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Globalization of class action lawsuits

From the outset of the litigation, Lead Counsel used our website royaldutchshellplc.com to generate witnesses and evidence, including important information from Dr John Huong, the Shell production geologist who blew the whistle on the reserves fraud.

By John Donovan

In January 2006, a U.S. Federal Judge set a deadline of 1st March 2006, to find a Royal Dutch Shell shareholder qualified to act as a representative of all non-US Shell shareholders in a global expansion of the U.S. class action litigation already underway in respect of the oil reserves scandal.

Shell had, for a number of years, deliberately filed Form 20F returns with the U.S. Securities & Exchange Commission containing false information about its claimed proven hydrocarbon reserves.

All U.S. shareholder claims had been consolidated into a single class action with the New York law firm of Bernstein Liebhard & Lifshitz LLP acting as Lead Counsel for the Lead Plaintiffs.

From the outset of the litigation, Lead Counsel used our website royaldutchshellplc.com to generate witnesses and evidence, including important information from Dr John Huong (left), the Shell production geologist who blew the whistle on the reserves fraud.

Following a conference between the senior partners of the Lead Counsel and me on how we could achieve the 1st March deadline for an expanded worldwide class action, we made an appeal on our website to find a qualified holder of Shell stock, as stipulated.

The appeal was successful and a non-U.S. Shell stock holder, a British national, Mr Peter M. Wood, a Petroleum Engineer, was found within the time limit set by the U.S. federal court. The court granted Mr Wood permission to intervene as a named plaintiff representing all non-U.S. qualified holders of stock. 

In response to the expanded action, Royal Dutch Shell secretly entered into discussions with other non-U.S. purchasers of Shell stock, including Dutch pension funds. On 11 April 2007, Shell advised the U.S. court of a proposed settlement agreement of all remaining reserves related litigation.

It is this settlement that is referred to in an article published today by Reuters. It was a milestone in the move towards the globalization of class action lawsuits.

A law book published in June 2008 stated: “A non-US shareholder, Mr Peter M Wood, was recruited into that action through an appeal on the website http://www.royaldutchshellplc.com”

Dr Huong’s conscience driven whistleblower actions predictably attracted retribution on an unprecedented scale from Shell. Eight Royal Dutch Shell companies collectively sued him for alleged defamatory comments published on our website under his name. Shell lawyers buried him in injunctions and wasted several years and tons of shareholder money in legal costs trying to have him imprisoned for telling the truth, before ultimately deciding to buy his silence.

U.S. class action lawyers spread their wings

By Terry Baynes: NEW YORK | Tue Mar 20, 2012 12:36pm EDT

(Reuters) – The United States has made some noteworthy contributions to globalization. The assembly line. The fast food industry. And now, class action lawsuits.

More than 25 countries have introduced some sort of group litigation rules, up from around three in 2000, according to a 2011 report by Stanford Law School professor, Deborah Hensler. They range from established democracies like Italy, England and Israel to emerging market nations such as Indonesia and Bulgaria.

The U.S. Chamber of Commerce recently warned colleagues in Europe about the dangers such lawsuits pose.

“It’s pretty scary stuff,” said Lisa Rickard, president of the U.S. Chamber of Commerce’s Institute for Legal Reform. Her office is especially worried about outside investors funding class actions, as has happened already in Australia. Rickard fears this will “fuel” more litigation.

HOME FIELD NARROWS

For U.S. firms that specialize in filing suits, the spread of class-action litigation comes at an opportune time. Recent Supreme Court rulings have made it harder to make a living with class actions at home.

An early blow came in a 2010 investors’ class action against one of Australia’s largest banks, Morrison v. National Australia Bank. The court ruled U.S. securities laws only apply to U.S.-listed companies. That wiped out the case.

Last year, the high court allowed companies to use arbitration clauses in customer contracts, in a case between wireless carrier AT&T Mobility and phone customers Vincent and Liza Concepcion. That dealt a blow to consumer class actions.

Wal-Mart v. Dukes, a sexual discrimination case brought on behalf of 1.5 million current and former Wal-Mart employees, was the biggest setback of all, raising the bar for what a group of people must have in common to qualify as a single class.

“You’ve seen a narrowing of options for class actions in the United States,” said Brian Ratner, a lawyer at the law firm Hausfeld. When firms have strong cases they can no longer bring at home, they’re looking abroad.

Even in the United States, class actions are pretty new. The government first adopted the modern class action in 1966, allowing lawyers to file on behalf of unnamed individuals and collect contingency fees – a right to a share of any winnings. They really caught on in the 1990s, with suits against tobacco and asbestos companies from plaintiffs’ attorneys like Richard Scruggs and Ronald Motley.

Some English-language countries followed suit, and a handful of U.S. firms have been quick to seize the opportunities.

Milberg, a securities-litigation firm, was an early player in Canada. Washington, D.C.-based Hausfeld planted a flag in the United Kingdom in 2008 with a price-fixing case against British Airways. Hausfeld recently settled a case on behalf of Barbados farmers and landowners, and is handling a vitamin price-fixing case in Panama.

Early players are making money. In 2009, three U.S. law firms walked away with $47 million when the Dutch court approved a class action settlement between shareholders and Royal Dutch Shell.

In mid-January, Bernstein Litowitz Berger & Grossman was one of three U.S. firms to win a $58.4 million settlement for a group of investors in a Dutch court. The investors accused the reinsurance company Converium of securities fraud. The court allowed the U.S. lawyers to take 20 percent of the settlement – more than local law would have allowed Dutch lawyers.

But there are still barriers. One is that many countries have “loser pays” laws, requiring the side that loses to foot the other side’s legal bills. South Africa leaves the allocation of fees up to individual courts, but costs are often borne by the losing side.

Other stumbling blocks range from ingrained suspicion of American litigiousness to rules barring the contingency fees that make class actions lucrative. “The law has to mature and develop in other countries before we’ll have any idea whether these kinds of actions are going to have legs,” said Max Berger, a lawyer at Bernstein Litowitz which represented investors in the Dutch settlements.

(Edited by Eileen Daspin and Sara Ledwith)

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