Europe (and much of the world) has long been skeptical of American-style “opt out” class actions in which the plaintiff’s attorney defines the scope of the class. Similarly, they have prohibited the contingent fee, discouraged punitive damages, insisted on “loser pays” fee shifting, and required opt-in classes to be led by a public agency or an approved not-for-profit body. All this should seemingly preclude the spread of “entrepreneurial litigation” to Europe or elsewhere.1 But it hasn’t!
Major securities class actions for record or near record amounts have recently settled in The Netherlands and Japan, and an even larger securities action is now being litigated against Volkswagen in Germany. All have involved an international parade of institutional investors, but the most striking fact about them is the key organizational role in structuring them played by traditional American plaintiff law firms. Although the courthouse door in the United States has been shut to these plaintiffs by Morrison v. National Australia Bank,2 their U.S. law firms have shown that they can take their show on the road to Europe and Japan. This had seemed impossible because no major European jurisdiction authorizes an opt-out class applicable to securities litigation; nor does any permit the contingent fee; and all also employ “loser pays” rules.
