Class
Action Lawsuits: Would this American legal 'product'
represent progress for Europe?
Le Figaro, France
Class Action Lawsuits: A U.S. Import Europe
Should Do Without
"At a time when the United States has assessed the
dangers of class actions, what country would want to follow the American
'model,' change its own legislation and expose itself to such abuses? … The
United States, if only as an old friend of Europe, must inform Europeans about
the danger of this Made in the USA 'product.'"
EDITORIAL
Translated
By Sandrine Ageorges
June
7, 2008
France
- Le Figaro - Original Article (French)
|
|
|
Class Action Lawsuits:
Designed to give the little guy a chance when suing large corporations
that have nearly unlimited resources, the procedure has come under attack
for encouraging frivolous lawsuits and triggering skyrocketing legal,
insurance and other fees.
|
|
|
Lisa Rickard, president of the Institute
for Legal Reform (U.S. Chamber of Commerce, Washington), warns against this
procedure, which would favor lawyers over consumers.
It may seem surprising that the U.S. Chamber
of Commerce would warn Europeans about the danger of a “product” made in the
USA: the class action lawsuit. For over forty years, this procedure for
collective action has permitted individuals to sue on behalf of those who have
suffered a similar harm, sometimes even in the name of millions of consumers.
Originally, businesses, consumers and
investors praised this concept as a way to reduce legal costs and speed
compensation to consumers or investors.
One notes today the devastating effects of
this system: businesses suffer frivolous lawsuits and are forced to settle [out
of court] to avoid exorbitant legal fees. Consumers and investors benefit
little from these trials, while attorneys charge huge fees and initiate
ever-more lawsuits. As a result of the settlement of a class action against an
American video rental enterprise, attorneys received $9.25 million and their
clients only a few discount coupons.
Worse, as occurred during a class action
brought against an American bank, the victims won the trial but lost money!
Following this transaction, the 700,000 "complainants" received just
a few dollars. A year later, sums ranging from $90 to 140 were withdrawn from
their bank accounts to settle their attorney fees, which amounted to some $8.5 million.
The United States now understands the
dangers of this system and is trying to improve it. A 2005 law called the
“Class Action Fairness Act 
” seeks to ensure
that the benefits of a class action go to the victims rather than their
lawyers.
At a time when the United States has
assessed the dangers of class actions, what country would want to follow the
American “model,” change its own legislation and expose itself to such abuses?
In the U.S., litigation costs total 2.1 percent of GDP, four times more than
the rest of the Organisation for Economic Cooperation
and Development combined. Four reports published in 2007 on the competitiveness
of U.S. financial markets show that fear of class actions is a factor in the
decision-making of foreign companies considering being listed on the stock
exchange or entering the United States. A 2007 study by the Financial Services
Forum demonstrates that for the past four years, 90 percent of companies that
decided not to be listed in the U.S. did so specifically because of the legal
environment. Any country concerned with its economic future should be aware of
the harmful long-term effects of class action lawsuits.
Posted by WORLDMEETS.US
For those who defend them, all of this has
little importance because such abuses are said to be specific to the American
model. According to them, other jurisdictions like that of Quebec [Canada] have
dealt with such excesses. In reality, Quebec's legislation is even more prone
to abuse than the American system: a less rigorous procedure of authentication
recognizes as class actions, cases which would never be accepted in the United
States. Thus, it remains impossible to import bits of a foreign model without
inheriting problems inherent to that system.
Solutions do exist for protecting
consumers and investors and sparing them the costs of a judicial proceeding.
The majority of European countries have rules
protecting consumer rights in many areas. Public authorities or mediators can
also assist victims to efficiently and inexpensively obtain compensation. The
option of a trial should remain the last resort; it's especially necessary to
ensure that the existing system doesn't encourage abuses by those who have a
financial interest in generating class actions. On April 3, the European
Commissioner for Competition, Nelly Kroes 
, released a White Paper on
lawsuits for damages, which promotes the development of class actions and
asserts a desire to avoid abuses.
But her plan will encourage de facto
the opening of a Pandora’s box of class actions in Europe by judicializing disputes which could be resolved out of
court, and it confers on organizations a role that shouldn’t be theirs - that
of prosecutor and, potentially, inquisitor.
Posted by WORLDMEETS.US
Will Europe learn the lessons of the
American experience? The future of business and all of the employees, consumers
and shareholders associated with them, depend on the answer that Europeans give
to this question. The United States, if only as an old friend of Europe, must
inform Europeans about the danger of this Made in the USA “product.”
CLICK HERE FOR FRENCH
VERSION
[Posted by WORLDMEETS.US June 23, 8:53pm]
