The Gazette 1984

GAZETTE

JULY/AUGIJST

19

attorney's fees to accomplish that recovery will run in the ten of thousands, perhaps up to a hundred thousand dollars — far beyond the financial interest in the case of any one member of the class. Unless the person who is contemplating bringing a class action can compel the class members to contribute to his attorney's fees, the class action will never be brought. In America the "common fund" rule permits a class action plaintiff to do this. • The rule in this country and in the United Kingdom, I understand, is different. In your practice, a class action plaintiff cannot compel class members to contribute to his attorney's fees. Each member of the class is entitled to his full share of the proceeds of the case, without offset for expenses. Under these ground rules, a class action simply is not feasible. • So, once again, we have a practice in America, which is an incentive to litigation. And we have a different practice here and in the United Kingdom, which is a disincentive to litigation. (h) Before leaving the subject of procedure, I should comment on the rules for pretrial discovery in American practice. • Discovery in America is extremely liberal, much more so, I believe, than here and in the United Kingdom. The test of discoverability is not the trial standard of admissibility in evidence, but whether the information sought is "reasonably calculated to lead to the discovery of admissible evidence". Methods of discovery include: oral depositions, of parties and of non-party witnesses; production of records; written interrogatories; and medical examinations, in appropriate cases. • If there is a case to be made, a diligent lawyer in America does not lack means to ferret out the evidence. (i) One further observation about the legal system in America: legislative bodies in America have a tendency to enact statutes encouraging what are known as "private attorney general" actions. They do this as a means of furthering some perceived public interest. • Let me cite two examples. The American antitrust laws prohibit "combinations in restraint of trade", by which we mean arrangements that will interfere with free and competitive markets. These statutes give a private right of action to any person who has been injured by a combination in restraint of trade, and provide that his damages will be equal to three times his actual loss. This treble damages feature is intended both to penalise the wrongdoer, and to encourage the bringing of antitrust actions by private parties. The legislative scheme relies heavily on private initiatives, to accomplish a public purpose. • The Securities laws, which require full disclosure of information concerning publicly traded securities, are another example. These statutes give liberal rights of action to private investors injured by false or incomplete disclosures, as a means of furthering the public interest in the integrity of financial markets.

• A complete listing of constitutional cases would be very time-consuming. It has been said that every important public issue in America ultimately finds its way into the courts. Indeed, the principal responsibility of the highest court in the land, the United States Supreme Court, is to decide constitu- tional cases. (0 Let me move from substance to procedure. An important procedural device that is used in American courts is the class action. In a class action, one of the parties acts, not only for himself, but for other persons similarly situated, who are not named separately as parties and are not represented by separate counsel. All members of the class are bound by the final judgment, as fully as if they were named parties. There are many kinds of cases that can be brought as a class action. • Claims arising from an airline crash or train wreck, or other major disaster, for example, will likely be brought as a class action. In Kansas City a walkway in a newly constructed hotel collapsed, killing or injuring hundreds of people. As you know, the liability issues in a case like that are enormous. There are claims, or potential claims, against the ownership of the hotel, the management of the hotel, the architect, the engineer, the contractor, and who knows how many subcontractors. And those liability issues are identically the same, for every person who was injured or killed by the collapse of the walkway. The class action device permits all of those liability issues to be tried in one case instead of hundreds of cases. The time and effort of only one trial judge and one jury will be required. And on the plaintiffs side, there will be just one group of trial counsel, instead of hundreds. In the case I have just cited — the major disaster case — the damages issues are individual, not common, to the members of the class. They may be disposed of in separate mini-trials after — and if — there has been a plaintiffs verdict on liability in the class action trial. As a practical matter, once liability has been established, the damages claims probably will be settled and mini-trials will not be necessary. • Any case in which class of people have claims arising out of the same fact situation is a candidate for class action treatment. Products liability cases, securities fraud cases, antitrust cases — any type of case that meets the class action requirements can be brought as a class action. This, of course, includes the constitutional cases that I referred to just a moment ago. (g) A particular feature of American law practice makes class actions feasible, as a practical matter. • What I refer to is the so-called "common fraud" rule, which is a rule requiring every member of a claimant class to pay his fair share of expenses, including attorney's fees, before receiving any portion of the proceeds of the case. Take, for example, a case in which the claimant class consists of two or three thousand people, each of whom has a claim of two or three hundred dollars. If the case is successful, the recovery for the entire class will be in the hundreds of thousands of dollars. The

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