RJ Gaudet & Associates LLC provides U.S. legal advice and representation to clients in Europe and the United States.
RJ Gaudet & Associates LLC is a law firm registered in Seattle, Washington with addresses in El Paso, Texas; Berkeley, California; and The Hague, the Netherlands. The firm was established by American lawyer Robert J. Gaudet, Jr. while he was studying complex litigation in Europe under a Fulbright grant.
The National Employment Lawyers Association (NELA), to which Mr. Gaudet belongs as a member, recently issued a letter to Speaker Paul Ryan in opposition to a Congressional bill that would cripple class actions by requiring an early showing, at the start, that all class members suffered a similar injury. Click here to read NELA’s letter. The bill would require an enormous expenditure of time and money to investigate each and every class member in a class action, some of which contain 9 million class members. This would have to be done without the benefit of discovery from the defendant.
NELA’s letter identifies the particular language in the bill that would be onerous:
“I am proud of the work that my client, Oikocredit, performs around the world,” said Mr. Gaudet. Oikocredit, an ecumenical cooperative based in the Netherlands, recently hired Mr. Gaudet to represent Oikocredit in a loan transaction in the United States. Mr. Gaudet previously represented Oikocredit in similar transactions on which he collaborated with in-house counsel Ben Aidam and business manager Barbara Marcussen.
In January 2016, Mr. Gaudet visited Oikocredit’s international headquarters in Amersfoort where he met Mr. Aidam and Ms. Marcussen who was recently promoted to Deputy Director. Ms. Marcussen now manages a portfolio of assets in Africa. RJ Gaudet & Associates congratulates Ms. Marcussen on her promotion and vision for continued growth and pursuit of Oikocredit’s founding values.
Although it manages substantial assets, Oikocredit has stayed true to the values of its founding members, such as the World Council of Churches, to help small businesses pursue big dreams, especially in lesser developed countries. Oikocredit provides financial assistance through micro-finance, direct loans to Small and Medium-Sized Enterprises (SMEs), and private equity investments. Over the past five years, Oikocredit’s total assets have doubled to 982 million Euros, an astonishing rate of growth.
At a 40th anniversary event in Berlin in 2015, Dr. Konrad Raiser, former General Secretary of the World Council of Churches, noted in an opening speech that the purpose of Oikocredit is to pursue social justice. The World Council of Churches endorsed the establishment of Oikocredit, in 1974, to address an unmet need. Oikocredit (which started with a different name) had just 1 million U.S. Dollars in starting capital. Since then, Oikocredit’s assets have multiplied almost 1,000 times. The field has grown with numerous Micro-Finance Institutions who, sometimes, compete among themselves.
The founding principles of Oikocredit are “justice, self-reliance, and economic empowerment for all, with a mission to alleviate conditions of poverty by providing credit and resources to the most disadvantaged, financially-excluded, ‘unbankable’ communities in the world.” Originally, these values stemmed from the faith of Oikocredit’s founding members. Today, hundreds of churches still serve as members of Oikocredit. The mission is supported by a diverse staff with different languages, races, beliefs, and nationalities. Dozens of worldwide offices, in different regions, provide local expertise.
The work of Oikocredit has affected millions of lives. In 2014 alone, Oikocredit financing supported 37 million people. Females accounted for 86 percent of all borrowers, and 50 percent of borrowers lived in rural areas. In recent years, Oikocredit expanded its scope to include renewable energy, increased numbers of SMEs, and agricultural cooperatives. Renewable energy projects enable people without electricity to obtain solar-powered lights that students can use for studying at night and which small business owners can use, e.g., for weaving cloth at night. These small, tablet-sized lights are cheaper ($50 or less) than other solar-powered lighting systems which cost more ($192).
Oikocredit collaborates with partner Thrive India to provide affordable solar-powered lights as part of a “one child one light” campaign. Oikocredit also partners with BBOXX to bundle together contracts from customers who bought solar home systems that the customers pay off through periodic payments. Those payments are used to secure notes that BBOXX DEARs sells to Oikocredit, secured by the future receivables.
In December 2015, Mr. Gaudet was admitted to the U.S. Court of Federal Claims. This admission will be useful for appearing in the Court to prosecute a Fair Labor Standards Act claim and to seek compensation for the victims of vaccinations.
Mr. Gaudet currently represents 290 U.S. Customs and Border Protection canine instructors with Fair Labor Standards Act claims against the U.S. Government, and this opt-in class action is being heard in the Court of Federal Claims. Mr. Gaudet works with El Paso lawyer David Kern and San Antonio lawyer Mark Greenwald on this matter. In November, Mr. Gaudet and co-counsel completed a plaintiffs’ motion for summary judgment that was filed with the Court. The lawyers representing the U.S. Government in this matter work in the Civil Division of the U.S. Department of Justice.
As a member of this Court, Mr. Gaudet may also represent people who suffer injuries after taking vaccines. They are entitled to file claims with the Court to obtain compensation from a government-financed compensation fund. The Court of Federal Claims processes claims for vaccine injuries and, as noted above, hears cases against the U.S. Government.
Applications to the Court require letters of recommendation from two members of the U.S. Court of Federal Claims as well as a certificate of good standing from a state bar association.
Robert Gaudet represents an elderly Louisiana landowner who is being pressured to enter into a lease to drill for oil and natural gas in Lincoln Parish through fracking, which has been used in the vicinity. Fracking is a fairly new and successful method for finding natural gas. However, there is some evidence it causes water pollution and even earthquakes.
Although some Louisiana lawyers who routinely handle oil and gas leases do not think there is a serious risk of earthquakes from fracking, there is some evidence that earthquakes have resulted from fracking in various locations around the world. In Oklahoma, the American Bar Association journal recently reported there are 300 times more earthquakes, after fracking, than in the past. An HBO documentary from 2010 reported on the consequences of fracking in Pennsylvania, Colorado, and Wyoming where water wells were polluted and kitchen sink faucets caught fire.
Last week, Mr. Gaudet met with an Amsterdam personal injury lawyer, Antoinette Collignon-Smit Sibinga, who told him she once lived in Groningen, the Netherlands which never had earthquakes until, after fracking, Groningen now has many earthquakes. An article in the Guardian describes the damages suffered by landowners in the Groningen due to earthquakes caused by the removal of natural gas. The Groningen landowners have been offered compensation but, generally, in amounts far lower than the actual costs for them to build new houses after old structures were damaged by earthquakes.
In April 2015, a Dutch court in the Hague ordered the halting of gas production in Groningen due to earthquake concerns, according to an article published in The Globe and Mail. The Netherlands Ministry of Economic Affairs, based in the Hague, had argued to the Court that gas production caused 196 earthquakes in the region over a period of two years. The ruling required the Dutch gas company to reduce production to a minimal level. In a separate decision, a Dutch court, in 2014, ordered payment of $1.6 billion in compensation to landowners with damages caused by earthquakes induced by fracking, as reported in an online publication.
In Louisiana, oil companies can obtain an order from a Governor-appointed Commissioner of Conservation to drill on people’s land without their consent. The statutory justification is to prevent the “waste” of natural resources. If a landowner refuses to enter into a lease, then the oil company can charge the landowner three times the costs for drilling (taken out of any production) as a penalty for the landowner’s refusal to enter into a lease. Consequently, there’s immense pressure upon Louisiana landowners to enter into leases to allow fracking even though it may someday cause earthquakes.
To protect their rights, landowners have the option of refusing to enter into a lease and, if the oil company seeks a unitization order from the Commissioner, then submitting objections to the Commissioner. The Commission is required to hear objections and may determine whether, or not, to grant an oil company’s application. In their objections, landowners could raise the prospect of increased earthquakes as a reason for the Commission to deny any application to drill without the landowners’ consent. According to some local lawyers in Louisiana, unitization orders (which create a “unit” of land that a company can drill on, even without the owners’ consent) are readily granted, even when they are opposed by landowners. Will the serious consequences of fracking, i.e. earthquakes, around the world change the mind of a Commissioner? Perhaps. Landowners can always refuse to enter into a lease and submit their objections to an oil company’s subsequent application for a unitization order.
As an alternative, landowners can insert more favorable provisions into a negotiated lease to seek protection and, in the event of harm, compensation for any damages caused by any earthquakes. A negotiated lease can also contain provisions that require an oil company to use the highest and best practices and technologies for the prevention of earthquakes and remediation of the land.
On behalf of his client, Mr. Gaudet cooperates with co-counsel in seeking creative solutions to growing concerns about fracking including Jenik Radon (who previously represented the country of Georgia in negotiations against BP Oil and currently teaches at Columbia University) and legal counsel in Louisiana.
The land broker seeking the lease, Mark A. O’Neal & Associates, has sent Mr. Gaudet’s client numerous copies of a fine print lease devoid of important legal clauses (e.g. indemnification provision, damages clause) and offered a percentage of royalties; $1 per long ton for sulphur, and just 10 cents/barrel of water. The broker attached a “draft check” in the hopes that Mr. Gaudet’s client would cash it and, thereby, become bound by the fine print devoid of legal protections, which many landowners sign with little or no revisions. At one point, the broker told Mr. Gaudet there was no risk of earthquakes due to fracking in Louisiana.
The Vatican recently called upon Prof. Dr. Detter de Frankopan for advice on the international legal impact of the encyclical, Laudato Si, which discusses the environment. Prof. Dr. Detter de Frankopan and Cardinal Peter Turkson had a private audience with Pope Francis.
Related to Prof. Dr. Detter de Frankopan’s legal advice, Pope Francis released Laudato Si, which is available here, on May 24, 2015. The full name of the document is “Encyclical Letter, Laudato Si, of the Holy Father Francis On Care For Our Common Home.”
The Encyclical likens earth to a sister and “mother” who “cries out to us because of the harm we have inflicted.” It asks people to protect bio-diverse systems in the Amazon, Congo, and elsewhere from “huge global economic interests which, under the guise of protecting them, can undermine the sovereignty of individual nations.” The Encyclical warns of transnational corporations with self-interested proposals to internationalize the Amazon as well as popular consumerism and the spread of a “throwaway culture,” a term the Pope has used in speeches. The Encyclical was inspired by St. Francis of Assisi who loved flowers and animals and spoke to the Earth, Sun, and Moon as his friends.
Pope Francis advocates for the abandonment of fossil fuels and their replacement with renewable energy. Although he is not a Catholic, Pres. Obama appears to agree with this general direction as he recently declined to establish a Keystone pipeline and, instead, said we should keep our fossil fuels in the ground.
The Pope’s Encyclical is not without controversy. For instance, Catholic miners in Poland are concerned that they may lose their jobs as the result of the legal implementation of the Encyclical.
As a result, Prof. Dr. Detter accompanied Cardinal Peter Turkson to Poznan, Poland to explain to the miners that legal implementation would only occur very gradually. In addition to speaking with Polish miners, Prof. Dr. Detter de Frankopan and Cardinal Turkson attended an environmental conference, Pol-Eco System Conference.
The Pol-Eco System Conference: International Trade Fair of Technologies and Products For Sustainable Development and Municipal Services took place in Poznan, Poland from October 11 – 14, 2015. The conference featured special exhibitions on renewable energy, water management, environmental protection, and other matters. More information about the conference is available at this link.
The Encyclical reflects a belief in the common brotherhood of people and, even, in the unity of all earthly creatures: “Because all creatures are connected, each must be cherished with love and respect, for all of us as living creatures are dependent on one another.” This is reminiscent of Dr. Martin Luther King, Jr.’s assertion that we are all interconnected within a single web.
What is the role for lawyers? Prof. Dr. Detter de Frankopan advises the Vatican on international law and explains the legal ramifications of moral beliefs. Another example is New York lawyer Jenik Radon who advises sovereign nations on the risks in contractual agreements with the oil, gas, and mineral industry. Mr. Gaudet and Mr. Radon currently advise a small landowner in Louisiana regarding negotiations with an oil and gas company that wishes to engage in fracking.
Lawyers have a role to play in writing normative values into legal contracts to ensure that the environment is not wasted or destroyed. They can give voice to weaker and less experienced parties, such as individual landowners or even small sovereign nations, in negotiations with multi-national oil and gas companies.
ABOUT RJ GAUDET & ASSOCIATES LLC: the firm is registered in Seattle with office addresses in El Paso, Berkeley, and The Hague. It consists of lawyers who are licensed in Texas, Washington, New Jersey, and the United Kingdom and who work across the United States with local counsel on litigation, class actions, international human rights, international law, wage and hour matters, environmental issues, and other types of cases. Prof. Dr. Detter de Frankopan is Of Counsel.
By Robert J. Gaudet, Jr.
In what is likely to yield a trickle rather than a tsunami of justice, Japan will allow class action-type lawsuits filed by consumer associations to seek damages in a new law that will take effect in December 2016.
On Sunday, October 24 at a Halloween barbeque of the Berkeley LLM students, I met a student from Japan, Shoichi Hara, who is on temporary leave from his position as a judge in Japan. We spoke about class actions. Judge Hara subsequently explained to me, by email, the status of Japanese class actions:
“In Japan, the Consumer Court Special Procedure Act (a Japanese-version of the class action) was promulgated on December 11,2013 and will be enforced within 3 years from that day, taking effect in December 2016. Since it has not been enforced yet, there are no cases now. The Act will allow only qualified consumer organizations to sue against business operators instead of allowing each consumer to file a lawsuit. There will be two steps in the procedure. In the first step, a court will decide the presence of legal liability. After declaring the legal duty of defendant in the first step, the court will inform relevant consumers of the procedure and decide each person’s amount of damage in a simple procedure.
Before the Consumer Court Special Procedure Act, Japan previously introduced another Special Act which enabled qualified consumer associations to file a lawsuit for injunction instead of consumers. The average number of cases per year (from 2009) is about 15, which is increasing, but there have not been so many yet. So, Japanese class action or other consumer protection systems have only just started.”
The Consumer Court Special Procedure Act will bring a slight advantage over the status quo. Presently, there are only a few procedural devices available: (1) joinder which, as in the United States, allows numerous individuals to file their own lawsuits and have them consolidated into a single action, (2) representative actions in which representatives can be appointed, upon explicit instructions from each one of the victims, to represent others with “common interests”; and (3) lawsuits for injunctive relief only filed by “certified” consumer associations that are pre-approved by the Prime Minister.
With the new procedure, consumer associations will be able to file actions seeking damages. This is a slight improvement under the older law that only allowed consumer associations to seek injunctive relief. However, given the limited resources of consumer associations, it is not likely there will be a significant number of cases filed under the Consumer Court Special Procedure Act. If, as Judge Soichi reports, only 15 lawsuits for injunctive relief were filed by consumer associations under the older law that took effect in 2007, then similar numbers might be expected under the Consumer Court Special Procedure Act permitting them to seek damages.
There is a hint of paternalism in Japan’s approach. It will allow only consumer associations – not victims themselves – to prosecute lawsuits. And, under the older 2007 law, the Prime Minster has to pre-approve eligible consumer associations and may decertify any class action, giving the Prime Minister the opportunity to exercise political influence over the prosecution of a case for injunctive relief.
Why don’t Japanese legislators trust victims and their lawyers to file suit as is done in the United States? As I mentioned at a conference in Brussels in 2012, Japanese legislators seem to have a paternalistic belief that victims and their lawyers cannot be trusted and that only a quasi-government association should be entrusted with the sacred duty of prosecution. There is no reason to believe a consumer association can prosecute suits more effectively or efficiently than the private bar. Nor am I aware of any empirical evidence to support the paternalistic approach.
The suits that Japanese consumer associations are allowed to file under the 2007 law are limited in scope to unjust contractual clauses and inappropriate solicitations. In addition, the consumer associations must pre-notify the offender to give it a chance to fix the problem before the associations can file suit. It seems likely that similar restrictions may be placed on consumer associations seeking damages under the new law that becomes effective in December 2015.
In its own discussion over collective redress, various governments and actors who submitted comments to the European Union, also, expressed a preference for cases filed by consumer associations rather than private individuals. Therefore, it is not surprising that Japan drew from this European experience, including an irrational paternalism, in drafting its own legislation.
From December 2016, it will be interesting to see how actively the consumer associations do – or do not – use their new powers to seek damages for consumers. Even more interesting, I am curious to see when Japanese legislators become willing to look beyond the paternalistic approach, gather empirical evidence, and brush aside mistrust of American-style class actions to devise a system that could, some day, invigorate the Japanese economy with a true tsunami of justice. But that day will have to wait for perhaps another decade or a subsequent generation.
 Sugawara, Ikuo, “The current situation of class action in Japan,” (undated), available at http://globalclassactions.stanford.edu/content/current-situation-class-action-japan (last viewed on Oct. 28, 2015).
 Id. at 12, 14.
 Id. at 11.
 Id. at 16 (“As a result, injunctive relief under the above mentioned consumer group actions was introduced by referring to the systems of the EU countries”).
On September 25, 2015, Stockholm University in Sweden conferred the honor of “Doctor Jubilaris” upon Prof. Dr. Ingrid Detter who graduated from the faculty of law and went on to a D.Phil. at Oxford University and a second doctorate from Stockholm University; became the first female Fellow of St. Antony’s College at Oxford University; was elected to the Chair of International Law at Stockholm University; and served as Legal Advisor on International Affairs to the Pope, Saint John Paul II, for 25 years.
Prof. Dr. Detter attended the ceremony in Stockholm at the Blue Hall in the Stockholm City Hall, followed by a gala supper at the Golden Hall which is often called the “Little Noble Feast” since it occurs on the same premises as the annual Nobel Prize ceremony.
The ceremony was conducted in Latin. Prof. Engelbrekt of Stockholm said, in Latin, that she had consulted with her colleagues in the law faculty and that they had selected Prof. Dr. Detter for this honor. In Latin, Prof. Engelbrekt said at the ceremony, “I order you to step forward to receive the sign of your honor.” And, then, she said, “I greet you, Jubilee Doctor” (again, in Latin) and “Good bye, distinguished Doctor” (in Latin as “Vale, clarissima, Doctor”). The program was performed in Latin to maintain the historical roots of this medieval tradition. Participants wore white tie and long evening dresses.
Prof. Dr. Detter de Lupis Frankopan was delighted to receive this honor bestowed by her colleagues on the law faculty. The Doctor Jubilaris is conferred under the auspices of King Carl XVI Gustaf of Sweden who officially serves as the head of the University. The firm of RJ Gaudet & Associates LLC congratulates Prof. Dr. Detter for this recognition.
After receiving this award, Prof. Dr. Detter has embarked to Rome for a meeting with HH Pope Francis. She advised his predecessors on matters of international law. It was, perhaps, due to her impressive scholarship and work that Prof. Dr. Detter was recognized on September 25 by her peers. Her academic career started at Oxford University where she attained a D.Phil. under the supervision of Sir Humphrey Waldock who later served as President of the International Court of Justice.
By Arthur H. Bryant*
Two years ago, dissenting in American Express v. Italian Colors Restaurant, Justice Elena Kagan, referring to the civil procedure rule on class actions, wrote, “To a hammer, everything looks like a nail. And to a court bent on diminishing the usefulness of Rule 23, everything looks like a class action, ready to be dismantled.” The message to people and companies involved in class actions was clear: “Be afraid. Be very afraid.”
Last term, the U.S. Supreme Court basically left class actions alone. This upcoming term, however, the court has already agreed to hear four cases that could dramatically restrict or terminate class action litigation in numerous ways. The concern is real. Will the court keep hammering class actions or let them be?
To understand why so many are worried, just look at the decisions that prompted Kagan’s remarks. In 2011, AT&T Mobility v. Concepcion effectively held that the Federal Arbitration Act gave corporations the power to violate state laws and use mandatory arbitration clauses in their form contracts to bar customers and workers from bringing class actions against them.
Wal-Mart Stores v. Dukes announced several new rules making it harder to prosecute cases as class actions and precluded the courts from determining whether the country’s largest private employer was discriminating against its female workers nationwide.
In 2013, neither Comcast v. Behrend, an antitrust case, nor Genesis Healthcare v. Symczyk, a Fair Labor Standards Act case, presented the questions the court heard them to address. But, instead of dismissing them, the court stopped both from proceeding as class actions on grounds not addressed by the parties.
Finally, in American Express, the court held corporations could use mandatory arbitration clauses to ban class actions when, as a practical matter, that prevented their customers from vindicating their substantive rights and let the companies illegally obtain billions.
FOUR NEW CHALLENGES
Against this background, the court’s decision to hear four new challenges to class actions has understandably raised grave concerns. Tyson Foods v. Bouaphakeo, attacking a $5.8 million jury verdict against the company for underpaying its workers, raises two questions: first, whether the trial judge should have permitted Tyson’s workers to rely on statistical sampling to establish liability and damages; and second, whether a class can be certified that contains some members who have not been injured and have no legal right to damages.
But statistical sampling has been used to establish liability and damages in cases for years. And classes have always been certified even though they contain some members who have not been injured and are not entitled to damages. For example, even if an employer is discriminating against women in hiring, unqualified female job applicants would not have been injured or be entitled to damages. That fact has never stopped class actions charging gender discrimination in hiring from proceeding.
In Spokeo v. Robins, a Fair Credit Reporting Act case, the company, charged with publishing inaccurate information and failing to provide legally required notices, contends that Congress cannot constitutionally give people the right to seek statutory damages, individually or collectively, when corporations violate the law.
Based on this rationale, it urges the court to bar class actions for statutory damages authorized by Congress to enforce the Truth in Lending Act, Fair Debt Collection Practices Act, Telephone Consumer Protection Act, Employee Retirement Income Security Act, Real Estate Settlement Procedures Act, Lanham Act, Fair Housing Act, Americans With Disabilities Act, Video Privacy Protection Act, Electronic Communications Privacy Act, Stored Communications Act, Cable Communications Privacy Act, Migrant and Seasonal Agricultural Worker Protection Act, Expedited Funds Availability Act, Homeowners Protection Act, Equal Credit Opportunity Act and the Driver’s Privacy Protection Act.
Campbell-Ewald v. Gomez presents the question the court granted review of Genesis Healthcare to decide: whether defendants can stop class actions and render them moot by offering the individual class representatives their full damages and the class members nothing. Since Genesis Healthcare, the lower courts have unanimously agreed that Kagan’s dissent in that case was right: the answer is no. But the court took the case anyway.
And, in DirecTV v. Imburgia, which charges early-cancellation penalties imposed on consumers were illegal, the company’s 2007 customer agreement said its mandatory arbitration clause was invalid if the clause’s class action ban violated “the law of your state.” It did. AT&T Mobility later held federal law pre-empted that state law, but the lower court found that didn’t matter — because the parties’ agreement was to follow state law. Contract interpretation is supposed to be governed by state law, which the Supreme Court does not create. The court could, however, still find a way to enforce the class action ban.
These cases are important to everyone in America. While they involve class actions — a procedural device — what’s at stake are the substantive and constitutional rights class actions are designed to preserve and enforce. When corporations or the government harm many people or businesses, class actions are often the only way that justice can be done.
The court will be deciding whether class actions can continue to be used, as they have been, to enforce state and federal consumer protection, employment, civil rights, civil liberties, environmental and other laws — and the state and U.S. constitutions. If it keeps hammering nails in class actions’ coffin, it could be burying significant portions of these laws as well. We will see.
*Arthur H. Bryant is the chairman of Public Justice, a national public interest law firm dedicated to advancing and preserving access to justice for all. His practice focuses on consumers’ rights, workers’ rights, civil rights, environmental protection, and corporate and government accountability.
[Reprinted from the National Law Journal (Sept. 7, 2015) with permission of Arthur Bryant, chairman of Public Justice. Mr. Gaudet is a member of Public Justice.]
By Arthur Bryant
Chairman, Public Justice
The U.S. Chamber of Commerce’s Institute for Legal Reform just released the latest version of the propaganda piece it started publishing in 2002. Entitled “2015 Lawsuit Climate Survey: Ranking the States,” the report summarizes the answers of a “nationally representative sample of 1,203 in-house general counsel, senior litigators or attorneys, and other senior executives who are knowledgeable about litigation matters at companies with annual revenues over $100 million” who responded to what it calls a “survey.” The so-called “survey” does not, however, show what these people really think. Everyone taking it knows that its purpose is – as it has been for the past 13 years – to give big business a basis to smear state court systems that aren’t pro-business enough as “judicial hellholes” and push all state courts to limit corporate liability for wrongdoing.
Even so, the answers provide some extraordinary information.
First, Corporate America’s representatives say that state courts are increasingly better for them. Consumer, worker, environmental, and civil rights advocates would agree. As the report says, in the 13 years since the so-called survey began, “there has been a general increase in the overall average score” given to state court systems by lawyers for big business – “and this trend continues with the 2015 survey.”
“From 2002-2006,” the report finds, “the overall score averaged approximately 52.9, whereas from 2007-2015, the score averaged approximately 59.6.” Chart 2 of the report gives the details and shows that the score given by big businesses’ lawyers to state court systems has gone up almost every year. In 2003, Corporate America’s lawyers gave the state courts a score of 50.7; in 2015, they gave them a score of 61.7.
Since this is supposed to be the views of one side in an adversarial system, wouldn’t a score close to 50 be ideal? The Chamber’s propaganda campaign (backed by corporate lobbying, campaign donations, and decisions like Citizens United) is plainly working. I understand that, in theory, a system perceived to be fair by all parties should get a score of 100 from everyone but, remember, this was a “survey” taken by specific people of specific people for a specific purpose: to push the state courts in the corporations’ favor. You could reasonably expect a court system that got a score of 100 from these participants to get a score of zero from lawyers trying to hold big businesses accountable for breaking the law.
Second, even in a “survey” designed and taken to show that the state courts are biased against big business, half of Corporate America’s lawyers say the state court liability systems overall are “excellent or pretty good.” Another 41% say the systems overall are “only fair.” I thought the goal was for them to all be “fair.” But perhaps that’s why I’m a public interest lawyer, not a lawyer for big business. Despite the reason for the “survey,” only 8% said the systems overall were “poor” (the last 1% was not sure or declined to answer).
In other words, despite what the “survey” is intended to show, it actually shows that the state court systems overall are viewed by Corporate America’s lawyers as significantly better for big businesses than they are for the people and companies suing them. Can you imagine the cries of bias we would hear if a survey showed legal services, consumer, and workers’ lawyers saying the courts were “excellent or pretty good” for them (much less “only fair”) in lawsuits against big business?
Third, Corporate America’s lawyers give grades between A and F to each of the state court systems and say where they do and don’t like to be sued. In a stunning and continuing display of arrogance, they actually include a map of the “Best to Worst Legal systems in America.” The map was apparently created in Bizarro World. They give As to 14% of the state courts, Bs to 38%, Cs to 27%, and Ds to 11%. In other words, even according to these “survey” respondents, 90% of the state court systems are passing. They give failing grades, Fs, to 5%. The other 5% were not sure or declined to answer. These answers, too, put the lie to Corporate America’s claims that state courts need to be more favorable to them. If anything, they show that many state courts are already far more favorable to big businesses than they are to those trying to hold big businesses accountable.
The “survey” respondents also took the time to tell us which states’ courts are the most, and least, favorable to Corporate America. The top five states, according to them, are Delaware (often called a subsidiary of DuPont), Vermont, Nebraska, Iowa, and New Hampshire. See any states in there with a lot of minorities and poor people who might not look kindly on big corporations abusing their power? The bottom five states, they say, are West Virginia, Louisiana, Illinois, California, and New Mexico. Ask yourself the same question. I question some of these rankings. Most plaintiffs’ lawyers would list the Texas state courts as one of the most pro-business in the nation. But maybe the state’s so big that they don’t want to admit that. The states they rank highest are all fairly small.
If you want to figure out which states have juries most likely to hold big corporations accountable, try reversing the order. These are the states the Chamber of Commerce regularly uses this “survey” to label “judicial hellholes.” In reality, however, a “hellhole” for corporations violating the law may be “heaven” for those seeking justice against businesses that cheat or injure consumers (for more on this, click here).
What we need in America are state and federal court systems that are fair – and biased in no one’s favor. Unfortunately, the Chamber of Commerce’s latest propaganda piece shows we are far from that goal and, for some time, things have been getting worse. Big businesses’ own lawyers say that state court systems have turned increasingly in Corporate America’s favor since the “survey” began.
This needs to stop. Our courts systems need to turn back to being even-handed. That’s the only way justice can be done.
[Reprinted with permission of Mr. Bryant. Mr. Gaudet is a member of Public Justice, the organized chaired by Mr. Bryant.]
By Robert J. Gaudet, Jr.
Today, in a decision that is sure to delight the Argentine critics of Judge Griesa (and Argentina’s lawyers, one of whom has already said he is “very pleased”), a panel of three judges of the U.S. Court of Appeals for the Second Circuit reversed an August 29, 2014 order by Judge Griesa to expand the class definition of bondholders in Brecher v. Argentina, one of numerous class actions against Argentina.
On August 29, 2014, Judge Griesa had expanded the class, at the plaintiffs’ request, to include “all holders of Republic of Argentina European Medium Term Note Bond, with a coupon rate of 9.25% and a maturity date of July 20, 2004 (ISIN XS011 3833510)” without limitation as to time held. The Second Circuit held that this definition was too broad and violated the requirement that the class be “ascertainable.”
Today, the Second Circuit gave a puzzling hypothetical that, in its opinion, demonstrated that the new class definition was not ascertainable:
A hypothetical illustrates this problem. Two bondholders—A and B—each
hold beneficial interests in $50,000 of bonds. A opts out of the class, while B opts
in. Both A and B then sell their interests on the secondary market to a third
party, C. C now holds a beneficial interest in $100,000 of bonds, half inside the
class and half outside the class. If C then sells a beneficial interest in $25,000 of
bonds to a fourth party, D, neither the purchaser nor the court can ascertain
whether D’s beneficial interest falls inside or outside of the class.3 Even if there
were a method by which the beneficial interests could be traced, determining
class membership would require the kind of individualized mini‐hearings that
run contrary to the principle of ascertainability. See Charron, 269 F.R.D. at 229;
Bakalar, 237 F.R.D. at 64–66. The features of the bonds in this case thus make the
modified class insufficiently definite as a matter of law. Although the class as
originally defined by the District Court may have presented difficult questions of
calculating damages, it did not suffer from a lack of ascertainability. The District
Court erred in attempting to address those questions by introducing an
ascertainability defect into the class definition.
This hypothetical makes little sense. For instance, it assumes that it is possible that “A opts out of the class, while B opts in.” However, this is not even possible in a Rule 23(b)(3) class action, as Brecher v. Argentina was certified under Rule 23(b)(3). In such a case, bondholders are automatically members of an opt-out class unless they exclude themselves by opting out. There is no requirement or procedure by which any party “opts in.” The opt in procedure is a part of opt-in class actions brought under the Fair Labor Standards Act (and it is also a primary feature of class actions in many European countries, like Sweden and Italy, where the mechanism is rarely used) but it is not a part of a Rule 23(b)(3) class action. The Court’s hypothetical suggests a fundamental misunderstanding of the way a Rule 23(b)(3) class action functions even though the panel’s opinion may be correct in other respects.
The problem identified by the Second Circuit could be cured. For instance, the class definition could be adjusted to include owners of beneficial interests at a certain point in time, e.g., at the time of final judgment or settlement. Even this would be an improvement over the initial class definition that required bondholders to continuously hold their bonds from the date of class certification until the date of final judgment in order to be a part of the class. It appears the Second Circuit may wish for the parties to return to this original class definition although it is not entirely clear.
The Second Circuit’s decision is further puzzling because it seems to add a new requirement, on remand, that does not seem to have any direct relationship to the class definition, the issue that was on appeal. Specifically, the Second Circuit seems to say in today’s opinion that the parties must know make a reasonable estimate of class damages and, if they are unable to do so, then they must estimate damages for individual members of the class:
There remains the question of determining damages on remand. Given
that Appellee here is identically situated to the Seijas plaintiffs and this Court has
already addressed the requirements for determining damages in those cases, we
conclude that the District Court should apply the same process dictated by Seijas
II for calculating the appropriate damages:
Specifically, it shall: (1) consider evidence with respect
to the volume of bonds purchased in the secondary
market after the start of the class periods that were not
tendered in the debt exchange offers or are currently
held by opt‐out parties or litigants in other proceedings;
(2) make findings as to a reasonably accurate, nonspeculative
estimate of that volume based on the
evidence provided by the parties; (3) account for such
volume in any subsequent damage calculation such that
an aggregate damage award would “roughly reflect”
the loss to each class, see Seijas I, 606 F.3d at 58–59; and
(4) if no reasonably accurate, non‐speculative estimate
can be made, then determine how to proceed with
awarding damages on an individual basis. Ultimately,
if an aggregate approach cannot produce a reasonable
approximation of the actual loss, the district court must
adopt an individualized approach.
493 F. App’x at 160; see also Seijas III, 2015 WL 4716474, at *4 (repeating
instructions). The hearing will ensure that damages do not “enlarge plaintiffs’
rights by allowing them to encumber property to which they have no colorable
claim.” Seijas I, 606 F.3d at 59.
This latter part of the 10-page opinion is also puzzling because there is no apparent reason why an estimate of damages would be necessary at this stage of the proceedings. There is no settlement to discuss. There is no motion for judgment or any order of judgment on the docket. Hence, it is not necessary to estimate damages in Brecher at this moment, so it appears the Second Circuit panel decided issues that were not before it and that it may not be necessary for Judge Griesa to hold a hearing over at this stage.
The Second Circuit’s panel decision is available at this link: 2d Circuit – Sept 16 2015. It is unclear whether the plaintiffs will file a petition for rehearing by a full panel of the Second Circuit but that may be advisable since the panel opinion seems to misunderstand the functioning, e.g., of a Rule 23 opt-out class action.
Mr. Gaudet of RJ Gaudet & Associates LLC drafted the original complaint in Brecher v. Argentina when he was a lawyer at a previous law firm. He has not worked on the case since he resigned from that firm in 2007 and the expanded class definition that was reversed by the Second Circuit was not related to his work.
Lawyers Mr. Gaudet, Jenik Radon, and Tim Ashby currently serve as class counsel in a separate class action against Argentina, Barboni v. Argentina, in which they are assisted by English barrister, Dr. Ingrid Detter de Frankopan, of the United Kingdom, who is an expert in the field of international law.