making decisions that may have
Where Are We major sociopolitical or economic consequences
(courts or legislatures). Considerable potential
Headed?
for evaluation of these tensions can be identi-
fied at the current time. It would appear pre-
mature to forecast whether significant changes
will occur in existing mechanisms and balances
of power as the outcome of ongoing debates
By
and reforms, but it is certainly worth attempting
CHRISTOPHER HODGES
to understand the issues in greater depth.
Christopher Hodges is head of the CMS Research
Programme in Civil Justice Systems at the Centre for
Socio-Legal Studies, Oxford University.
NOTE: I am grateful to my colleagues Deborah
Hensler and Magdalena Tulibacka for comments and
suggestions. I also gratefully acknowledge research
funding from CMS Cameron McKenna and the
European Justice Forum.
DOI: 10.1177/0002716208328679
330
ANNALS, AAPSS, 622, March 2009
WHAT ARE PEOPLE TRYING TO DO IN RESOLVING MASS ISSUES?
331
Some Basic Models
U.S. models
The starting point is to reflect on class action as found in the United States.
This jurisdiction has not only had far greater and lengthy use and experience of
mass procedures than any other similar mechanism in any other jurisdiction, but
it has also been extremely influential internationally. It is only recently that ter-
minology other than “class action” has emerged to describe concepts of aggregate
dispute resolution mechanisms that differ from the American court-based opt-
out model. The nature of that influence has, however, notably changed in the past
decade. Before 2000, jurisdictions such as those in Australia and Canada intro-
duced new aggregating procedures based on the U.S. model. Since then, altered
or even competing models have begun to emerge. Solutions adopted in Europe
and Latin America have either adopted only some parts (a general approach to
aggregation) and sought to improve other parts (controls against unacceptable
excesses and abuse) or have sought to identify new ways of addressing the under-
lying problems that may be better than the private litigation model.
It is, however, wrong to speak of a single U.S. model. Many commentators may
have in mind as a class action paradigm a single plaintiff representative opt-out
class action, as found in Rule 23(b)(3) actions for money damages. But other pro-
cedures also exist, such as injunctive action brought under Rule 23(b)(2), which
are non-opt-out (presumably on the basis that equitable relief is either granted
or not, and the result is for the benefit of or applies to all class members: for
example, if a corporation is ordered to stop discriminatory promotion practices,
a prison is ordered to provide more beds for prisoners, or a defendant’s conduct
is deemed lawful). Rule 23(b)(1) actions are similarly non-opt-out, and judges
have sometimes approved opt-in procedures at the joint request of opposing par-
ties (an example being in silicone gel breast implant cases). Furthermore, an
aggregation approach has been adopted by the multidistrict litigation procedure.
So U.S. procedure and experience is diverse.
Consumer representative actions
It is now clear that many jurisdictions have followed a distinctive representa-
tive action model, limited to enforcement of certain aspects of the consumer law
enacted since the 1960s. This trend is identifiable across European jurisdictions,
some Latin American jurisdictions, and elsewhere, such as in Japan. Four facets
are notable in this model. First, the subject matter of court actions involving
many parties has related almost exclusively to enforcement of new consumer pro-
tection law, such as unfair contract terms and unfair advertising legislation and,
more recently, general unfair trading legislation. The absence of other types of
claims is striking: this is a vertical solution, not a generic one.
Second, the procedure is usually a “representative” model, in which an inter-
mediary represents the consumer interest involved. In many instances, the initial
332
THE ANNALS OF THE AMERICAN ACADEMY
manifestation of such a procedure involved a consumer association as intermedi-
ary, but not an individual consumer as class representative. However, deciding
the juridical basis for such a representative role caused civil law jurisdictions con-
siderable intellectual problems, often involving extensive debate, most recently
in Latin America, over the nature of the rights involved and standing to bring
representative claims and the acceptance of new collective rights. The issues
raised in such debates led to limitations on the scope of the collective rights that
could be raised, and hence the type of subject matter that could be claimed in
representative actions. On one restricted view, still seen in some jurisdictions,
private organizations can only raise issues of general consumer interest not
involving the rights of individual consumers. A more liberal view would be that
the enforcement of consumer protection requires that private sector entities
should be encouraged to assist in enforcement activities, so a wider view of stand-
ing and rights may be taken.
Nevertheless, third, most of these consumer representative mechanisms have
historically been limited to seeking injunctive relief. Limiting the relief to injunc-
tions has the consequence that, as mentioned above in relation to U.S. Federal
Rule 23(b)(2), one avoids difficult issues of defining who is in or out of a class,
since the model is essentially non-opt-out. The issue of whether such historical
procedures can or should be extended to damages claims is one of the current hot
topics and inevitably brings more complex decisions over who initiates, controls,
pays, and is bound.
Fourth, restrictions on the entities are permitted to act as representative inter-
mediaries. These restrictions have their origin in a desire to avoid frivolous law-
suits that might be brought by individuals or less established bodies. Accordingly,
in a number of cases, the intermediary is a public organization that has sufficient
standing, permanence, and assets. There is also a political dimension, in that
politicians seek the favorable perception that they are empowering consumers to
take control of their affairs and of markets. However, the practical effect may be
that private organizations do not possess the expertise, resources, or knowledge
to be particularly effective in an enforcement role. It is notable that the most
active intermediaries are public enforcement bodies: the British Office of Fair
Trading, the Brazilian Attorney General, the Chilean National Consumer Service
(SERNAC), the Australian Competition and Consumer Commission, the Nordic
Consumer Ombudsmen, and the publicly funded German and Austrian con-
sumer organizations (the exception that proves the rule) are leading examples.
This last observation raises the fundamental question of the purpose of this—
or any—type of representative procedure: is it intended to address some aspects
of enforcement (not all aspects, since only the injunction remedy has tradition-
ally been involved, and the right to enforce through post facto prosecutions, for-
feitures, and other orders is retained by public authorities), or is it extendable to
damages claims? Developments in damages claims are just beginning to occur
(witness the different but related approaches in the Nordic states) but are still
tentative and controversial. Perhaps the leading questions here are whether the
representative action model will develop beyond its limited injunctive function
and whether that function is effective or merely symbolic.
WHAT ARE PEOPLE TRYING TO DO IN RESOLVING MASS ISSUES?
333
Excess and How to Control It
The recent and ongoing debate in Europe on whether and how money claims
might be covered collectively has been particularly interesting and has been
breaking new ground. In response to governmental interest during the current
decade in the introduction of new procedures for collective redress involving
money damages, business responded that although the U.S. model might deliver
money transfer to consumers or investors, it involves huge cost, conflicts of inter-
est between intermediaries and claimants, settlements that are unjust, and impo-
sition of an unnecessary drag on the economy. That impasse produced two
streams of thought. The first is an attempt to refine the U.S. model by introduc-
ing controls against abuse into the procedure, and the second is to consider alter-
native means of dealing with the underlying issues. Political debate in Europe,
and seemingly...
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