- Class Actions, Conflict and the Global Economy1
The development of the global economy – in the sense of interconnected markets for consumer products, for investment capital, and for labor – has necessitated the development of global regulatory strategies. Such strategies depend on the ability of governments to work together both in coordinating or harmonizing disparate national laws and in establishing cooperative enforcement mechanisms. With respect to the public enforcement of the laws governing economic conduct, this project has been largely successful. Harmonized rules have been developed in a number of areas, creating common standards applicable to the activities of multinational business enterprises. Regulatory agencies such as securities commissions and antitrust authorities work regularly with their counterparts in other countries,2 and also participate in multilateral organizations created to facilitate a shared approach to cross-border problems.3
With respect to the private enforcement of regulatory law, however, an entirely different picture emerges. Civil lawsuits brought under national regulatory law are a site of conflict, not coordination, among governments. This conflict encompasses disagreement over the extraterritorial application of domestic law, doctrines of adjudicatory jurisdiction, and the use of certain procedural devices in the cross [End Page 585] border context. In addition, the disagreement extends more generally to views of the appropriate role of domestic courts in the international arena.
In previous decades, the primary flashpoint for friction in cross-border civil litigation was the discovery process, as chronicled during the 1980s in work on the “Justizkonflikt.”4 Today, the flashpoint for such debates seems to be the class action. Disagreement regarding the function and utility of class actions is particularly evident in the U.S.-European debate. This essay will focus on that debate, setting out an explanation for the animosity that it has engendered and an argument for quelling that animosity.
Until relatively recently, the United States stood virtually alone in its commitment to ordinary civil litigation as an instrument of economic regulation, and in its support of the procedural devices required to incentivize that litigation. European countries have of course long permitted certain types of collective litigation. One type common to many systems, for instance, is litigation by consumer or trade associations, seeking injunctive relief on behalf of association members.5 What these systems have historically not permitted, however, are class actions for monetary damages on the U.S. model: that is, true representative litigation in which one plaintiff can act for, and bind, the rest of the class members.6
This legislative landscape has changed significantly in recent years. U.S. courts and legislators have entered a period of retrenchment, cutting back in a variety of ways on the efficacy of class actions.7 In [End Page 586] Europe, meanwhile, many countries have adopted new procedures for aggregate litigation – either across substantive areas of law, or in connection with some specific regulation, such as a consumer protection law or an antitrust statute.8 Additional countries are currently considering such reform. Yet these first steps toward convergence have not yielded increased cooperation and coordination in private enforcement. To the contrary, one finds constant friction between the United States and many European countries – a sharpening, perhaps, of the Justizkonflikt. This is true despite the fact that the United States’ historical and current practice with class actions presents a rich resource of information and experience for countries considering their utility.
Whatever one thinks about the successes and the failures of the U.S. class action system – and there are clearly both – it has been in operation for many decades. Information about the procedural rules that govern class actions, the funding models such as contingency fees or fee-shifting arrangements that were developed to encourage class litigation, and, especially, the long history of refinements and adjustments that have been made to the system when it was perceived to be functioning poorly – all are tremendously useful to other systems considering how to create a local model for group litigation. Yet while some effort is being made to examine the United States as a source of information in this sense, the attitude that has emerged in Europe is one of antagonism toward the U.S. class action system. European regulators have...