Aggregate Litigation across the Atlantic and the Future of American Exceptionalism

By Nagareda, Richard A. | Vanderbilt Law Review, January 2009 | Go to article overview

Aggregate Litigation across the Atlantic and the Future of American Exceptionalism


Nagareda, Richard A., Vanderbilt Law Review


This Article analyzes the emerging phenomenon of trans-Atlantic civil litigation on an aggregate basis-chiefly, though not exclusively, by way of class actions. European systems have shown a growing receptiveness to aggregate litigation, but scholarly treatments of this development have been largely descriptive. This Article offers an analytical framework with which to anticipate the structural dynamics of transnational aggregate litigation in the twenty-first century.

Simply put, these structural dynamics will tend to recreate the difficulties seen in the context of nationwide class action litigation within the United States. The nationalization of U.S. commerce led to aggregate litigation of a commensurately national scope. The result was regulatory mismatch. The scope of aggregation expanded to match the scope of the disputed nationwide activity, rather than the jurisdictional sovereignty of the forum. The globalization of commerce and the multiplicity of approaches to aggregate litigation today have a considerable tendency to replicate these mismatches-now, with international proportions. The recent Vivendi securities class action in the United States and the pathbreaking Royal Dutch Shell settlement under the 2005 Dutch collective settlement act confirm this trend.

The Article then analyzes the vehicles by which to address regulatory mismatches. Here, too, the U.S. experience is instructive, underscoring both the centrality and the limitations of the two vehicles by which to achieve a kind of de facto, informal governance: the principles of transnational claim preclusion and the latitude available for private contracts to shift disputes from litigation to arbitration.

INTRODUCTION

In long-running debates over civil justice reform, two points remain broadly shared: the legal regime for civil litigation in this country is exceptional by comparison to European systems as a positive matter, and the United States is much the worse for it in normative terms. The positive dimension of this account pinpoints several exceptional features of the U.S. civil justice system: class actions, primarily on an opt-out basis; contingency-fee financing of litigation; rejection of Euro-style "loser-pays" rules that link responsibility for the fees of both sides to the outcome of the litigation; extensive reliance on juries as factfinders; costly pretrial discovery; and the availability of punitive damages in substantial areas of civil litigation, such as torts.1

One normative implication drawn by some proponents of civil justice reform, particularly as to tort litigation, is that the foregoing features generate a considerable and undesirable drag on the U.S. economy.2 A related criticism posits that the civil justice system yields a paltry ratio between the compensation actually received by claimants and the expenses incurred by the legal system to deliver it.3 Some popular proponents even go so far as to suggest that much of the U.S. civil justice landscape facilitates a kind of interest group rent-seeking by the plaintiffs' bar, with the result of an "overlawyered" nation.4

Other observers share the positive description of American exceptionalism but see its implications quite differently. These observers regard U. S. -style civil litigation as the regrettable byproduct of a deep cultural hostility to the kind of robust bureaucratic administration by public regulatory bodies embraced in Europe.5 Versions of this second view cast U.S.-style tort litigation, for instance, as an unwieldy substitute for social insurance programs6 and the plaintiffs' bar as a useful form of privatized bureaucracy, at least in the absence of robust Eurostyle public administration.7

Differences of prescription aside, however, the shared points remain: the United States is indeed exceptional in matters of civil litigation, and its exceptionalism is a bad thing. If only the United States could get over its bugaboos, so the implication goes, then its policymakers would realize the wisdom of civil justice measures that would be, in one way or another, more along the lines of their counterparts in Europe. …

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