Class Actions Around the Globe

The United States is notorious for excessive litigation. A 2013 study by NERA Economic Consulting revealed that the U.S. has the highest liability costs as a percentage of GDP of the countries surveyed, with liability costs at 2.6 times the average level of the Eurozone economies. Unfortunately, many foreign governments are considering adopting one of the most problematic features of the U.S. lawsuit system – class actions. read more...

Class actions permit multiple claimants with the same claim to file a single lawsuit. Well-intentioned policymakers believed this would increase efficiency and access to justice. 

Unfortunately, they were wrong. Class action litigation has become a lawyer-driven business in which lawyers seek out reasons to sue and then file on behalf of hundreds or thousands of claimants. In the “opt-out” system, where claimants are in the case unless they take the initiative to remove themselves, most do not even know they are litigants. With so many claimants, the potential for huge damages looms large. Companies often settle meritless claims because taking the case to trial is risky, expensive, time-consuming and damaging to their reputation.

At the same time, class action settlements often provide little or no benefit to claimants. An April 2013 U.S. national opinion survey revealed that only 14% of those who were part of a class action lawsuit reported having received something of value, such as a cashed check or redeemed coupon. Four in five voters involved in a civil lawsuit said that lawyers benefit the most from class actions.

Some policymakers outside the United States are considering proposals to allow class actions, further burdening businesses in a difficult global economy while creating little, if any, real value for consumers. While some class action proposals differ in certain ways from the U.S. model, not every aspect of the American system needs to be present to create an unbalanced system with U.S.-type abuses. 

American businesses have experienced the class action system for many years and understand its perils. As a result, ILR is urging policymakers in Europe (both in individual countries and at the EU level), Asia, and Latin America to think twice before adopting opt-out class actions.

 

Research

The Growth of Collective Redress in the EU: A Survey of Developments in 10 Member States

March 21, 2017 | This paper examines the 'state of play' of collective redress in 10 Member States in the EU and suggests minimum necessary safeguards to prevent litigation abuse taking hold in Europe.

The ILR Research Review - Spring 2015

May 18, 2015 | This edition of the ILR Research Review offers valuable insights from the latest of ILR's research on enforcement slush funds, Canadian class actions, emerging litigation trends and theories from the plaintiffs' bar, and recent state tort law rulings.

All Results for Class Actions Around the Globe

Australian Press Highlights New ILR Proposal for Reforming Oversight of Third Party Litigation Financing

September 12, 2013 | News and Blog

In recent years, the use of third party litigation financing ("TPLF") in Australia has resulted in a notable proliferation of class actions and other funded lawsuits. Read More »

International Comparisons of Litigation Costs: Canada, Europe, Japan, and the United States

Author: NERA Economic Consulting | June 14, 2013 | Research

The costs of liability systems can vary significantly from country to country with potential consequences for international competitiveness and productivity. Simply put, litigation costs affect the ability of companies to compete and prosper. But higher direct costs of doing business are just the tip of the iceberg: litigation also imposes indirect costs. These indirect costs stem from the uncertainty created by litigation, which may deter investment in high-cost jurisdictions. They also may affect companies' borrowing costs and hence their ability to invest, grow, and create jobs. Concerns surrounding litigation can also occupy management time, which may distort or hinder effective business decision making. Read More »

U.S. Legal System Is World's Most Costly According to a New Study

May 14, 2013 | Press Release

WASHINGTON, D.C. - The U.S. Chamber Institute for Legal Reform (ILR) today released a study by NERA Economic Consulting showing that the U.S. has the world's most costly legal system as a share of its economy. The study compared liability costs as a percentage of GDP using general liability insurance sold to companies in Canada, Eurozone countries, and the U.S. because it covers similar types of costs in each country. Data shows that as a percentage of its economy, the U.S. legal system costs over 150 percent more than the Eurozone average, and over 50 percent more than the United Kingdom. Read More »

Business Coalition Letter to the Japanese Consumer Affairs Agency Regarding Expansion of Class Actions

March 26, 2013 | Press Release

Urgent Proposition on the Japanese Class Action System (Shudan Sosho Seido) Keidanren, Japan Chamber of Commerce and Industry (JCCI), Keizai Doyukai, American Chamber of Commerce in Japan (ACCJ), U.S. Chamber Institute for Legal Reform (ILR), European Business Council in Japan (EBC), and BUSINESSEUROPE are comprised of member companies and management executives committed to producing quality products and services for consumers in Japan. We support legal systems that offer remedies for consumer damages, including appropriate activities by consumer consultation centers or consumer organizations, Alternative Dispute Resolution (ADR) and legitimate claims filed in civil litigation. Read More »

Collective Redress in the Netherlands

Author: U.S. Chamber Institute for Legal Reform | February 06, 2012 | Research

The Netherlands has three main mechanisms for collective redress, including the well-known "WCAM" collective settlement procedure. This paper describes the current Dutch collective redress landscape and some concerning developments. Read More »

Think Globally, Sue Locally: Out-of-Court Tactics Employed by Plaintiffs, Their Lawyers, and Their Advocates in Transnational Tort Cases

Author: Jonathan Drimmer, partner at Steptoe & Johnson and adjunct professor of law at the Georgetown University Law Center | June 21, 2010 | Research

There has been a sharp rise in lawsuits brought against United States companies, as well as foreign companies with a substantial U.S. presence, that are premised on alleged personal or environmental injuries that occur overseas. Most of those transnational tort lawsuits have been filed in the United States by plaintiffs' class action firms, public interest attorneys, and Non-Governmental Organizations ("NGOs"); some have been brought in federal courts, while many more have been filed in state courts under traditional bases of jurisdiction. A growing number of notable actions also have been filed in foreign courts, with the plaintiffs seeking to obtain judgments they can enforce in the United States. Read More »

Third Party Financing: Ethical and Legal Ramifications in Collective Actions

Author: John Beisner, Jessica Miller & Gary Rubin of Skadden, Arps, Slate, Meagher & Flom LLP | November 19, 2009 | Research

This paper begins with an overview of third party litigation financing. It next examines the current third party financing practices of a number of European jurisdictions. Then, it sets forth ILR's critique of the practice, particularly the incentives it creates to engage in frivolous and abusive litigation. ILR also presents a case study of the Commonwealth of Australia, the first jurisdiction to permit third party litigation funding, where such funding has dramatically increased litigation and given investors pervasive - even total - control over a claimant's case. Finally, the paper concludes that such funding should be prohibited altogether in collective litigation. Read More »

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