Representative Actions: Access to Justice?

1. FEATURES OF REPRESENTATIVE ACTIONS

1. Standing

A unique feature of some European proposals and legislation has been an expansive provision allowing organizations with no claim to sue on behalf of persons who have a cause of action. The procedure for representative claims proposed in February 2001 by the U.K. Lord Chancellor, for example, would have permitted organizations "to bring proceedings on behalf of persons whose collective interests they support.[12] The organization would not have to have a "direct interest in the proceeding."[13] Instead, it would simply need to satisfy the Court that it is "an appropriate body to represent the interests of the individuals concerned and that it has "a sufficient interest in the matter, including by demonstrating an awareness of the issues involved."[14] The organization might do this by, for example, 1) having an appropriate constitution[15]; 2) showing a sufficient interest in the issue[16]; or 3) being a qualified entity from another EU Member State.[17] Applicant organizations could include ad hoc groups formed specifically in response to a particular incident or concern.[18]

In addition, the Lord Chancellor sought views on whether an organization should be able to make a claim on behalf of a group where "an individual would have a direct cause of action arising out of a conduct complained about but not necessarily against that defendant."[19] This would permit an organization which has no claim against a defendant to bring a claim on behalf of individuals who have no claim against that defendant. Furthermore, the proposal would have allowed the organization to launch "a preventive measure where no cause of action has yet arisen."[20] It suggested, for example, that a consumer group may want to bring suit to show that a product is potentially harmful prior to the damage occurring.[21]

In April 2002, after a lengthy comment period, the Lord Chancellor's Department published its Consultation Response on the procedure it had proposed for representative claims.[22] After analyzing the 80 responses received from the judiciary, law firms, government departments, business and commercial organizations and others, the LCD concluded that no generic procedure should be adopted within the Civil Procedure Rules allowing organizations to represent their members in the courts of England and Wales.[23] The LCD Response recognizes the legal concern that enabling organizations, who have no claim in their own right to represent their members who do, is a major change in the law which would require primary legislation.[24] Importantly, the LCD Response takes particular note of other areas of European legislation which have required procedures for representative organizations to act on behalf of their clients. That legislation "appears to be seen (as for example in the Stop Now Orders implemented by the Department of Trade and Industry as a result of the EU's Injunction Directive) as facilitating organizations to act in their own capacity rather than representing others with a claim."[25]

Nonetheless, the LCD Response also concludes that there is support for representative claims where a need can be shown in a specific area for greater access to justice. The Lord Chancellor intends to take forward this initiative in a "targeted" fashion, "feeding into issues at the European level" where there is a representative claim element in legislation being developed and considering this aspect in developing domestic legislation targeted at relevant areas.[26]

Similar to the original UK Lord Chancellor's proposal, the Swedish Act on Class Actions, which goes into effect January 1, 2003, gives an organization the right to bring an class action in disputes between consumers and a businessperson concerning a product, service or other utility.[27] Once the suit is filed, the organization would not lose its right even if the circumstances allowing it to sue under the Act change.[28] In addition, the organizational class action may include another, different dispute "if it has considerable advantages to the review and circumstances in general that the disputes be handled jointly."[29]

Other European statutes, including those in Portugal and Spain, have similar provisions regarding organizations bringing class actions for damages to consumers.[30] However, France has taken a different approach regarding standing in representative actions. On the one hand, absent specific legislation, members of the association in a civil action must have suffered a personal and clearly established injury and acted with the association.[31] In addition, the by-laws of the association must empower it to bring action. Civil courts do not generally admit actions by associations for the defense of public interest, this being a prerogative of the Office of Public Prosecution.[32]

On the other hand, French law has empowered specific associations to represent a particular aspect of public interest.[33] Pursuant to these provisions, these associations may bring an action before the criminal or civil courts when specific criminal offenses are committed. Similarly, consumer associations may bring an action against persons who commit a criminal offense against consumers, such as, for example, misleading advertising.[34] These associations may also join civil actions brought by consumers in the absence of a criminal offense.[35] In all these cases, the association may ask the Court to enjoin the defendant's conduct, but may claim only nominal damages. These actions thus cannot be used as collective actions for damages.[36]

1. Identification of Individuals Represented

The extent to which proposals and legislation require an organization to identify the individuals it seeks to represent varies considerably.

The LCD Consultation Paper would have permitted an organization to represent named identifiable individuals; unnamed but identifiable individuals; and unnamed, unidentifiable individuals.[37] Thus, under the proposal a consumer group could sue on behalf of unnamed and unidentifiable consumers where it could identify a cause of action but it "has difficulty finding suitable individuals to run a test case."[38] It could also assert claims on behalf of a "non-specific or potentially very large number of people for example 'all consumers.'"[39] Where it was not possible to name the individuals, they should be identified "as clearly as possible."[40]

The presence of unidentified individuals in the group presents challenging issues regarding remedies. While English law does not permit distribution of a monetary award to a wholly unidentifiable group of individuals, the Lord Chancellor requested comments as to whether this should be changed.[41] Among the novel methods of distributing damages entertained were "provisions intended to benefit consumers more generally by a reduction in the price of a product or an investment in health and safety," research provisions equal to the damages or a Trust Fund to distribute damages to those affected."[42]

The LCD Response, in fact, reported little support and strong opposition to awarding damages to unnamed claimants.[43]

Similar to the LCD proposal, the Portuguese procedure does not require individual identification of the members of the class to be represented, but merely requires description of the quality or geographic area that is common to the class.[44] If the class prevails on the merits of a case seeking damages, the Court will award an amount for the entire class which will be held in a fund for three years. The Act provides no criteria for the determination of the global amount. During that period, class members may bring individual actions for their shares of that award. Any sum remaining in the fund at the end of the three-year period is returned to the Ministry of Justice to be used to support future class actions.[45]

Likewise, Article 221 of the Spanish procedure provides that if a class whose members have not been identified obtains a judgment, the judgment will be enforceable not only by class members identified at the time of the proceeding, but also by all members not so identified but who meet the criteria for the class set out in the judgment.[46]

In contrast, the Swedish Act requires the group to be "suitably defined."[47] The organization must state the name and address of all group members in the complaint if the information is "required to handle the case."[48]

French procedural law, which is governed by the principle that "no one shall plead by proxy," also requires that all claimants in an action be personally identified. Even in the case of the "action in joint representation," only those consumers having given the association an express mandate to represent them are affected by the lawsuit.[49] The judgment rendered is not applicable to other consumers whose situation is similar or identical.[50]

1. Notice

Representative action provisions vary as to whether they require notice to the individuals represented. The LCD proposal for England and Wales gave the applicant organization two options. The organization could give the Court the names of persons represented "where practicable" and "demonstrate that they consent to being represented by the applicant."[51] Alternatively, "where they can be easily notified," individuals could be given the opportunity to opt out if they do not wish to be represented by the applicant."[52] The proposal did not discuss how the individuals represented were to be notified.[53]

Similarly, the LCD Response did not specifically discuss notice, but rather left that for future consideration in potential targeted legislation involving representative actions. The Response did note that most respondents felt this portion of the proposal needed further clarification.[54]

Notice provisions in the Swedish Act are driven by the fact that members who do not opt into the action are not part of the group.[55] Accordingly, the Swedish Act requires that group members be informed of the trial and be given a brief description of the complaint; information regarding the handling of the trial, the opportunities to participate in the trial, the scope of judgment, and regulations on costs; the name and address of the plaintiff and counsel; the time for opting into the action; and other information of importance to the rights of group members.[56] It is unclear, however, how notice is to be given if the organization extends the action "to include other claims."[57]

Under the Swedish Act, the court has wide discretion as to notice and can give notice to group members in the way it finds appropriate.[58] The court can order a party to be responsible for notice if "it involves considerable benefits for the handling of the case."[59] If so, the party can get compensation for the expense from public funds.[60]

The Portuguese class action statute incorporates a flexible notice procedure, requiring only the best notice practical under the circumstances[61] but specifically does not require individual notice.[62] The purpose of the notice is to provide the class member a right to participate in the collective action or to opt out and proceed with an individual suit.[63] The right to opt out may be exercised until the end of the evidentiary proceedings,[64] potentially offering the class member an advantage if he concludes he could present a stronger case on a second try.

Where the members of the affected class are difficult or impossible to determine, the Spanish procedure only requires notice by publication in the mass media in the geographic area in which the injury to rights has occurred.[65] After a period set by the court, not to exceed two months, all class members who have responded may participate in the proceedings if they so choose.[66] If the group is certain or easily determined, the plaintiff must notify the class members and they will have a right to participate in the proceedings.[67]

In French "actions in joint representation," organizations may not publicly solicit participation in the group action. Only those individuals who take the initiative to contact the association are thus included.[68]

1. Appeal

None of the representative action statutes in Sweden, Portugal, Spain or France or the LCD proposal in England and Wales addresses whether an order permitting a representative action to proceed or refusing such permission can be appealed immediately.

1. Costs

Some of the representative action provisions eliminate the "loser pays" rule for such actions. The LCD proposal for England and Wales requested comments on whether normal costs rules should be abrogated in representative actions "in the public interest" against the government or a corporation.[69] In such actions each party would bear its own costs, or if the action failed, the representative organization would not be liable for costs.[70] While drawing no specific conclusions, the LCD Response notes that there was little support for this proposal.[71]

Similarly, the Portuguese statute provides that the representative party is not liable for costs if the decision is even partially favorable. If the class loses, costs are assessed by the judge at between one-tenth and one-half of normal costs, depending on financial and other circumstances.[72]

In contrast, under the Swedish Act, the usual Swedish rule appears to apply and a losing organization must pay the defendant's costs.[73] [Check]

French legislation does not contain any specific provision regarding costs. However, when setting the expenses to be paid by the losing party, the court must take into account equity and the economic situation of the parties.[74]

1. Fees

While several representative action statutes do not address fees, others propose novel strategies to help organizations fund representative actions. The U.K. has focused on conditional fee agreements as a means of facilitating representative actions.[75]

The Swedish Act permits organizations seeking to represent a group to enter into a "risk agreement" in which counsel fees depend on the extent to which the group members' claims are granted.[76] Risk agreements must be approved by the court.[77] Fees cannot be based solely on a share of the value of the dispute.[78] A risk agreement may be approved only if reasonable given the nature of the matter.[79]

1. PROBLEMS OF REPRESENTATIVE ACTIONS

The issues of standing, identification of group members, notice, appeal, costs and fees present several problems in achieving justice for claimants and defendants and in maintaining the balance among interested parties.

1. Lack of Standing

Standing -- the requirement that a claimant have an injury -- is a fundamental legal requirement.[80] Without standing, a court does not have power to hear a claimant's suit. In order to determine whether a party has standing, a court asks whether that party has a sufficient stake in an otherwise justiciable controversy to obtain judicial resolution of that controversy. In determining standing, the primary focus is on the party seeking to obtain review of the complaint and the secondary focus is on the issues that the party wishes to have adjudicated. Therefore, regardless of the importance of the issues under review, if the party does not have an interest in those issues, the party does not have standing and the court will refuse to review the complaint.

A recent United States court decision, Rivera v. Wyeth-Ayerst Laboratories, illustrates the impact of standing on a class action.[81] In this case, the trial court certified a class of prescription pain killer purchasers who sued the manufacturer to recover economic damages after the drug was withdrawn from the market due to risk of liver damage. The Fifth Circuit Court of Appeals found that the plaintiffs lacked standing to assert such a claim and that the class certification was inappropriate.

The court ultimately held that the plaintiff had no injury in fact. Plaintiffs alleged that (1) the drug company sold the drug; (2) the plaintiffs purchased and used the drug; (3) the drug company did not list enough warnings regarding the drug and/or that it was defective; (4) other people were injured by the drug; and (5) therefore, plaintiffs wanted their money back. Plaintiffs never claimed any physical or emotional injury caused by the drug, that the drug was ineffective as a painkiller or that plaintiffs anticipated any future health consequences as a result of consuming the drug. Rather, plaintiffs merely alleged that their loss of cash in purchasing the drug was an economic injury.

The court found that the party seeking review must be among the injured.[82] It was not enough for the plaintiffs to show that the drug company violated a legal duty owed to some other patients. The plaintiffs needed to show that the drug company violated a legal duty owed to them.[83] Without an injury in fact, the plaintiffs could not show a legal duty that was violated.

Several of the European statutes and proposals regarding representative actions have failed to take into account the necessity of standing to the proper functioning of the judiciary. Standing demarcates the function of the legislature from that of the courts. The claimant's injury is the factual tether which the court requires to decide whether this claimant, as opposed to someone else, should be awarded damages or other relief. If a claimant has no injury but simply an interest in an abstract question, regardless of how intense or longstanding, his or her concerns are not a matter for the courts but for the legislature.

Generally, a litigant has been required to assert his own legal rights and has not been permitted to assert claims based upon the legal rights or interests of third parties. Courts want to avoid unnecessary or premature decisions on issues. They also prefer to respect the apparent judgment of the absent third parties who have failed to come forward, which may demonstrate that those third parties feel that their rights are not threatened or that they do not wish to assert them. Finally, the courts have determined that third parties are best able to represent their own rights and ensure concrete and sharp presentation of the issues as opposed to a representative organization.

These problems have led US courts to permit organizations to bring a representative action only when the organization itself has suffered an injury. The organization acting in representative capacity must show a specific injury, not just a generalized grievance or a problem impacting abstract social interests. In order to fulfill this standard, the United States Supreme Court in Hunt v. Washington State Apple Advertising Commission, set out a test containing three elements for determining when an organization may sue in representative capacity.[84] First, an organization must show that its members would otherwise have standing to sue in their own right (injury in fact). Second, the organization must demonstrate that the interests that it seeks to protect are linked to the organization's purpose (adequate representation). Third, the organization must show that neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit (zealous representation).

Representative actions have generally failed in the United States because such cases do not meet the requirement of the test for determining adequate representation. An important factor in this determination is the nature of the relief sought. Frequently, when money damages are the requested relief, courts find that the injury is specific to each individual member and both the fact and extent of the injury require individual proof. Therefore, individual members must be a part of the action in order to prove injury and damages because that proof cannot be established in a representative capacity. Other problems occur when conflicts of interest exist within the organization itself or when specific facts are required to clarify the issues presented to the court. When any of these circumstances create uncertainty as to the adequacy of representation, American courts are extremely reluctant to grant an organization standing to sue in a representative capacity.

1. Lack of Fundamental Fairness

Representative actions brought by organizations which have no injury themselves do not fairly protect the interests either of the individuals who actually have claims or of defendants.

1. Individuals with Claims

First, organizations which have no claim themselves cannot adequately represent individuals who do. Organizations have their own interests, which may be different from those of the injured individuals they seek to represent. For example, a consumer group which is interested in the safety of pharmaceutical products may seek to represent individual patients who used a pharmaceutical product and were injured by it. The individual patient will want to focus on proving that the manufacturer is liable to him or her and the amount of damages he or she has suffered. A strategy which advances the interest of the organization may not advance the individual's claims and may be in fact detrimental to those claims.

In addition, the individuals whom the organization seeks to represent may have conflicts among themselves, which makes it impossible for the organization to represent the group. Some individuals who took a pharmaceutical product already have suffered an injury; others may be concerned that their ingestion of the product will cause them to develop an injury in the future. Some individuals may have serious or life threatening injuries; others may have minor complaints. Some may have been warned by their doctors of potential side effects; others may have received no warnings. An organization cannot adequately represent a group of such individuals with disparate claims any more than one of the individuals could adequately represent a class of such individuals. A representative action by an organization would particularly jeopardize the rights of individuals with strong claims who suffered serious injury and incurred substantial damages. The strong claims would risk being buried in an avalanche of weak claims.[85] Plaintiffs with strong claims would likely feel great pressure to settle from attorneys and plaintiffs with weak claims because groups would stand to gain from even a small settlement. In addition, the settlement money available to the plaintiffs with strong claims would be unlikely to fully compensate those plaintiffs for the value of their cases because of the need to distribute funds to all class members. The Swedish Legal Council, whose members are present and former Supreme Court judges, recognized the danger of substantial differences among group members and recommended that the Swedish Act include an express prerequisite barring such differences.

A representative action by an organization would also risk splitting the causes of action of individuals the organization is purporting to represent. If, for example, the organization sought only injunctive relief, such as preventing a manufacturer from engaging in certain marketing practices, an individual with a claim against the manufacturer may be estopped from seeking damages for his injury. The representative action would leave an injured individual with the worst of both worlds: not focusing adequately on his claim while estopping him from pursuing that claim himself.

Furthermore, representative action proposals lack adequate provisions for giving fair notice to the individuals purportedly represented. Focusing on the ease or difficulty of giving notice, they fail to identify the circumstances under which notice is essential to protect the rights of the individual who actually has the claim. The anomalous result is that an organization with no injury itself could avoid giving notice to the only individuals with claims because they are not "easily notified." Individuals who are difficult to notify might most need this notice to protect their rights, whereas those who can easily be notified might be the people closest to the organization seeking to represent them. For example, individuals joining a union may agree that the union may represent them in a variety of circumstances. A union could easily notify such individuals from their membership list, but no notice may be necessary to protect the members' rights given the union agreement. In contrast, getting notice may be the only opportunity for individuals with serious personal injury claims to tell the organization that they do not want to be represented. This problem is exacerbated if an organization were allowed to sue on behalf of unnamed and unidentifiable individuals. In such circumstances, inability to give notice is a self-fulfilling prophesy.

Under the American class action rules, all potential class members must be notified that the litigation is proceeding and be given an opportunity to opt-out.[86] Notice ensures that the potential class members are able to opt out if they do not want to be precluded from bringing their own actions. In order to satisfy this rule, courts have examined the adequacy of various methods of notice. The requirement of individual notice to all reasonably ascertainable class members and the "best" notice to all other potential class members is strictly construed by the courts. Courts typically require that class-wide notice be sent to each known or reasonably identifiable class member by first class mail.[87] In addition, notice to unidentified class members and those whose addresses may be inaccurate is usually required through public media, including newspapers and television.[88]

Finally, proposals to distribute a monetary award when the individuals represented cannot be identified risk treating both the individuals with claims and the defendant unfairly. Using the damages assessed to invest in health and safety or fund research would completely divorce the case from the individuals who suffered the actual loss. Unidentified families of individuals who died as a result of an adverse reaction to a pharmaceutical product will not be compensated by a research program funded by their damages. General welfare programs like health and safety and research are typically funded with taxes, not by reallocating damages suffered by particular individuals to others or to the society at large. If the individuals with the actual losses are made irrelevant to the judicial process in this way, the damages awarded are in fact simply a penalty imposed upon defendants.[89]

Creating a general fund of damages for an unascertainable class also raises significant questions concerning unclaimed relief. Class members' lack of notice or lack of motivation may leave a large amount of damages unclaimed.[90] When a representative organization recovers a significant damages fund, the organization really has no right to the money because it was obtained through the rights of others. However, if the money is left with the organization because no one claims it due to lack of notice, the organization receives a potential windfall and the injured individuals are denied their just relief. It is questionable whether an organization would have much incentive to provide notice when it stood to receive the unclaimed monies.

1. Defendant

Many of the features of representative actions also are unfair to defendants. The failure of some statutes to require an identifiable group makes it impossible for defendants to know what potential liability they are facing. At the same time, the nebulousness of such actions may jeopardize the application of res judicata to group members, exposing the defendant to the risk of multiple suits for the same damages.

The inability to appeal a decision permitting a representative action raises similar fairness concerns. Representative actions by organizations seeking damages on behalf of perhaps millions of individuals can have the same coercive effect on a defendant as American class actions, even if the claim lacks merit. American courts have noted that class certification creates "insurmountable pressure" on defendants to settle because it magnifies and strengthens the number of unmeritorious claims.[91] In addition, aggregation of such claims makes it more likely that a defendant will be found liable and be subject to a high damage award.[92] Defendants will find themselves under intense pressure to settle, even when the probability of an adverse verdict is low, when the risk of an adverse verdict could bankrupt the company.[93] The potential loss may be so great that a defendant cannot risk trying the case even if it has strong defenses. Under these circumstances, an appeal after a trial judgment on the merits is no appeal at all.

1. Impact on Substantive Law

None of the statutes or proposals to permit organizations to bring representative actions purports to change substantive law. However, if organizations without a claim are permitted to bring claims on behalf of individuals without having to prove each of these claims, the substantive law will be radically changed. Notably, the LCD Response showed a strong consensus among respondents that the Lord Chancellor's proposal, which took the form of changes to the civil procedure of England and Wales, was not procedural at all, but rather would require primary legislation to change the substantive law, and should not be done on a generic basis.[94]

Substantive law sets out what an individual must prove in order to establish the defendant's liability to him. If the individual files a misrepresentation claim, he must prove among other things, that he saw the misrepresentation and relied on it. Similarly, the plaintiff must prove his individual damages. The defendant can assert defenses provided in the substantive law to the individual plaintiff's claim. For example, the defendant might assert that if the plaintiff did not see the alleged misrepresentation, he failed to establish causation. These issues, if contested, are litigated in every individual case. They cannot be proved on a group-wide basis in a representative action where all the individuals the organization seeks to represent are identified. When the individuals are not, or cannot, be identified, the court cannot determine if the unidentified individuals even state a claim, much less determine if the organization seeking to represent them has proved each and every element of that claim. Allowing an organization without any claim to recover damages without proving each individual's claim would create rights for the organization which the individuals with claims do not have. It would also deprive defendants of rights they have under the substantive law.

1. The Judicial System

The lack of standing, relaxation of traditional "loser pays" rules and allowance of liberal fee arrangements will give organizations significant incentives to file representative actions. The LCD Consultation Paper for England and Wales hoped that the requirement to obtain court permission would act as a filter to frivolous litigation and address concerns about potential costs to defendants and the need to a balance the rights of claimants and defendants. The responses to that paper showed strong support for that provision.[95] However, the court would have to make this decision on a case-by-case basis, without the benefit of the bright line test of standing used in every other kind of case. A multitude of organizations could bring actions to get a hearing on issues of interest to them. Representative actions could be used to resolve a particular issue in multiparty litigation instead of using the multiparty litigation itself.[96]

Furthermore, drafters of representative action proposals appear to have devoted little consideration to whether such actions can actually be tried. This has serious implications for the judiciary and public funds. Trying representative actions presents the same problems as trying American-style class actions. Substituting an organization as the named plaintiff will not make these problems go away.

More than thirty years of experience in applying the criteria of U.S. Federal Rule 23 has made it clear that some proposed aggregated claims simply cannot be tried. For example, the overwhelming trend is for American courts to deny class certification in cases claiming personal injury from products because the individual issues swamp any possible common issues.[97] In practice, such a case would disintegrate into thousands of mini-trials.[98] In contrast, certain other proposed aggregated actions, such as discrimination claims based on a written policy uniformly applied to all employees, can offer an efficient way to resolve multiple claims because trying the class representative's claim determines the liability of the defendant to each and every other class member.[99]

The failure to provide criteria requiring proposed representative actions to be manageable will result in judicial gridlock. The point of a legal action bringing individual claims is to determine if the defendant is liable to specific individuals, and if so, to award damages to those individuals. If a representative action of aggregated individual claims is so unwieldy that it cannot be tried, it should not be permitted to proceed.

1. Forum Shopping

These flaws in representative actions are magnified by the opportunities for forum shopping in the EU. The Lugano Convention requires that a judgment under the Convention issued by a court of one EU Member State be recognized and enforced in every other EU State. Neither the jurisdiction of the Court granting the judgment nor the merits of the judgment can be reviewed.[100] It is unclear whether any EU State could refuse to enforce a judgment on the ground of public policy.

Under Lugano, organizations could choose to litigate in the forum with the most expansive representative action law. For example, a consumer organization might bring a claim in one member state on behalf of consumers in the EU who had been injured by a specific type of product. If the court allowed such an action to proceed to judgment, the organization could then take the judgment to other EU States to get it enforced, whether or not those states permitted representative actions.[101]

1. Is The Representative Action A Solution Looking For A Problem?

Proposals to adopt representative actions have been justified by a concern that individuals with claims do not have access to justice.[102] The absence of claims is cited as evidence that people cannot bring claims. However, this explanation overlooks the existence of effective mechanisms for addressing claims which are already in place in Europe.

In most European countries, litigation is not viewed as the principal avenue for addressing social ills and achieving social justice. First, an extensive welfare system means that most Europeans have minimal out of pocket losses.[103] Generous disability and employment benefits minimize damages due to loss of work. Health care systems largely provide universal medical benefits.[104]

In addition, an extensive regulatory framework addresses issues relating to the environment, pharmaceuticals, consumer product safety, and other areas of public concern. Thus, in France, the legislation on pharmaceuticals represents several thousands pages of documents, the compilation of which is a long process which has still not been completed. Every aspect of the pharmaceutical industry is strictly regulated: the professional qualification of the members of the industry, the testing procedures of new products, the authorizations required, the production processes, the packaging and labeling of products, their advertising, their retail sale, and even their price.

These regulatory institutions offer several advantages over representative actions as a tool for effecting social policy. First, they have a wealth of experience and expertise in the areas they regulate. Second, interested parties -- whether consumers, industries or organizations -- can present their views to the regulatory agency so that the agency has the benefit of the entire spectrum of opinion as it considers regulatory options. For example, the French AFSSAPS, the government agency in charge of regulating drugs and pharmaceutical laboratories, includes representatives of virtually all interested groups such as government, consumers, physicians, researchers, with the notable exception of the industry, and organizes public hearings on various issues. Third, regulatory agencies can assure consistency throughout the country, or in the case of EU regulatory agencies, throughout the European Union. Such consistency is essential in the case of product warnings, environmental emissions, safety standards and other subjects of regulation.

To the extent the legislature has not delegated to a regulatory authority, it remains the decision maker on social policy. Giving organizations with no injury the right to bring representative actions sets up a competing mechanism for making social policy resulting in conflicting and confusing decisions. An organization could bring a representative action to enjoin a manufacturer to use a warning (1) which is different from that requested by another plaintiff organization in the same Member State, (2) which is different from the warnings suggested by other plaintiff organizations in different Member States, and (3) which is also different from the warning mandated by regulatory agencies governing such warnings in numerous Member States. If there is concern that manufacturers are putting dangerous products on the market, the Member States agency responsible for consumer products can be given the power to enjoin such sales. Similarly, if there is concern that discrimination is going unchecked, it would seem sensible to give the Member State agency responsible for preventing discrimination the right to bring suit on behalf of employees of companies which engage in discriminatory practices rather than charge a consumer organization with that task. Unlike public regulatory agencies, private organizations given the power to bring representative actions are neither subject to rigorous public scrutiny nor bound by legislative enabling statutes. The problems which result from such lack of scrutiny are not hypothetical. [105]

IV. CONCLUSION

Proposed representative actions purport to enhance access to justice for injured individuals with claims, but such proposals, unless carefully limited legislatively and crafted to particular situations, will not accomplish this goal. The risk is that injured individuals will be largely irrelevant to the proposed representative actions. They are not necessary to bring the action, which can be filed by an organization with no claim. They do not need to get notice if it is too difficult. Likewise, if it would be impossible to distribute damages awarded on behalf of the absent injured individuals to those individuals, it may not be necessary to do so. An injured person with a serious claim may well question whether this is justice.

The representative action may appeal to Europeans who hope to avoid the excesses of the American litigation culture. But by allowing representative actions which are stripped of European restraints to abusive litigation, such as standing and the obligation to pay costs, and lack the robust criteria embodied in U.S. Federal Rule 23, Europeans could easily be allowing a Trojan horse to enter their courtrooms.

[1]. Laurel Harbour, a partner at Shook, Hardy & Bacon International L.L.P. in London, has worked on litigation in Europe and the Middle East. Vivian W. Addam, a partner at Shook Hardy & Bacon L.L.P. in Houston, has litigated class actions throughout the United States. Olivier Debouzy, a partner at August & Debouzy, in Paris, represents multinationals and French companies in complex litigation in France. The authors express their appreciation for the assistance of Angela Splittgerber an associate at Shook, Hardy & Bacon L.L.P.

[2]. Pub. L. No. 104-67, 109 Stat. 737 (1995) (codified in scattered sections of 15 U.S.C.). The Act redefined substantive criteria for securities fraud actions and imposed additional procedural requirements. Those requirements included (1) creating a preference for institutional shareholders to serve as lead representative plaintiffs; (2) setting limits on individual shareholders' eligibility to serve as representative plaintiffs and on their compensation for that service; (3) new notice provisions; (4) mandating disclosure of settlement terms to class members; and (5) prohibiting sealed settlements in most cases. Congress later passed the Securities Litigation Uniform Standards Act of 1998, Pub. L. 105-353, 112 Stat. 3227 (1998) (codified in scattered sections of 15 U.S.C.) which limited securities actions brought under state law as a result of plaintiffs' attempts to evade the federal act.

[3]. "A court of appeals may in its discretion permit an appeal from an order of a district court granting or denying class action certification under this rule if application is made to it within ten days after entry of the order." F.R.C.P. 23(f), as amended 1998.

[4]. See e.g. Amchem Prod. Inc. v. Windsor, 521 U.S. 591 (1997); Cimino v. Raymark Indus., Inc., 151 F.3d 297 (5th Cir. 1998); In re American Medical Systems, Inc., 75 F.3d 1069 (6th Cir. 1996); In re Rhone-Poulenc Rorer, Inc., 51 F.3d 1293 (7th Cir. 1995), cert. denied, 516 U.S. 867 (1995); Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180 (9th Cir. 2001).

[5]. Directive 98/27/EC, hereinafter "Injunctions Directive."

[6]. Id. at Art. 3.

[7]. Annex to Directive 98/27, List of Directives Covered by Article 1. (Courts can enjoin violations regarding misleading advertising, consumer contracts negotiated away from business premises, consumer credit practices, television broadcasting, package holidays, advertising of medicines, unfair terms in consumer contracts, timeshare property and distance contracts.)

[8]. Injunctions Directive at Art. 4.

[9]. Member States can require the organization to consult with either the defendant or with both the defendant and the qualified independent public entity of the Member State where an injunction is sought. Id. at Art. 5.

[10]. Green Paper: Liability for Defective Products, COM(99)396 (July 28, 1999), hereinafter "Green Paper.".

[11]. Report from the Commission on the Application of Directive 85/374 on Liability for Defective Products, COM(2000)893 (Jan.31, 2001) at 27.

[12]. Lord Chancellor's Department Consultation Paper: Representative Claims: Proposed New Procedures (Feb 2001), ¶ 16, hereinafter "LCD Consultation Paper."

[13]. Id.

[14]. Id. at ¶ 29.

[15]. An appropriate constitution includes elected officers, membership rates and statement of purpose.

[16]. A sufficient interest may be shown by providing a history of campaigns, general involvement in the issue, national or local recognition, or affiliation with a national organization or local authority.

[17]. LCD Consultation Paper at ¶ 26. ^{Under the U.K. proposal, an organization seeking to file a representative action would have had to obtain the Court's permission to sue, filing a written application and serving it on the defendant. Id. The Court would decide whether the applicant organization is an appropriate representative on a case-by-case basis. Id. at ¶ 27. The proposal suggested that there be "some form of indicative criteria the organization should meet," which could be set out in the rules or practice direction. Id. at ¶ 26. The Court would have discretion to override any of these criteria. Id. at ¶ 27. This would have permitted an organization which failed to meet the criteria to bring suit or one which met the criteria to be denied permission to sue.}

[18]. LCD Consultation Paper at ¶ 27.

[19]. Id. at ¶ 24 (emphasis added).

[20]. Id. at ¶ 23iv.

[21]. Id. at ¶¶ 23iv, 39.

[22]. Lord Chancellor's Department Consultation Response: Representative Claims: Proposed New Procedures (April 2002), hereinafter "LCD Response."

[23]. Id. at Concl. ¶ 10.

[24]. Id. at Concl. ¶ 2.

[25]. Id.

[26]. Id. ¶ 7,10.

[27]. Act on Class Actions, hereinafter "Swedish Act." Id. at § 5.

[28]. Id. at § 7.

[29]. Id. at § 5.

[30]. The Portuguese class action or "popular action" procedure allows consumer and environmental associations to bring representative suits on matters of public interest. Portuguese Act No. 83/95 (August 31, 1995). (This Act was passed pursuant to Port. Const. (no.30, Art. 520, 1976). Article 520 confers to all, personally or through associations of defense of interests the "right of the popular share" in cases and terms foreseen in the law, including the right to indemnification for injury. These interests protected by law include the public health, the environment, the quality of life, the protection of goods and services, the cultural patrimonia and the public domain.) The association has standing provided it (1) has a legal personality; (2) has an express provision in its powers or statutory aims that includes defense of interests covered by the class action provision; and (3) is not engaged in any professional activity competing with the defendant in the lawsuit. Id. at Art. 30.

The new Spanish Civil Procedural Code took effect on January 8, 2001. Spanish Law of Civil Judgment 1/2000. It also includes provisions for (1) representative actions for groups of consumers with damages whose identities are known or readily ascertainable, and (2) representative actions for consumer groups whose membership is difficult or impossible to ascertain. Id. at Art. 11. In the former case, the group may be represented by a legally constituted consumer association. In the latter case, the only proper plaintiff is a consumer association which is representative of the group "in accordance with the law." Id. This latter concept is not defined. However, it is clear that such an association can represent not only its own members, but also affected people in general. Id.

[31]. Cass. civ., July 23, 1918, D.P. 1918 1, p. 52. Overall, such actions only amount to joinder of the claims of the individuals concerned and do not affect the burden of proof. For example, in a negligence case, each individual must demonstrate a fault, an injury and a causal link. The only practical advantage of such a representative action appears to be centralizing the administration of the lawsuit. Therefore, few actions of this type have been brought.

[32]. Cass. ch. réuns, June 15, 1923, Gazette du Palais, 1923, p. 164. It should, however, be noted that pursuant to specific provisions of the law, labour unions and certain professional associations (orders professionnels) may act for the defense of the general interest they represent (i.e., that of workers or of their profession).

[33]. See Articles 2-1 through 2019 of the Code of Criminal Procedure.

[34]. Article L. 421-1 C. com.

[35]. Article L. 421-7 C. com.

[36]. Article L. 422-1 of the French Consumer Code however provides for an exception, referred to as "action in joint representation" when several individual consumers have incurred injuries caused by the same professional and having a common cause. In such cases, the consumers may provide an association with a written representation mandate. The action is then brought by the association, naming the identity of all the consumers represented. An association may not solicit mandates in the media. The advantages of this action are thus very limited, which explains why it has almost never been used.

[37]. LCD Consultation Paper at ¶ 23-24.

[38]. Id. at ¶ 23iii.

[39]. Id.

[40]. Id. at ¶ 24.

[41] Id. at ¶¶ 33, 35.

[42] Id.

[43]. LCD Response at Concl. ¶ 5.

[44]. Portuguese Act No. 83/95, Art. 150.

[45]. Id. at Art. 220.

[46]. Spanish Laws of Civil Judgment 1/2000, Art. 221.

[47]. Swedish Act at § 8.

[48]. Id. at § 9.

[49]. Art. L. 422-1 C. com.

[50]. Art. 1351 C. civ.

[51]. LCD Consultation Paper at ¶ 24.

[52]. Id.

[53]. The proposal sought input on whether the court should publish its reasons for approving a representative to enable other organizations or interested parties to come forward." Id. at ¶ 31.

[54]. See generally, LCD Response at Concl. ¶ 10; Id. at ¶ 20.

[55]. Swedish Act at § 14.

[56]. Id. at § 13.

[57]. Id. at § 18.

[58]. Id. at § 50.

[59]. Id.

[60]. Id.

[61]. Portuguese Act No. 83/95 at Art. 15.20.

[62]. Id. at Art. 15.

[63]. Id. at Art. 15.10.

[64]. Id. Art. 15.40.

[65]. Spanish Law of Civil Judgment 1/2000, Art. 15.

[66]. Id.

[67]. Id.

[68] Art. L. 422-1 C. com.

[69]. LCD Consultation Paper at ¶ 37.

[70]. Id.

[71] LCD Response at ¶ 24^.

[72]. Portuguese Act. No. 83/95, Art. 20^o.

[73] The Swedish Act contains several specific provisions addressing costs in various circumstances. See §§ 30-37.

[74]. Art. 700 NCPC. The expenses do not include legal costs, which mostly covers attorney fees.

[75]. Reflection document for the hearing of February 20, 2001 on "Legal Aid in Civil Matters: The Problems Confronting the Cross Border Litigant," February 14, 2001.

[76]. Swedish Act at § 38.

[77]. Id.

[78]. Id. at § 39.

[79]. Id..

[80]. See, e.g. Art. 31 of the New Code of Civil Procedure of France (requiring standing and interest to act).

[81]. 283 F.3d 315 (5th Cir. 2002).

[82]. Id. at 320.

[83]. Id.

[84]. 432 U.S. 333 (1977).

[85]. See In re "Agent Orange" Product Liability Litigation, MDL No. 381, 818 F.2d 145 (2d Cir. 1987), cert. denied, Adams v. U.S., 484 U.S. 1004 (1988).

[86]. F.R.C.P. 23(c)(2): "In any class action ..., the court shall direct to the members of the class the best notice practicable under the circumstances, including individual notice to all members who can be identified through reasonable effort."

[87]. In re Integra Realty Resources, Inc., 262 F.3d 1089 (10th Cir. 2001).

[88]. For example, notice made through the electronic and print media to unascertained class members in one case included: print notice in 27 major English-language newspapers and 27 Spanish-language newspapers in nine states, in 34 newspapers in Mexico, and twice in USA Today; a 30-second television announcement in Spanish on the Univision television network eight times per week for two weeks, on 16 Spanish-language local television stations in seven states nine times per week for two weeks, and four TV stations in Mexico; a 60-second radio announcement on 115 Spanish-language radio stations in nine states 24 times per week for two weeks and on 102 Mexican radio stations 25 time per week for two weeks; and a print notice for posting in defendant's retail locations in all 50 states with a toll-free number for questions. In addition, a direct mailing was sent to all known class members. In re Mexico Money Transfer Litigation (Western Union and Orlandi Valuta, 164 F. Supp. 2d 1002 (N.D. Ill. 2000).

[89]. See LCD Consultation Paper at ¶ 34; Portuguese Act 83/95 at Art. 21⁰-22⁰.

[90]. In Mexico Money Transfer Litigation, 267 F.3d 743 (7th Cir. 2001) it was estimated that only 20%-30% of the total value of coupons would even be claimed by class members; it was likely that even less would be used. The remaining 70%-80% would simply remain with the defendants.

[91]. See Castano v. American Tobacco Co., 84 F.3d 734, 746 (5th Cir. 1996).

[92]. Id.

[93]. Rhone-Poulenc Rorer Inc., 51 F.3d 1293, 1298 (7th Cir. 1995).

[94]. LCD Response at Concl. ¶ 2.

[95]. Id. at Concl. ¶ 4.

[96]. The response by the Association of Personal Injury Lawyers to LCD Consultation Paper, April 30, 2001, ¶ 15, p. 7, points out that nonprofit-making organizations such as APIL would not be able to take full advantage of the ability to pursue representative claims to resolve such issues if cost implications had to be considered.

[97]. Amchem Prod. Inc. v. Windsor, 521 U.S. 591 (1997) (rejecting certification because resolution of individual claims was "likely to present significant questions, not only of damages but of liability and defenses of liability...affecting individuals in different ways," and these issues "barred a determination...that common questions predominated"); Barnes v. American Tobacco Co., 161 F.3d 127 (3d Cir. 1998), cert. denied, 110 S. Ct. 1760 (1999) (affirming denial of certification because "addiction, causation, the defenses of comparative and contributory negligence, the need for medical monitoring and the statute of limitations present too many individual issues to permit certification"); Castano v. American Tobacco Co., 84 F.3d 734 (5th Cir. 1996) (reversed certification smoker class because the case was "permeated with individual issues"); Cimino v. Raymark Indus., Inc., 151 F.3d 297 (5th Cir. 1998) (invalidating class action trial plan because trial court failed to determine causation as to "individuals, not groups"); In re American Medical Systems, Inc., 75 F.3d 1069 (6th Cir. 1996) (decertifying class because "the economies of scale achieved by class treatment are more than offset by the individualization of numerous issues relevant only to a particular plaintiff"); In re Rhone-Poulenc Rorer, Inc., (7th Cir. 1995), cert. denied, 516 U.S. 867 (1995) (decertifying class because trial judge's proposal of trying common and individual issues was impermissible); Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180 (9th Cir. 2001) (affirming denial of certification because individual issues predominated).

[98]. The court in Arch v. American Tobacco Co., 175 F.R.D. 469, 488 n.19 (E.D. Pa. 1997), noted the "staggering" manageability problems associated with trying individual issues after a common issues trial in the case, "If the examination necessary for the jury to decide each of these individual issues took only one hour per person, and if this class is composed of one million people, then the 'trial' of this case would take (with testimony being heard 8 hours a day, 50 weeks per year) approximately 250 years."

[99]. See Jefferson v. Windy City Maintenance, Inc., 1998 WL 474115 (N.D. Ill. 1998) (class certification granted for class of African American plaintiffs who alleged a specific policy and practice of racial discrimination under their employer's written disciplinary system).

[100] Richard O. Faulk, Armageddon Through Aggregation? The Use and Abuse of Class Actions in International Dispute Resolution, BNA Class Action Litigation Reporter 362, 373-374 (2001). 37 Tort & Ins. L. J. 999, 1023-24 (Spring 2002).

[101] Id.

[102]. See, e.g. Green Paper.

[103]. Christopher Hodges, Multiparty Actions: A European Approach, 11 Duke J. Comp. & Int'l L. 321, 339-40 (2001).

[104]. "The social security scheme generally covers the medical expenses, earnings during sick leave, etc. before any approach to the producer responsible by the victim. One of the reasons why litigation under Directive 85/374/EEQ has not reached the same proportions as in the United States appears to be the widespread existence of Social Security schemes in Europe: the greater the likelihood of being covered by Social Security, the less incentive there is to claim the producer's liability. In this respect, producer liability is regarded as an instrument for compensation which is complementary to the other ways in which the victim can obtain redress." Green Paper at 16. In France, for example, although various categories of persons belong to different regimes of Social Security virtually the whole population, especially since the 1999 Act on universal illness coverage, is entitled to Social Security benefits.

[105]. IGAS, Contrôle du Comité national contre la Tabaqisme, Report no. 97107, January 1998 (criticizing use of funds by association given the power to bring legal actions.)