Regulatory litigation in the European Union: does the U.S. class action have a new analogue?
b. Bottom-up and Top-down Regulatory Litigation
Once regulatory litigation has been framed as a means of addressing
risk, it is possible to distinguish between various types of risk. (137)
For example, some types of risks can be anticipated in advance while
others cannot. One type of regulatory litigation–that which operates
“top down”–focuses on “risks that have already come to
pass. In such instances, the law fills the regulatory gaps by providing
individuals the means to achieve compensation for their injuries….
[T]he legislature can do so either through the establishment of
administrative agencies or through the use of substantive law.”
In these sorts of cases, “courts become regulatory
instruments” (139) to the extent that they enforce various statutes
and administrative pronouncements. This sort of regulatory litigation is
quite common, and “[i]t is for this reason that some authors have
suggested that all litigation is regulatory and, in this sense, they are
One example of top-down regulatory litigation involves the European
regulation (141) on passenger rights, which gives airline passengers the
right to private compensation arising from delayed or cancelled flights.
(142) The risk of cancelled or delayed flights is already known and can
easily be anticipated to arise again in the future. Providing passengers
with a right to individual compensation serves as a means of regulating
the future behavior of industry actors, with the “penalty” of
a right to individual compensation acting as the catalyst for airlines
to take all reasonable steps to avoid or insure against cancelling or
delaying flights in the future. (143) Although the regulation does not
currently include the right to pursue claims collectively, that could
change as a result of procedures contemplated by the Resolution. (144)
While injuries arising from delayed or cancelled flights are easily
foreseeable, not all risks can be identified in advance. (145) This has
led to a second and more controversial type of regulatory litigation,
namely the “bottom-up … use of law by judges and litigants.”
(146) It is this type of regulatory litigation that is primarily at
issue in this Article.
Bottom-up regulatory litigation shares certain functional
attributes with top-down regulatory litigation, in that bottom-up
regulatory litigation, “[l]ike legislative efforts to regulate, …
aims to address risk.” (147) However, it does so in “a
different way,” using “the legal remedy or the settlement
equivalent in order to influence future, risk-producing behaviors. In
cases properly described as regulatory, the remedy is structured either
by a party or by the judge with the intent of altering future
behavior.” (148) Although there is some difference of opinion about
certain aspects of bottom-up regulatory litigation, the three critical
elements are: (1) intent, meaning “not only the desire to influence
behavior as the conscious object of the one who would regulate, but also
the desire to prevent some future, risk-producing behavior,” (2) a
pre-existing substantive norm which is to be enforced by “the
litigant, the judge, or the two acting in concert,” who
“intend to produce some action on the part of the target of
regulation because of the risk (and the litigant’s or judge’s
apprehension of the risk) that the target actor’s future behavior
will fall short of the relevant norm,” and (3) a rule, typically in
the form of a remedy, “that expresses the norm to the world and
attempts to limit the threats (risk) to that norm.” (149)
This definition of bottom-up regulatory litigation is quite useful.
(150) Not only does it identify a functional objective that cannot be
readily addressed by legislative or administrative bodies (i.e.,
unanticipated risk), it also provides a principled, predictable basis on
which such actions may be based (i.e., a pre-existing substantive norm
working in conjunction with a pre-existing rule or remedy). (151)
However, application of this standard in cases involving class and
collective relief can be somewhat problematic because the definition of
remedies has traditionally been considered to refer only to damages,
injunctions, and declaratory judgments, not the ability to proceed as a
Some people may see this issue as something of a moot point, given
the number of courts and commentators that have suggested that the
capacity to proceed as a class or collective is a type of remedy. (153)
However, there are other authorities that frame the ability to proceed
collectively as a species of right. (154) This is cause for some
concern, for although the elevation of a particular concept to the
status of a “right” allows that principle to trump or override
certain other laws or practices, a sharp distinction is often made
between rights and remedies. (155)
The debate between rights and remedies will be taken up more fully
later in this Article. (156) However, at this point it is sufficient to
note that concerns about whether and to what extent class or collective
relief constitutes a remedy need not bar class or collective actions
from being defined as a form of bottom-up regulatory litigation, since
traditional types of remedies–injunctions, damages, or declaratory
judgments–can be combined with class and collective relief in such a
way that a number of class actions fall within the definition of
bottom-up regulatory litigation. (157) Not only is this useful for
purposes of this Article, in that it allows both U.S. and possibly
European forms of class and collective relief to constitute a form of
regulatory litigation, but it is consistent with conclusions reached by
commentators under other sorts of analyses indicating that some, but not
all, class actions contain a regulatory element. (158)
A few examples based on Rule 23 of the Federal Rules of Civil
Procedure will serve to illustrate this point. (159) To begin with,
injunctions clearly constitute the kind of forward-looking remedy
contemplated by the definition of bottom-up regulatory litigation used
in this discussion. (160) Therefore, actions proceeding under Rule
23(b)(2) of the Federal Rules would qualify as bottom-up litigation,
since that rule provides for injunctive relief on a classwide basis.
Next, class requests for money damages are often said to constitute
a form of regulatory litigation, (162) based on empirical research
Despite their distaste for class litigation and their dismay about rising numbers of lawsuits, many corporate representatives ... said that ... class litigation had caused them to review financial and employment practices. Likewise, some manufacturers noted that heightened concerns about potential class action suits sometimes have a positive influence on product design decisions. (163)
However, it is important to identify precisely how this regulatory
effect comes about. (164) For example, it is possible to argue that the
high level of compensatory damages associated with a large class
constitutes a sufficient disincentive to those who would otherwise be
inclined to act in an unlawful manner, particularly in situations where
it is unlikely that individual compensatory suits would be brought in
the absence of class or collective relief. (165) However, experience
shows that there are times when large-scale compensatory relief will not
be sufficient to regulate wrongful behavior because the cost associated
with providing compensation is less than the cost of avoiding harm.
(166) In those cases, compensatory damages are an insufficient deterrent
to illegal behavior. (167)
The second and more likely alternative is that the regulatory
effect in cases involving money damages arises by combining the
class-expanding aspects of Rule 23 with various statutory or common law
means of imposing treble or punitive damages. (168) Various background
principles of law, such as the easy availability of contingency fees and
the broad scope of pre-trial discovery, also contribute to the deterrent
effect, since such measures not only allow class lawsuits to be brought
in the first instance but also increase opportunities for expanding the
size of the class, exposing other causes of action and/or providing the
means of prevailing on the merits. (169) Therefore, it is the
combination of these various factors–a broad class-expanding mechanism,
a substantive law that provides for damages multipliers and a variety of
pro-plaintiff principles of basic civil procedure–that provide not only
the incentive to bring damages class actions but also provide much of
the regulatory effect. (170) Given that one of these necessary
elements–money damages–clearly constitutes a type of remedy, this
species of class action falls squarely within the definition of
bottom-up regulatory litigation. (171)
Although these two types of class actions appear to act in a
regulatory manner, the same cannot necessarily be said of all forms of
large-scale legal relief used in the United States. For example, Rule
23(b)(1) of the Federal Rules of Civil Procedure allows parties to bring
class actions so as to avoid potentially inconsistent judgments or the
diminution of other parties’ rights. (172) Although these disputes
include some of the same elements seen in Rule 23(b)(3) cases–i.e., the
class-expanding mechanism and various litigation incentives as a matter
of basic procedural law–it is not clear whether damages multipliers
would always be available in these types of disputes. (173) While
plaintiffs could attempt to certify an individual damages dispute under
Rule 23(b)(1) or Rule 23(b)(2) simply as a means of avoiding the more
onerous notice provisions under Rule 23(b)(3), such efforts are less
likely to succeed given the U.S. Supreme Court’s recent decision in
Wal-Mart Stores, Inc. v. Dukes. (174) Therefore, cases arising under
Rule 23(b)(1) appear to focus more on concerns about fairness and
efficiency than on regulation, although a full functional or empirical
analysis could prove otherwise. (175)
Class actions are not the only type of large-scale litigation
available in the United States. Federal multi-district litigation (MDL)
(176) has been receiving an increased amount of attention over the last
few years (177) as a result of several recent decisions from the U.S.
Supreme Court that appear to curtail parties’ ability to seek
large-scale representative relief. (178) Although “MDL aggregation
is not exactly an alternative to class action” litigation, (179)
MDL nevertheless provides a solution to the problem of mass legal
injuries by combining various individual claims “involving one or
more common questions of fact” on an aggregative, rather than
representative basis. (180) This means that claims are combined only for
“coordinated or consolidated pretrial proceedings” (181) and
are subsequently disaggregated to address individual issues and provide
final disposition of the claims. (182)
In some ways, it might seem as if MDL cannot provide any regulatory
effect, since the judge hearing the consolidated matter is not providing
the ultimate remedy (i.e., injunctive, monetary, or declarative relief)
that would drive the defendant or other industry actors to alter their
future behavior. (183) However, bottom-up regulation can be based not
only on a rule or remedy, but also on “the settlement
equivalent” thereof. (184) Since aggregation under the MDL
framework can drive settlement in the same way that class certification
decisions do, MDL may be capable of acting as a regulatory device. (185)
Although this is an interesting proposition, more work, particularly of
a functional and empirical nature, needs to be done before any
conclusions can be made about how MDL operates in the U.S. regulatory
As the preceding suggests, U.S. class actions can be considered
regulatory even if the ability to proceed as a class is not considered a
remedy of itself. This discussion has also shown that it is impossible
to conclude that class or aggregative procedures fulfill a regulatory
function simply by virtue of the number of participants, since some
other factors must be present to create the necessary regulatory effect.
(187) This conclusion is important, since it suggests that the
procedures contemplated by the Resolution cannot provide a regulatory
effect simply by virtue of their collective nature. (188)
c. Substantive and Procedural Risk
The next question to consider is whether and to what extent a legal
system can or should allow unanticipated risk to be resolved through
bottom-up regulatory litigation and whether all sorts of unanticipated
risk should be considered in the same light. (189) This analysis is
important because what looks like an unanticipated risk in some legal
systems may be framed in other jurisdictions as a conscious choice to
leave those risks unregulated. In the latter situation, bottom-up
regulatory litigation would be jurisprudentially illegitimate, even if
it constituted an effective means of addressing such risks, because such
mechanisms would be contrary to that legal system’s institutional
Traditionally, European jurisdictions have resisted bottom-up
regulatory litigation on the grounds that “decisions on the
appropriate scope of regulatory protection” should “be left to
… politically accountable actors.” (191) Under this view,
regulatory litigation constitutes an illegitimate usurpation of
legislative or administrative authority because such measures allow
judges and litigants to operate in “the presence of regulatory
gaps” that are considered conscious “policy decisions on the
part of agencies and the legislature.” (192)
While that analysis may make sense in cases where the type of risk
at issue has been identified in advance (since the failure to regulate
in those situations obviously reflects a conscious policy decision on
the part of the democratically elected branches of government),
arguments about the judiciary improperly infringing on the legislative
prerogative carry less weight in situations where the risk is
unanticipated. (193) Indeed, it is difficult to say that courts and
private actors are acting in contravention to policy decisions made by
the legislature if the legislature never considered the matter in
When viewed in this light, bottom-up regulatory litigation appears
as less of “an ad hoc supplement to public law” (195) and more
of an essential element of a comprehensive regulatory regime. As such,
regulatory litigation can be viewed as consistent with, rather than in
conflict with, public forms of regulation, “[e]ven when public
enforcement is relatively robust,” since “private enforcement
may serve a complementary regulatory role in the achievement of various
substantive goals.” (196)
While this analysis may overcome some of the criticism aimed at
regulatory litigation, it may not be enough to overcome skepticism based
on the view that the substance of public regulation must be determined
by politically accountable actors. (197) However, those concerns can be
met through further refinements to the concept of unanticipated risk.
One of the seminal cases on U.S. class actions, Deposit Guaranty
National Bank v. Roper, holds that:
[t]he aggregation of individual claims in the context of a classwide suit is an evolutionary response to the existence of injuries unremedied by the regulatory action of government. Where it is not economically feasible to obtain relief within the traditional framework of a multiplicity of small individual suits for damages, aggrieved persons may be without any effective redress unless they may employ the class-action device. (198)
According to this decision, class relief developed as a functional
response to certain “injuries unremedied by the regulatory action
of government,” i.e., certain unanticipated risks. (199) However,
the risks at issue cannot relate to the type of injury, since the
three-prong test for regulatory litigation indicates that claims must be
made under a pre existing substantive norm. (200) Instead, the
unanticipated risk must be something other than substantive. (201)
Closer contemplation of Deposit Guaranty National Bank suggests
that the risk in question refers either to the scope of injury (such as
an unanticipated volume of harm) or to the nature of the injury (such as
an unexpectedly low value of each individual claims). (202) In other
words, the legislature anticipated a particular type of substantive harm
but did not anticipate the possibility that the standard method of
addressing the harm (i.e., bilateral litigation) would be incapable of
sufficiently deterring the behavior in question. Instead, certain
unexpected aspects of the injury generated the need to use a particular
procedural mechanism (i.e., class or collective techniques) to provide
an adequate legal response. (203) Because the unanticipated element here
relates to certain procedural needs, bottom-up regulatory litigation can
be said to provide a response to an unanticipated procedural risk.
While Deposit Guaranty National Bank suggests one type of
unanticipated procedural risk, (204) class and collective claims may
generate other types of procedural risks. For example, it is possible to
consider the likelihood of inconsistent judgments from the perspective
of risk, even though most discussions relating to large-scale litigation
appear to analyze inconsistent judgments under the rubric of procedural
fairness. (205) However, it can be said that inconsistent judgments
arise when the state has contemplated a particular type of substantive
harm but has not anticipated the magnitude of claims that would ensue
and the possibility that some of those judgments might be inconsistent
with one another. (206) As such, class and collective relief can be
viewed as providing an adequate, albeit unanticipated, procedural
response to a particular type of procedural risk.
Framing bottom-up regulatory litigation as a means of addressing
unanticipated procedural risk could resolve the concerns of those who
worry that regulatory litigation constitutes an impermissible
infringement on the proper domain of politically accountable actors
because procedural matters can be viewed as being more properly within
the scope of judicial rather than legislative or administrative
authority. (207) Furthermore, even this limited judicial power remains
subject to the oversight of democratically elected branches of
government because legislatures are enabled to enact subsequent
legislation or regulation that reverses the course of most types of any
regulatory litigation, if the elected officials find those decisions
problematic. (208) Indeed, legislative overrides have often been used in
the United States when the political branches believe the courts have
overstepped their bounds with regard to class relief. (209)
This dynamic interaction between the various branches of government
suggests that bottom-up regulatory litigation does not constitute a
private form of regulation, operating outside the scope of political
debate and discourse. To the contrary, the process appears highly
iterative, with the judicial, legislative, and executive branches
working responsively rather than in isolation.
If this is true, then the real debate is not about whether and to
what extent bottom-up regulation contravenes the will of politically
elected officials. (210) Instead, the focus is more on default
preferences (211) and where the risk of action (or inaction) should lie
as a matter of institutional design. (212) While this issue is beyond
the scope of this Article, it is well-covered by other commentators.
Framing bottom-up regulatory litigation as a means of addressing
unanticipated procedural risks also provides the means of responding to
other potential areas of concern. For example, some critics might claim
that remedy-based regulation does not provide sufficient predictability
to parties to allow them to alter their behavior to reduce the risk of
liability or obtain the necessary insurance. (214)
While predictability is of course important, that concern appears
to be met to the extent that regulatory litigation is based on both a
pre-existing substantive norm and a pre-existing rule or remedy. (215)
Because potential defendants are on notice that they may be subject to a
particular type of remedy if their action causes injury, they can take
adequate precautions so as to avoid or limit legal liability, (216) even
if the precise type of injury or scope (i.e., the unanticipated
procedural risk) cannot be anticipated. (217) Notably, defendants are
not responsible for all unanticipated risks, since bottom-up regulatory
litigation does not impose a system of strict liability, unless such an
approach is permitted under the applicable substantive law. (218)
Instead, the defendant in a remedy-based form of regulatory litigation
is only liable to the extent identified in the relevant substantive
d. The Nature of the Ability to Proceed as a Class or Collective
This Article’s concept of a regulatory remedy does not require
class or collective mechanisms to be considered remedial in nature.
(220) Instead, the requirements for bottom-up regulatory litigation can
be met in cases involving class and collective relief by combining
traditional remedies with large-scale litigation techniques and various
background principles of procedural law. (221) This approach is not only
useful in discussions under U.S. law, it is also helpful in analyses
involving European law, since the analytical framework does not reflect
a bias towards U.S. forms of collective justice. (222)
Although it is not necessary to delve more deeply into the nature
of class and collective procedures, it is worthwhile to do so briefly,
since differences in the way the ability to proceed as a group is
characterized may help explain why regulatory litigation is so difficult
for some people to accept in both the United States and Europe. (223) As
it turns out, the key issues appear to arise as a result of two
interrelated jurisprudential traditions, namely the longstanding
elevation of (1) rights over remedies and (2) substantive over
procedural law. (224)
First, some people appear to view bottom-up regulatory litigation
as less valuable or less legitimate because it appears to involve a
remedy rather than a right. (225) As Owen Fiss has noted, there is a
long and “complicated relationship between rights and
remedies,” based largely on the common (mis) perception that:
Rights are "the true meaning of ... constitutional values, such as equality, liberty, due process, or property...." Remedies are designed to "actualize" the constitutional value and incorporate considerations that are not principled corollaries of the constitutional value but rather are "subsidiary," "strategic," and "instrumental." Thus, remedies are "subordinate" to fights. They are not only subordinate, but also metaphysically segregated, for "rights operate in the world of abstraction, remedies in the world of practical reality."... Although Fiss wants to keep judges in the business of remedies, he worries that judges will distort the true meaning of constitutional rights by tailoring them to fit what effective remedies are available. Fiss fears that the purity of rights will be corrupted by the practicalities of remedies. (226)
Second, even if the ability to proceed as a group is considered a
right rather than a remedy, that right may be characterized as
“merely” procedural rather than substantive. (227) This can be
problematic, for although a growing number of commentators recognize
that procedure and substance are inextricably linked, (228) there
nevertheless appears to be a lingering perception that matters of
substance are more important than matters of procedure. (229) This may
be particularly true in the United States, where a number of recent
decisions from the U.S. Supreme Court have reputedly signaled
“It]he conversion of procedural rules from publicly created,
mandatory guarantors of procedural justice to default rules subject to
market forces.” (230) This is said to “alter the nature and
function of civil procedure at a basic level” by challenging
“the traditional conception of private enforcement as serving a
dual public and private role.” (231)
Although judicial discussions regarding the nature of the ability
to proceed as a class or collective have thus far been somewhat
unsatisfactory due to their highly formalistic nature, U.S. courts
currently appear to view the right as procedural rather than
substantive. (232) Commentators have taken a different view, suggesting
that it may be appropriate to consider the fight to proceed as a class
as substantive in nature, at least in some circumstances. (233) The
European Union appears poised to adopt a proceduralist interpretation,
based on language in the Resolution stating that “access to justice
by means of collective redress comes within the sphere of procedural
Consideration of this issue is still in its early days. However, as
the discussion goes forward, courts and commentators may wish to think
about whether rights really are distinct from remedies and whether it
would be possible to construe particular substantive rights as including
a right to a particular remedy. (235) Alternatively, it might be
possible to argue that certain procedural rights have been elevated to
the status of a substantive right. (236) While these propositions are by
no means universally accepted, (237) they do indicate areas for further
discussion and debate. (238)
Although European authorities may be predisposed to characterize
the right to collective relief as procedural in nature, (239) that right
may be given somewhat elevated status in practice, based on statements
in the Resolution that “in the European area of justice, citizens
and companies must not only enjoy rights but must also be able to
enforce those rights effectively and efficiently” (240) and an
increasing inclination in the European Union to provide procedural
rights with a high degree of protection and respect as a general
This emphasis on procedural justice is reflected most clearly in
the concept of an effective remedy, which is explicitly protected as a
matter of national, international, and European law. (242) Thus, for
example, Article 13 of the European Convention on Human Rights states
that “[e]veryone whose rights and freedoms as set forth in this
Convention are violated shall have an effective remedy before a national
authority notwithstanding that the violation has been committed by
persons acting in an official capacity.” (243) Article 47 of the
Charter of Fundamental Rights of the European Union similarly states
that “[e]veryone whose rights and freedoms guaranteed by the law of
the Union are violated has the right to an effective remedy before a
tribunal in compliance with the conditions laid down in this
Article.” (244) Although no court has yet interpreted the
“effective remedy” language of these provisions in the context
of collective redress, it appears likely that the term will be
interpreted expansively, since such procedures are often considered to
constitute a necessary procedural response to a particular type of
While it is important to determine whether the right to proceed as
a class or collective is substantive or procedural in nature, an equally
critical concern involves whether the right should be considered
private, and thus held by an individual, or public, and thus held either
by the group of persons asserting the claim or by society at large.
(246) The answer to this latter question can determine whether certain
“procedural contracts are able to sever the tie between
compensation and deterrence interests, thus creating a choice for the
individual between the public and private interest in litigation.”
(247) The most well-known and controversial of these efforts involves
contractual waivers of class and collective relief. (248)
Waivers of class remedies are, of course, very much at the cutting
edge of U.S. law right now as a result of the recent Supreme Court
decision in AT&T Mobility LLC v. Concepcion, which upheld a
contractual waiver of class remedies that was placed in an arbitration
agreement. (249) However, that decision failed to address several
important issues regarding the nature of the ability to proceed as a
Although the highly individualistic economic analysis carried out
by the majority suggests that several justices view the ability to
proceed as a class as entirely private in nature, there is no discussion
about the effect private waivers might have on larger regulatory
concerns, (251) despite a significant amount of commentary cautioning
against letting those with “superior economic power” (252)
take “unilateral control over designing a dispute system for
conflicts to which [they are] a party” (253) and create a form of
private dispute resolution that “disserve [s] fundamental social
interests–while serving all too well the legal profession’s narrow
self-interest.” (254) However, some lower federal courts have
stepped into the gap left by the Supreme Court, noting that the ability
to proceed on a collective basis cannot be waived in certain
circumstances, such as those involving the Fair Labor Standards Act
(FLSA), since collective relief provisions “are integral to [that
statute’s] function and structure.” (255)
When considering waivers of class and collective relief, it is
useful to reflect on the possible ramifications of a decision to allow
private re-ordering of regulatory procedures in jurisdictions that use
bottom-up regulatory litigation as an integral part of their regulatory
systems. (256) Four basic outcomes appear possible.
First, the widespread limitation or elimination of the right to
proceed as a class or collective could lead to public actors being
required to increase public enforcement of various laws at a rate equal
to the amount of private enforcement that has been lost through the use
of waivers or similar devices. (257) This alternative could have a
potentially significant effect on the public purse, since public
entities that engage in regulatory litigation will need more resources
to produce higher levels of performance. (258) If waivers occur
infrequently or are analyzed on an individual, case-by-case basis, this
additional burden on public agencies may seem negligible. If, however,
the use of class waivers becomes routine or widespread, either generally
or within a specific industry, then the cost of replacing private
enforcement with public enforcement could be substantial. (259)
Furthermore, because public actors may not be as effective as private
actors in regulating some types of behavior, additional expenditures may
be needed in order to bring public entities up to the necessary standard
of competence. (260)
Second, curtailing the ability to proceed as a class or collective
could lead to public actors being expected to fill the gap left by the
departure of private regulators, even though no additional resources are
provided to the relevant agencies. This scenario would likely lead to
under-deterrence of wrongful behavior, since public bodies cannot be
expected to achieve more results without a concomitant rise in the
amount of resources available to them. (261) Although public agencies in
both the United States (262) and Europe (263) have often had to make do
with very little in the way of resources, shortages in public funding
may increase as the global economy works its way out of the recent
Third, limitations on the right to proceed as a class or collective
could lead legislative or administrative bodies to increase regulation
ex ante so as to eliminate the need for regulatory litigation ex post.
(264) While the regulations in question could simply reflect more or
more detailed provisions of the same types that are now in place, the
changes could also be different in kind. (265) Thus, for example,
private regulatory remedies relating to mass torts could be replaced by
criminal liability for individual and corporate tortfeasors (266) or by
social insurance programs that eliminate the need for wrongdoers to pay
compensatory damages. (267)
Fourth, elimination of the right to proceed as a class or
collective could inspire legislators to reinstate private forms of group
relief at previously existing levels, effectively superseding any
judicial decisions permitting private waiver of class or other types of
regulatory remedies. (268) Regulatory litigation often involves this
kind of iterative process wherein the legislature and judiciary mutually
monitor each other’s actions, so it would not be surprising to see
some form of legislative action in response to certain types of judicial
decisions. (269) Indeed, such efforts have already been seen in the wake
of the U.S. Supreme Court decision in AT&T Mobility.” (270)
Given these alternatives, some critics may find regulatory
litigation less problematic than they originally believed. (271)
Furthermore, these kinds of analyses demonstrate the importance of
considering regulatory litigation holistically, as a matter of
institutional design, rather than simply evaluating the device on an
individualistic basis, devoid of context. (272)
2. Specific Needs Giving Rise to Regulatory Litigation
Given the benefits of a contextual analysis, it is perhaps
unsurprising that the next step of this discussion puts bottom-up
regulatory litigation into a practical, functional framework by
identifying the types of situations where such litigation might be most
necessary and appropriate. Previous analysis of this issue has been
somewhat unsatisfactory, as demonstrated by suggestions that litigation
might be considered “regulatory by virtue of the number of
participants, [or] the size or nature of the remedy.” (273) The
problem with that approach is that it could be used to argue that all
forms of large-scale litigation should be considered regulatory, thus
reducing the analysis about the situations in which regulatory
litigation is most appropriate to a simple inquiry as to the
circumstances in which class or collective redress is permitted as a
matter of national law. However, this methodology cannot be correct,
since not every form of class or collective relief is regulatory in
Therefore, other factors must be considered. Since regulatory
litigation arises as a “stopgap … to protect individual citizens
from risk,” (275) the most appropriate inquiry would be to identify
how best to identify and address unanticipated risk from a functional
perspective. (276) As it turns out, there are three instances when
regulatory litigation might be particularly appropriate as a matter of
a. Limitations on Public Bodies
First, regulatory litigation may be necessary in cases where
“limitations on public bodies … circumscribe their effectiveness
in achieving regulatory goals.” (277) Because public regulators are
unable to achieve anticipated or optimal levels of enforcement on their
own, class or collective relief can act as a supplement to public
enforcement mechanisms. (278)
Public entities can experience various types of limitations,
although the most obvious is underfunding. (279) Scarce public resources
have long been “the rule, not the exception,” (280) in the
United States, which may be one reason why class actions have become so
prevalent in the U.S. However, European institutions also appear to be
increasingly “overtaxed and under-resourced,” suggesting that
a need for regulatory litigation may be on the rise in the European
Union. (281) This need for private means of enforcement in Europe may
increase further as a result of the recent financial crisis. While it
would be premature to suggest that there is a causal connection between
the increase in collective redress in the European Union over the last
ten years and the recent challenges in public funding, such a conclusion
makes some intuitive sense. (282)
b. Informational Disadvantages
Second, regulatory litigation may be necessary in situations where
public authorities suffer from “informational disadvantages”
in comparison to private citizens. (283) Informational asymmetries can
arise in a variety of ways. For example, the tendency toward
“public under-investment in information” can result in
agencies holding sub-optimal levels of information. (284)
As a result, “the best sources of information about private
wrongs are often the parties themselves.” (285) This may be
particularly true in cases where regulatory bodies are geographically
distant from the place of legal injury, since that “not only limits
their ability to access or be accessed by those who suffered alleged
harm but also reduces their ability to even know that such harm occurred
in the first place.” (286) Problems could also arise in situations
where the regulatory body is particularly large or politically
decentralized, as might occur in the multi-tiered structure found in the
European Union. (287) In such circumstances, private forms of
regulation, including class or collective suits, might provide a better
means of addressing the legal injury. (288)
Access to information may vary according to the type of injury at
issue. Thus, for example, individual employees may be better placed than
public regulators to identify violations of the Fair Labor Standards
Act, since employees “will usually have the best information
regarding underpayment of wages or nonpayment of overtime.” (289)
However, unlawful behavior in the realm of consumer finance may not be
as obvious to individual users “who are looking at a single credit
card statement” and therefore are less able to identify
“practices like predatory lending or the charging of usurious
interest rates.” (290)
Private individuals’ access to information may also depend on
certain background principles of law that exist outside the regulatory
scheme. (291) For example, litigants in U.S. courts can obtain a great
deal of information from both parties and third parties through the
discovery process. (292) Although judicial discovery was not created
with regulatory litigation in mind, the device can be used to facilitate
private enforcement of public laws in the United States. (293)
The situation is very different in the European Union. Not only is
the scope of discovery in litigation much narrower (to the extent the
concept of pre-trial production of documents and information even
exists), but most litigants are required to have their evidence in hand
prior to filing their lawsuits. (294) Because private individuals based
in the European Union have far less access to information as a result of
the litigation process, they may be unable to utilize regulatory
litigation as effectively as parties suing in U.S. courts. (295)
Notably, the Resolution has already recommended against the adoption of
any special measures that might increase access to evidence in cases
involving cross-border collective redress, stating that:
[C]ollective claimants must not be in a better position than individual claimants with regard to access to evidence from the defendant, and each claimant must provide evidence for his claim; an obligation to disclose documents to the claimants ("discovery") is mostly unknown in Europe and must not form part of the horizontal framework. (296)
Third, private forms of relief may be necessary in cases where
“public regulatory bodies are potentially subject to capture by
well-capitalized or politically influential interest groups.” (297)
While the compromises necessary in the political process suggest that no
one interest group will ever entirely capture a particular agency,
“the disproportionate influence of well-organized interest groups
is disturbing” to a number of commentators in the field. (298)
Certainly industry groups were seen to have asserted a great deal of
political pressure on the question of collective redress in Europe
during the public consultation process undertaken by the European
Commission prior to the adoption of the Resolution. (299)
Interestingly, some public choice theorists suggest that courts are
now subject to the same concerns about “capture” of special
interests as other public institutions. (300) This phenomenon may
perhaps be most apparent in cases heard in the U.S. Supreme Court, given
that many of the same interest groups that are active in legislative
lobbying now undertake judicial “lobbying” through use of the
amicus process. (301)
Nevertheless, many commentators take the view that regulatory
litigation is preferred over more traditional means of regulation
precisely because judges are not subject to capture. (302) Other
observers go even further, suggesting that class and collective relief
expands democratic opportunities because “class actions may
increase the political expression of larger groups” that are
disadvantaged during the traditional lobbying and legislative process.
(303) Other experts suggest that “the threat of private actions can
increase the expected probability that a punishment will be imposed
relative to a purely public regime.” (304)
Focusing the regulatory analysis on functionally based criteria
such as the availability of resources, informational advantages, and the
possibility of capture provides useful benefits to lawmakers in both the
United States and Europe. (305) Not only do these types of operational
considerations provide useful information for states considering the
role of bottom-up regulatory litigation in their own domestic systems,
they constitute a neutral means of comparing the usefulness of
regulatory litigation across jurisdictional lines. (306) Therefore, as
the European Union works to develop its coherent approach to
cross-border collective redress, drafting authorities should be aware of
the potentially heightened need for regulatory litigation in situations
where state actors are either unwilling (because of capture) or unable
(because of insufficient resources or informational disadvantages) to
engage in public forms of regulatory litigation. (307) However, it
remains to be seen whether the procedures proposed in the Resolution are
likely to result in some form of regulatory litigation. (308) This issue
is considered in the next Part. (309)
IV. REGULATORY LITIGATION IN EUROPE
A. Current Forms of Regulatory Litigation
Applying the analysis outlined in Part III to issues of European
law, it appears likely that the European Union has already adopted a
top-down form of regulatory litigation, which “allows the
government to address risks that have already come to pass.” (310)
Indeed, the European regulation on passengers’ rights seems to fall
firmly within the definition of this type of procedure. (311)
The more difficult question is whether the European Union has
adopted or is adopting a form of bottom-up regulatory litigation as a
result of its coherent European plan for cross-border collective relief.
(312) This is an intriguing question, for although there is some
evidence suggesting that European authorities consider some of the
individual Member States’ existing collective redress schemes to be
regulatory in nature, (313) there has been little public discussion thus
far about whether and to what extent European authorities intend or
expect the new inter-European form of collective redress to do the same.
While commentators have considered the issue, their opinions are
somewhat inconsistent. For example, some observers believe:
that European regulatory styles are converging, but not on a system of adversarial legalism, as the Americanization literature suggests. Rather, European systems are converging on a regulatory process that combines tough, legalistic administrative enforcement of government rules, extensive public pressure on industry actors to self-regulate, and low levels of litigation.... (315)
Other experts take the view that some European forms of collective
redress “comprise claims that are essentially regulatory in
character, enabling collective action to defend the collective rights of
consumers in specified circumstances.” (316)
One reason for these differing perspectives may relate to the fact
that the law on the books does not necessarily reflect the law in
practice. (317) Although there are numerous pieces of European
legislation providing for collective redress, (318) those devices are
neither well known nor well used. (319) Therefore, a formalist analysis
might suggest one level of support for bottom-up regulatory litigation
while a functional analysis showed another. (320)
While it would be possible to conduct a retrospective review of the
various types of collective redress that are currently available under
European law to determine whether any of those devices constitute
bottom-up regulatory litigation, that exercise seems somewhat futile in
light of the scale of reform proposed by the Resolution. (321)
Therefore, the following analysis focuses on whether and to what extent
the Resolution contemplates the creation of a bottom-up form of
regulatory litigation, based on two separate factors: the enunciated
purposes of the Resolution and the proposed procedures. (322) The first
of these elements will identify any regulatory effects that are intended
by the European Parliament while the second will pinpoint any unintended
regulatory effects as well as the extent to which the proposed
procedures are likely to fulfill the European Parliament’s stated
B. The Resolution–Enunciated Purposes
1. Compensatory and Efficiency-Related Rationales
On first glance, the Resolution might appear to be more concerned
with compensation and efficiency than with regulation, based on
statements indicating that “victims of unlawful practices–citizens
and companies alike–must be able to claim compensation for their
individual loss or damage suffered, in particular in the case of
scattered and dispersed damages, where the cost risk might not be
proportionate to the damages suffered.” (324) Other provisions
state that “bundling claims in a single collective redress
procedure, or allowing such a claim to be brought by a representative
entity or body acting in the public interest, could simplify the process
and reduce costs for the parties involved.” (325) Similar language
notes that while “public enforcement is essential to implement the
provisions of the Treaties, … fully achieve the goals of the EU and
… ensure the enforcement of EU competition law,” (326)
“public enforcement to stop infringements and impose fines does not
of itself enable consumers to be compensated for damage suffered.”
These statements clearly indicate that the European Parliament is
promoting a form of cross-border collective redress because such
measures constitute an effective means of addressing certain types of
large-scale legal injuries. (328) In so doing, the European Parliament
upholds the principles enunciated in national, international, and
European law requiring parties to have recourse to an effective remedy.
(329) However, the right to an effective remedy can be justified on both
regulatory and non-regulatory grounds. (330) Therefore, the mere
adoption of collective procedures as a means of providing an effective
remedy does not necessarily lead to the conclusion that the collective
mechanisms proposed in the Resolution are meant to operate as a form of
bottom-up regulation. (331) More must be shown before that conclusion
can be reached.
2. Public Regulatory Rationales
A second set of statements found in the Resolution are regulatory
in nature, but only to the extent that those provisions are meant to
establish a legal or factual justification for European intervention
(i.e., regulation) in the area of cross-border collective redress. (332)
Rather than describing how collective redress might provide some type of
regulatory effect, these statements discuss issues such as the
principles of subsidiarity and proportionality (which identify the legal
parameters within which European authorities must act), (333) “the
integration of European markets,” (334) and the fragmented and
incomplete nature of national and European legislation concerning
collective redress. (335)
Because these references are meant only to demonstrate that
European authorities are acting in a manner that is consistent with
their powers under the relevant treaties, it is not surprising that
these provisions do not appear sufficient to suggest that the Resolution
is introducing a form of bottom-up regulatory litigation into European
law. (336) Instead, the necessary language must be found elsewhere.
3. Private Regulatory Rationales
As it turns out, there is a third set of statements that appears to
suggest that the European Union is intending to adopt a form of
bottom-up regulatory litigation as a matter of institutional design. For
example, at one point the Resolution indicates that “in some Member
States the overall performance of the existing consumer redress and
enforcement tools designed at EU level is not deemed satisfactory, or
such mechanisms are not sufficiently well known, which results in their
limited use.” (337) This reference to “enforcement tools”
appears to indicate that something more than mere compensation or
efficiency is at work. (338) Indeed, that statement seems to suggest
that private litigation is being used to enforce public laws, either
through statutory design (as in top-down regulatory litigation) or
through the provision of remedies (as in bottom-up regulatory
Additional evidence of regulatory intent is seen in statements that
“when a group of citizens are victims of the same infringement,
individual lawsuits may not constitute an effective means of stopping
unlawful practices or obtaining compensation, in particular if the
individual loss is small in comparison with the litigation costs.”
(340) While this language mentions compensatory and efficiency-oriented
aims, the reference to “stopping unlawful practices” appears
to suggest a desire to deter certain types of future behavior. (341)
This suggests the intention to manage risk through litigation, a
hallmark of regulatory litigation. (342)
Finally, and perhaps most conclusively, the Resolution indicates
that “national and European authorities play a pivotal role in the
enforcement of EU law, and private enforcement should only supplement,
but not replace, public enforcement.” (343) Additional language
mentions the “need to improve injunctive relief remedies”
(344) so as to protect “both the individual interest and the public
interest.” (345) These references to the public interest and the
role of private litigation as a supplement to public means of regulatory
enforcement again suggest an intention to adopt regulatory litigation as
a matter of institutional design, since those two elements are central
to the common understanding of regulatory litigation. (346) Therefore,
the Resolution appears to reflect a clear and significant shift away
from the traditional perception that European jurisdictions do not
engage in regulatory litigation. (347)
C. The Resolution–Proposed Procedures
One of the aims of this Article is to determine whether and to what
extent the procedures outlined in the Resolution will allow an effective
form of regulatory litigation to develop in the European Union. (348)
Full analysis of this issue is impossible, since the Resolution does not
describe the final procedures that will be used to create a coherent
European approach to cross-border collective redress. (349) However, the
European Parliament has made a number of preliminary suggestions in this
regard, and it is possible and indeed helpful to evaluate the efficacy
of these initial proposals, since that will provide practical assistance
to European authorities charged with creating a final set of procedures.
Although the European Union, as a second-generation user of
collective redress mechanisms, is perfectly placed to learn from the
mistakes from other legal systems, it is possible to overcompensate for
the errors of others. (351) Indeed, this may be what is happening in the
European Union, since it quickly becomes apparent that the
Resolution’s approach to cross-border collective redress is more
reactive than proactive, with the clear intention being “that
Europe must refrain from introducing a US-style class action system or
any system which does not respect European legal traditions.” (352)
Not only are many of the procedures framed in negative, rather than
positive, terms, but the document focuses almost entirely on issues that
are hotly debated in the United States rather than on developments that
arise under the law of the European Union or the individual Member
The Resolution’s procedural proposals include several
different elements. (354) First and foremost, the European Parliament
indicates that “the European approach to collective redress must be
founded on the opt-in principle,” a feature that clearly renounces
U.S.-style opt-out class actions. (355) Other facets of the Resolution
also demonstrate a rejection of U.S. principles and the abusive
litigation culture that is commonly associated with the U.S. approach to
mass claims. (356) Therefore, the Resolution requires members of the
collective to be identified prior to the bringing of the claim, creates
a procedure to allow a judge to conduct a preliminary analysis on
admissibility, and allows for retention of the individual right to
assert one’s claim. (357) Concerns about background principles of
American law are also apparent in prohibitions on contingency fees,
production of documents (discovery), and punitive damages. (358) The
Resolution also rejects the U.S. procedural approach to attorneys’
fees by explicitly retaining the European-derived loser-pays principle.
This is not to say that the Resolution does not include some
elements that are reminiscent of U.S.-style class actions. (360) For
example, the Resolution recommends that any future form of cross-border
collective redress operate on a horizontal, rather than sectoral
(subject-specific), basis, as has been used by the European Union in the
past. (361) While this move makes the proposed procedures more similar
to the trans-substantive approach embodied in Rule 23 of the Federal
Rules of Civil Procedure, the shift is considered appropriate because
“collective redress mechanisms available within the EU have not
generated disproportionate economic consequences.” (362) This
decision to adopt a horizontal approach is consistent with the example
set by other legal systems that have expanded the availability of class
or collective redress after an initially positive experience. (363)
European authorities are in a difficult position because
“Europe seeks to strike a precarious balance–to facilitate the
closure of related civil claims in the aggregate but, at the same time,
not to ‘enable’ litigation.” (364) Numerous commentators
have suggested that the European desire to avoid an abusive litigation
culture could lead European authorities to design a system of collective
redress that is so restrictive it curtails the effectiveness of
large-scale litigation as a regulatory and compensatory device. (365)
Problems arise with respect to several of the proposed procedures,
beginning with the recommendation that European authorities adopt an
opt-in, rather than an opt-out, mechanism. (366) This choice was driven
by a number of factors, not the least of which was the fact that opt-out
procedures are considered constitutionally suspect in several European
Member States. (367)
While this decision is a perfectly legitimate exercise of public
policy, the functional ramifications cannot be ignored. For example,
opt-in procedures tend to result in smaller groups than opt-out
procedures, thereby reducing the deterrent (i.e., regulatory) effect of
the device in question. (368) Although the number of plaintiffs is
related to some extent to the preferred default principle (i.e., whether
plaintiff inaction should work to increase or decrease class size),
opt-in actions’ smaller size is also the result of certain
logistical difficulties associated with creating an opt-in class. (369)
European authorities developing the new cross-border collective redress
mechanism need to be aware of these sorts of pragmatic concerns and, if
necessary, address them so as ensure that any procedures that are
adopted provide the desired regulatory effect free from any unintended
A second potential problem involves the Resolution’s
prohibition on punitive and exemplary damages. (371) This provision is
on constitutional concerns expressed by various Member States, in
this case, regarding the way in which punitive damages blend private and
public (i.e., criminal law) concerns. (372) Again, the decision to
exclude punitive damages is entirely appropriate from a public policy
perspective. However, numerous commentators have suggested that caps on
damages in large-scale litigation reduce the regulatory value of class
and collective actions, which suggests that European authorities should
consider whether the coherent European approach to cross-border
collective redress needs to adopt special mechanisms to counteract the
reduction in regulatory effect caused by the limitation on damages.
A third problem area involves funding mechanisms. (374) Contingency
fees are strongly disfavored in Europe, and although some Member States
allow third party litigation funding to fill this particular gap, the
availability of these alternative funding mechanisms varies from state
to state. (375) The Resolution takes no position on this issue, leaving
the matter of funding to the individual Member States to decide. (376)
While European authorities and individual Member States are fully
entitled to disallow third-party and contingency-fee funding as a matter
of public policy, that decision must be made subject to the recognition
that the absence of any special funding devices “poses huge
challenges for the effective implementation of class actions” and
other collective mechanisms. (377) Indeed, some commentators have
concluded that “partial compensation of victims and large profits
for the class counsel, far from being a side-effect [of U.S. class
litigation], are actually a necessary condition for reallocation of the
costs and risks associated with the legal action.” (378)
The fourth and final issue involves fee-shifting provisions.
Loser-pays rules can limit the ability of class and collective relief to
act as a regulatory agent, since plaintiffs in a large-scale litigation
often cannot afford to pay for respondents’ legal fees and costs
and may therefore decide not to bring the case in the first place. (379)
As a result, some jurisdictions mitigate the harsh effect of the
loser-pays principle in cases involving the public interest so as to
avoid this chilling effect. (380) The Resolution indicates that
loser-pay rules should apply in cases involving cross-border collective
redress, but does not discuss how those principles should be applied and
whether any adjustments can or should be made to soften the effect of
the loser-pays rule. (381) Again, this is an issue that European
authorities should consider so as to make sure that the procedures they
adopt have the desired regulatory effect.
D. Dispute Resolution Design Theory in the European Context
When considering how best to structure the European approach to
cross-border collective redress, European authorities should take
advantage of recent advances in dispute system design (DSD) theory so as
to create “an effective, efficient, and fair dispute resolution
process based upon the unique needs of a particular system.” (382)
Although DSD originated in the field of alternative dispute resolution,
DSD theory has subsequently been used in a wide variety of contexts,
including international investment arbitration, international law,
international mass claims processes, federalism, and the rule of law.
(383) While a full DSD analysis is beyond the scope of this Article,
(384) the first step involves a functional analysis, which is consistent
with the methodological approach that has been used herein. (385)
A DSD-oriented functional analysis yields “operational
criteria” that can and should be considered in any effort to create
or amend procedures associated with bottom-up regulatory litigation.
(386) These criteria “seek to better guide courts, legislatures,
and administrative agencies in tailoring mechanisms of private
enforcement to the particular exigencies of the regulatory scheme and
the potential private-party regulator.” (387) Therefore, when
considering the proposals made in the Resolution and evaluating the
confines of any future procedures regarding a coherent system of
cross-border collective redress, European authorities should keep the
following issues in mind. (388)
1. Allowing regulators with superior information to act first
First, “all things being equal, enforcement mechanisms should
be entrusted to, and tailored to the needs of, the regulator with
superior information relevant to potential wrongdoing.” (389) The
party chosen to act as regulator not only needs to have the best access
to information, but also sufficient incentive to use that information in
an appropriate manner. (390)
Public entities have an operational advantage, and thus should be
the regulator of choice, in cases where the relevant information is
particularly voluminous or complex or where a comparative analysis is
necessary. (391) Conversely, private actors appear to be better
regulators in situations where they are geographically proximate to the
cause of the harm or where the wrongdoing is aimed toward private
individuals or persons operating in a particular marketplace or similar
type of closed environment. (392)
This analysis suggests that the horizontal approach advocated by
the European Parliament may not be the best way to proceed, since it
appears to contemplate the adoption of a single procedure applicable
across multiple subject matter areas and therefore may not take into
account differences relating to access to information. (393) Indeed,
this type of trans-substantive approach has caused some difficulties in
the United States in the past. (394) However, the Resolution suggests
that some degree of procedural differentiation might be available in
some cases, such as those involving follow-on actions in the competition
law context. (395) This appears to be a very good suggestion, given that
follow-on actions equalize informational asymmetries by allowing private
individuals to use information gleaned during a public enforcement
process in an action for individual compensatory damages. (396)
This is not to say that European authorities should retain a
sectoral approach, since the current system of subject matter-specific
relief has already proven problematic. (397) However, U.S. difficulties
with a trans-substantive mechanism suggest that some sort of middle
course should be charted. (398)
2. Avoiding over- and underdeterrence
Second, those who are involved in devising new forms of regulatory
litigation need to ensure that they are creating the right regulatory
balance. This could prove particularly difficult for European
authorities charged with creating a coherent European approach to
cross-border collective redress, given the various challenges associated
with transnational regulatory litigation. (399) However, the task is
facilitated somewhat by the fact that the European Union has the
political authority to operate on a regional basis, at least in certain
matters, and therefore is operating in a manner that is somewhat (though
not completely) analogous to a national authority in a closed legal
When considering the various procedures that could be used to
establish a form of regulatory litigation, lawmakers must navigate
between the Scylla and Charybdis of over- and underdeterrence.
Overdeterrence can occur when the “mechanisms of private
enforcement combine vis-a-vis the enforcement of a particular
substantive law to create excessive or duplicative liability that is
vastly disproportionate to the underlying harm.” (401) Numerous
commentators have expressed concern about situations where “a
particular mechanism of enforcement in a specific regulatory context too
easily permits private parties to extra settlement values either for
meritless claims or for conduct that the relevant legislature has not
even deemed wrongful.” (402) Instead, “private enforcement
mechanisms” need to “be integrated with other regulatory
efforts” to provide “the complete range of remedies provided
in a given scheme” while still being “tailored appropriately
so as not to generate over-remediation.” (403)
Although opponents to regulatory litigation often focus on the
issues associated with overregulation, underdeterrence can be as much of
a problem as overdeterrence. (404) Indeed, commentators have already
expressed concern that the proposals outlined in the Resolution are too
severe and will lead to a collective redress mechanism that provides
little, if any, regulatory value. (405)
When considering both over- and underdeterrence, it is important to
do so from a functional perspective, since what may appear to be a
useful mechanism on the books may not be used in practice with any
frequency or efficiency. (406) Indeed, this has been the problem with
many of the collective redress mechanisms that are currently in place at
the European and Member State level. (407)
3. Using private litigation to address harm not prevented through
Finally, in some fields, “it is implausible to ask regulatory
bodies to craft ex ante measures that anticipate all future harm or to
close every potential compliance loophole, at least without drastically
over-regulating on the front end so as to foreclose or discourage market
entry in the first place.” (408) Indeed, the need to address
unanticipated risk is one of the primary reasons why bottom-up
regulatory litigation developed in the first place. (409) Several areas
of particular operational concern have already been identified as likely
candidates for regulatory litigation in the European Union. (410)
It is often said that regulatory litigation is less appropriate in
situations where legislative or administrative bodies have either
refused to act or have provided for more traditional forms of
regulation, since that demonstrates a desire to reserve those particular
subject matter areas for public forms of regulation. (411) However, some
areas of regulatory activity “are characterized by historical
levels of significant underenforcement, thus necessitating private
enforcement mechanisms to achieve regulatory goals.” (412) In those
cases, private litigation may act as an appropriate supplement to public
forms of regulation. (413)
Regulatory litigation is an extremely controversial subject in both
the United States and Europe. (414) While this Article has set aside the
question of whether litigation constitutes the best means of regulating
certain types of activity, (415) the discussion reflected herein
demonstrates how difficult the concept of regulatory litigation is to
define as a matter of both theory and practice. (416) Additional
challenges arise in international and comparative contexts, since
different countries not only adopt different views about the propriety
of using litigation as a means of regulation, but also embrace different
procedural means of effectuating those regulatory aims. (417)
Although the term “regulatory litigation” encompasses a
variety of different procedures, this Article has focused on those
involving class and collective disputes. (418) While large-scale
litigation techniques provide a useful response to many of the problems
associated with mass legal injuries, such mechanisms can trigger both
regulatory and procedural mismatches when used to address multinational
Analysis of regulatory issues in the transnational context is
becoming more and more challenging, given the wide and increasing
diversity of large-scale litigation methods currently in use around the
world. (420) Longstanding antipathies towards U.S.-style class actions
often create additional difficulties, (421) since the desire to
distinguish new procedures from U.S. class actions can lead either to a
failure to recognize the regulatory potential of a particular procedure
(resulting in unintended distortions to the regulatory equilibrium) or
to a conscious effort to limit the availability of class or collective
relief (resulting in a reduction in the regulatory value of the
procedure, perhaps even to the vanishing point). (422)
Although a final conclusion cannot be reached until European
authorities have determined the precise parameters of the proposed
pan-European approach to cross-border collective redress, it appears
highly likely that the procedures outlined in the Resolution will
ultimately result in a new European form of bottom-up regulatory
litigation. (423) If this is indeed the case, then European authorities
need to proceed carefully, since there are signs that several of the
procedures that are currently being proposed may unintentionally
diminish the regulatory effectiveness of the collective redress
mechanisms that are to be adopted. (424) Fortunately, there is still
sufficient time to reverse any trend in that regard, since the drafting
and consultation process has only just begun. (425) While there are a
number of ways of responding to the various concerns, this Article has
provided several suggestions regarding the areas in which regulatory
litigation might be most appropriate as a functional matter, (426) as
well as the ways in which the proposed procedures might be improved.
(427) Although this discussion has focused extensively on European
developments, there is much that American audiences can gain from this
analysis. For example, this Article provides U.S. courts with a better
understanding of how the regulatory litigation process works in the
United States and other countries, thus facilitating judicial analyses
regarding domestic and global class actions. U.S. legislators also
obtain a number of benefits, ranging from an alternative view on how
group litigation might proceed in domestic cases (which might assist
ongoing debates regarding class action reform in the United States) to
additional insights into issues relating to transnational regulation
(which might inspire increased attention to treaty negotiations in
certain areas of law).
This Article also contains useful lessons for parties, courts, and
lawmakers outside the United States and the European Union, since the
analytical methods developed herein can be used in other jurisdictions
to help improve the understanding of how regulatory litigation might
operate at home and abroad. Even if some or even most states decide not
to adopt regulatory litigation into its domestic legal system, it is
useful to have an increased international appreciation for the
possibilities and pitfalls of transnational regulatory litigation, since
that might lead to international efforts to either increase the
effectiveness of such lawsuits (which might occur through the adoption
of formal or informal procedural protocols such as the ones currently
being proposed by a number of North American and international
organizations (428)) or decrease the need for such litigation (which
might occur through increased use of formal transnational regulation).
(429) Either way, individuals, corporations, and states benefit through
the reduction of various kinds of problems, including overdeterrence,
underdeterrence, and regulatory inconsistencies, that can arise when
courts and lawmakers do not fully understand how litigation can operate
as an intended or unintended regulatory mechanism. (430)
Although the United States was once the only country in the world
to allow large-scale litigation, as well as so-called
“private” means of regulation, much has changed in recent
years. (431) Numerous countries now allow for class or collective relief
as a matter of national law, although it is unclear whether and to what
extent those jurisdictions recognize the regulatory potential of the
various mechanisms. (432) An equally large number of states have
abandoned the traditional command and control model of regulation, at
least in some regards, and are increasing the amount and types of
private participation in regulatory endeavors. (433) While the overlap
between countries that have adopted class and collective redress and
countries that have adopted a new governance approach to regulation may
be only partial, (434) the simultaneous appearance of these two
phenomenon suggests a heightened if not urgent need for analysis of the
ways in which various forms of class and collective relief constitute a
form of regulatory litigation on both the domestic and international
levels. Large-scale legal injuries are on the rise, within and between
countries, and states must find an effective and principled means of
addressing those issues as a matter of both regulatory and procedural
law. (435) Hopefully, this Article provides a helpful first step in that
(1) “There is no consensus in policy or academic circles as to
what exactly is connoted by the term regulation.” Colin Scott,
Privatization and Regulatory Regimes, in Oxford Handbook of Public
Policy 651, 653 (Michael Moran et al. eds., 2006). One classic
definition states that regulation involves “sustained and focused
control exercised by a public agency over activities that are socially
valued,” although modern critics have expanded the scope of
application to include regulatory activity undertaken by private actors
and other decentralized entities. See id. (citing Phillip Selznick,
Focusing Organizational Research on Regulation, in REGULATORY POLICY AND
THE SOCIAL SCIENCES 363, 363 (Roger G. Noll ed., 1985)).
(2) See John S. Coffee, Jr., Litigation Governance: Taking
Accountability Seriously, 110 COLUM. L. REV. 288, 344 (2010); see also
J. Maria Glover, The Structural Role of Private Enforcement Mechanisms
in Public Law, 53 WM. & MARY L. REV. 1137, 1140 (2012).
(3) See Coffee, supra note 2, at 345.
(4) Peer Zumbansen, Sustaining Paradox Boundaries: Perspectives on
Internal Affairs in Domestic and International Law, 15 EUR.J. INT’L
L. 197, 201 (2004) (reviewing A. CLAIRE CUTLER, PRIVATE POWER AND GLOBAL
AUTHORITY (2003)); see also Scott, supra note 1, at 652 (recognizing
that “regulation occurs within ‘regimes’ characterized by
diffuse populations and of actors and considerable diversity in the
norms and mechanisms of control”).
(5) See Francesca Bignami, Cooperative Legalism and the
Non-Americanization of European Regulatory Styles: The Case of Data
Privacy, 59 AM. J. COMP. L. 411, 412, 414-15 (2011); R. Daniel Kelemen,
Suing for Europe: Adversarial Legalism and European Governance, 39 COMP.
POL. STUD. 101, 102 (2006).
(6) See Bignami, supra note 5, at 412, 414-15 (referring to the
European model as “cooperative legalism”).
(7) Glover, supra note 2, at 1146.
(8) Patrick Luff, Risk Regulation and Regulatory Litigation, 64
RUTGERS L. REV. 73, 96 (2011) (quoting ANDREW P. MORISS ET AL.,
REGULATION BY LITIGATION 1 (2009)).
(9) However, not all class actions operate in a regulatory manner.
See RACHAEL MULHERON, THE CRASS ACTION IN COMMON LAW LEGAL SYSTEMS 63,
63-66 (2004); see also infra Part III.B.I. Class actions are not the
only type of regulatory litigation. See Miriam H. Baer, Choosing
Punishment, 92 B.U.L. REV. 577, 612-25 (2012) (discussing the role of
the Department of Justice (DOJ), the Securities and Exchange Commission
(SEC), and state attorneys general as well as shareholder litigation,
which is considered the weakest and “most controversial” of
the various forms of regulatory litigation); Glover, supra note 2, at
1190-91 (discussing enforcement mechanisms in the Racketeer Influenced
and Corporate Organizations (RICO) Act) ; Luff, supra note 8, at 113
(discussing both “top-down” and “bottom-up”
regulatory legislation); Timothy Meyer, Comment, Federalism and
Accountability: State Attorneys General, Regulatory Litigation, and the
New Federalism, 95 CAL. L. REV. 885, 886 (2007) (discussing state
(10) See Hannah L. Buxbaum, Multinational Class Actions Under
Federal Securities Law: Managing Jurisdictional Conflict, 46 COLUM. J.
TRANSNAT’L L. 14, 67 (2007) [hereinafter Buxbaum, Securities] ;
Hannah L. Buxbaum, Transnational Regulatory Litigation, 46 VA. J.
INT’L L. 251, 309-17 (2006) [hereinafter Buxbaum, Transnational];
Richard A. Nagareda, Aggregate Litigation Across the Atlantic and the
Future of American Exceptionalism, 62 VAND. L. REV. 1, 41-52 (2009).
(11) These issues affect questions regarding international
enforceability of a class action judgment as well as the initial
certification of the class. See Tanya J. Monestier, Transnational Class
Actions and the Illusory Search for Res Judicata, 86 TUL. L. REV. 1,
78-79 (2011); Rhonda Wasserman, Transnational Class Actions and
Interjurisdictional Preclusion, 86 NOTRE DAME L. REV. 313, 313-16
(12) See Nagareda, supra note 10, at 13; see also infra Part II.
(13) See Monestier, supra note 11, at 79 (“The complexity of
foreign law on the recognition and enforcement of foreign judgments
generally, as well as the lack of comparable class procedures elsewhere,
greatly limits the ability of a U.S. court to ascertain whether or not a
U.S. class judgment would be enforceable in a given foreign
court.”); Wasserman, supra note 11, at 313 (“As global markets
have expanded and transborder disputes have multiplied, American courts
have been pressed to certify transnational class actions….”).
(14) These issues have led to a flood of commentary. See Deborah
Hensler, How Economic Globalisation is Helping to Construct a Private
Transnational Legal Order; in THE LAW OF THE FUTURE AND THE FUTURE OF
THE LAW 249, 250-59 (Sam Muller et al. eds., 2011) [hereinafter Hensler,
Future]; George A. Bermann, U.S. Class Actions and the “Global
Class,” 19 KAN. J.L. & PUB. POL’Y 91, 94 (2009)
(discussing the potential for “inter-jurisdictional conflict”
and the worry about whether U.S. class action judgments will be
recognized and enforced abroad); Buxbaum, Securities, supra note 10, at
35 (discussing forum non conveniens); Stephen J. Choi & Linda J.
Silberman, Transnational Litigation and Global Securities Class Actions,
2009 WIS. L. REV. 465 (2009); John C.L. Dixon, The Res Judicata Effect
in England of a US Class Action Settlement, 46 INT’L & COMP.
L.Q. 134 (1997); Rachael Mulheron, The Recognition, and Res Judicata
Effect, of a United States Class Actions Judgment in England: A Rebuttal
Of Vivendi, 75 MOD. L. REV. 180, 181-82 (2012) [hereinafter Mulheron,
Vivendi]; Nagareda, supra note 10, at 11-12; Linda Sandstrom Simard
& Jay Tidmarsh, Foreign Citizens in Transnational Class Actions, 97
CORNELL L. REV. 87, 89 n.70 (2011) (discussing economic issues relating
to global class actions); Mark Stiggelbout, The Recognition in England
and Wales of United States Judgments in Class Actions, 52 HARV.
INT’L L.J. 433 (2011).
(15) See 622 THE ANNALS OF THE AMERICAN ACADEMY OF POLITICAL AND
SOCIAL SCIENCE (Deborah Hensler et al. eds., 2009) [hereinafter THE
ANNALS] (discussing thirty different jurisdictions); see also Deborah R.
Hensler, The Globalization of Class Actions: An Overview, in THE ANNALS,
supra, at 7, 15-17.
(16) See Hensler, supra note 15, at 7; see also THE ANNALS, supra
(17) Procedures range from other types of representative relief
(such as that which is available only on an opt-in basis, only with
respect to certain substantive areas of law, only with respect to
injunctive relief, and/or only at the instigation of an approved
intermediary entity such as a government association or non-government
organization) to aggregate and settlement only relief. See Hensler,
supra note 15, at 8, 13-17.
(18) See Coffee, supra note 2, at 345.
(19) See DIRECTORATE GENERAL FOR INTERNAL POLICIES, OVERVIEW OF
EXISTING COLLECTIVE REDRESS SCHEMES IN EU MEMBER STATES 38 (2011)
[hereinafter Directorate General], available at
201107/20110715ATT24242/20110715ATT24242EN.pdf (noting European Member
States have adopted four general types of collective redress:
“group and representative actions, test case procedures and
procedures for skimming off profits”); see also Filippo
Valguarnera, Legal Tradition as an Obstacle: Europe’s Difficult
Journey to Class Action, 10 GLOBAL JURIST 1, 8-19 (2010).
(20) See Directive 2004/35, of the European Parliament and the
Council of 21 April 2004 on Environmental Liability with Regard to the
Prevention and Remedying of Environmental Damage, 2004 O.J. (L 143)
(EC), available at http://eur-lex.europa.
Directive 2005/29, of the European Parliament and the Council of 11 May
2005 Unfair Commercial Practices Directive, 2005 O.J. (L 149) (EC),
available at http://www.esma. europa.eu/system/files/2005_29_EC.pdf;
Directive 2004/48, of the European Parliament and the Council of 29
April 2004 on the Enforcement of Intellectual Property Rights, 2004 O.J.
(L 195) (EC), available at http://eur-lex.europa.eu/LexUriServ/
LexUriServ.do?uri=OJ:L:2004:157:0045:0086:en:PDF; Directive 2000/35, of
the European Parliament and the Council of 29 June 2000 on Combating
Late Payment in Commercial Transactions, 2000 O.J. (L 200) (EC),
available at http://eur-lex.europa.
Directive 98/ 27, of the European Parliament and the Council of 19 May
1998 on Injunctions for the Protection of Consumers’ Interests,
1998 O.J. (L 166) (EC), available at http://
eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:1998:166:0051:0055:EN:PDF; Directive 93/13, of the European Parliament and the Council of 5
April 1993 on Unfair Terms in Consumer Contracts, 1993 OJ. (L 95) (ECC),
available at http://eurlex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:31993L0013:en:HTML; see also White Paper on Damages Actions for Breach
of the EC Antitrust Rules, COM (2008) 165 final (Apr. 2, 2008) ; Green
Paper on Consumer Collective Redress, COM (2008) 794 final (Nov. 27,
2008) [hereinafter Green Paper on Consumer Collective Redress]; European
Parliament, Resolution of 2 February 2012 on “Towards a Coherent
European Approach to Collective Redress,” P7_TA-PROV (2012) 0021,
[paragraph][paragraph] 10-14 [hereinafter Resolution], available at
/EP//TEXT+TA+P7-TA-2012-0021+0_DOC+XML+V0//EN; Christopher Hodges,
European Union Legislation, in THE ANNALS, supra note 15, at 78-85
[hereinafter Hodges, ANNALS].
(21) See Resolution, supra note 20. The Resolution was adopted
following a public consultation from the European Commission and an own
initiative report from the European Parliament. See Public Consultation:
Towards a Coherent European Approach to Collective Redress, SEC (2011)
173 final (Feb. 4, 2011) (EC) [hereinafter Public Consultation],
available at http://ec.europa.eu/justice/news/consulfing_public/0054/sec_ 2011_173_en.pdf; Committee on Legal Affairs Report, 12 January 2012,
“Towards a Coherent European Approach to Collective Redress,”
2011/2089 (INI) [hereinafter Lehne Report], available at
http://www.europarl.europa.eu/sides/getDoc.do?pubRef =-//EP//NONSGML +
REPORT +A7-2012-0012 +0+DOC +PDF +VO//EN.
(22) See Resolution, supra note 20.
(23) See Council Regulation 44/2001 of 22 December 2000 on
Jurisdiction and the Recognition and Enforcement of Judgments in Civil
and Commercial Matters, art. 5(3), 2001 O.J. (L 12) 1 (EC) [hereinafter
Brussels I Regulation].
(24) See Resolution, supra note 20, [paragraph][paragraph] 26-27.
(25) See Brussels I Regulation, supra note 23, [paragraph] 8, art.
6(1), Long-anticipated revisions to the Brussels I Regulation were
formally approved by the Council of the European Union just as this
Article was going to press and will go into effect on January 10, 2015.
See Regulation (EU) No. 1215/2012 of the European Parliament and of the
Council of 12 December 2012 on jurisdiction and the recognition and
enforcement of judgments in civil and commercial matters (recast), 2012
O.J. (L 351) 1 [hereinafter Brussels I Recast]. However, none of the
revisions affect the current analysis.
(26) See Case C-281/02, Owusu v. Jackson, 2005 E.C.R. 1-1386,
available at http://
curia.europa.eu/juris/showPdf.jsf?text=&docid=49758&pageIndex=0&doclang=EN& mode=1st&dir=&occ=first&part=1&cid=2389349; S.I. Strong, Backyard Advantage: New Rules Mean That U.S.
Companies May Be Forced to Litigate Across the Pond, 28 LEGAL TIMES 43
(May 23, 2005) (noting a foreign defendant may be subject to the
Brussels I Regulation if that party is one of several necessary
defendants, where one of those defendants is domiciled in a European
Member State). Notably, the revised version of the Brussels I Regulation
contemplates other instances in which the Regulation can affect persons
domiciled outside the European Union. See Brussels I Recast, supra note
25. For example:
The recast regulation will provide that no national rules of jurisdiction may be applied any longer by member states in relation to consumers and employees domiciled outside the EU. Such uniform rules of jurisdiction will also apply in relation to parties domiciled outside the EU in situations where the courts of a member state have exclusive jurisdiction under the recast regulation or where such courts have had jurisdiction conferred on them by an agreement between the parties. Another important change will be a rule on international lis pendens which will allow the courts of a member state, on a discretionary basis, to stay the proceedings and eventually dismiss the proceedings in situations where a court of a third state has already been seized either of proceedings between the same parties or of a related action at the time the EU court is seized.
Press Release, The Council of the European Union, Recast of the
Brussels I regulation: towards easier and faster circulation of
judgments in civil and commercial matters within the EU (6 Dec. 2012),
16599/12, PRESSE 483. This new lis pendens rule could be particularly
important in cases involving U.S. global class actions.
(27) See Bermann, supra note 14, at 94; Buxbaum, Securities, supra
note 10, at 35; Choi & Silberman, supra note 14, at 465; Dixon,
supra note 14, at 134; Monestier, supra note 11, at 44-45; Mulheron,
Vivendi, supra note 14, at 181-82; Rachael Mulheron, The Case for an
Opt-Out Class Action for European Member States: A Legal and Empirical
Analysis, 15 COLUM. J. EUR. L. 409, 426-27 (2009); Nagareda, supra note
10, at 11-12; Simard & Tidmarsh, supra note 14, at 89; Wasserman,
supra note 11, at 335-69 (offering an overview of “salient
differences” between the preclusion doctrines in Europe and the
(28) See Resolution, supra note 20; see also infra Part IV.A.
(29) See supra note 17.
(30) See Resolution, supra note 20. Some analyses of procedural
issues are available. See S.I. Strong, Cross-Border Collective Redress
in the European Union: Constitutional Rights in the Face of the Brussels
I Regulation, 44 ARIZ. ST. L.J. (forthcoming 2013) [hereinafter Strong,
(31) See Resolution, supra note 20.
(32) Although concerns regarding the international enforceability
of a class award may seem to relate only to the tail end of a dispute,
the issue actually arises very early on since many U.S. judges take
future enforceability into account during certification proceedings and
will not allow an international class to go forward if the defendant
cannot be assured that any resulting judgment will be given preclusive
effect in other jurisdictions. See Monestier, supra note 11, at 10-13.
33 See Resolution, supra note 20.
(34) Virtually all existing commentary on the use of collective
redress in Europe focuses on procedural issues rather than regulatory
concerns. See generally EXTRATERRITORIALITY AND COLLECTIVE REDRESS
(Duncan Fairgrieve & Eva Lein eds., 2012); see also Duncan
Fairgrieve & Geraint Howells, Collective Redress Procedures European
Debates, 58 INT’L & COMP. L.Q. 379, 380 (2009); Christopher
Hodges, Collective Redress in Europe: The New Model, 29 Cry. JUST. Q.
370, 370 (2010) [hereinafter Hodges, Collective]; Christopher Hodges,
What Are People Trying to Do in Resolving Mass Issues, How Is It Going,
and Where Are We Headed?, in THE ANNALS, supra note 15, at 330, 338
[hereinafter Hodges, Resolving]; Samuel Issacharoff & Geoffrey P.
Miller, Will Aggregate Litigation Come to Europe?, 62 VAND. L. REV. 177,
181 (2009); Rachael Mulheron, Recent Milestones in Class Action Reform
in England: A Critique and a Proposal, 127 L.Q. REV. 288, 289 (2011);
Mulheron, Opt-Out, supra note 27, at 426-27; Laura Carballo Pineiro,
Collective Redress in the Proposal for a Brussels Ibis Regulation: A
Coherent Approach ?, 2 ZEITSCHRIFT FOR EUROPAISCHES UNTERNEHMENS- UND
VERBRAUCHERRECHT–J. EUR. CONSUMER & MARKET L. 81 (2012); Francesco
Rizzuto, Does the European Community Have Legal Competence to Harmonise
National Procedural Rules Governing Private Actions for Damages From
Infringements of European Community Antitrust Rules?, 2 GLOBAL
COMPETITION LITIG. REV. 29, 29-30 (2009); Tiana Leia Russell, Exporting
Class Actions to the European Union, 28 B.U. INT’L L.J. 141, 164-79
(2010); Edward F. Sherman, Group Litigation Under Foreign Legal Systems:
Variations and Alternatives to American Class Actions, 52 DEPAUL L. REV.
401 (2002); Strong, Brussels I, supra note 30; S.I. Strong, CrossBorder
Collective Redress and Individual Participatory Rights: Quo Vadis? 32
CIV. JUST. Q. –(forthcoming 2013) [hereinafter Strong, Quo Vadis];
Gerhard Wagner, Collective Redress–Categories of Loss and Legislative
Options, 127 L.Q. REV. 55, 55 (2011).
(35) See Coffee, supra note 2, at 345. However, this does not
necessarily mean that the procedures do not also include regulatory
elements. See Directorate General, supra note 19, at 38; MULHERON, supra
note 9, at 63, 66; Bignami, supra note 5, at 441-59 (discussing
regulatory styles of France, Germany, Britain, and Italy); Hodges,
Resolving, supra note 34, at 336-38; Christopher Hodges, Europeanization
of Civil Justice: Trends and Issues, 26 CIV. JUST. Q. 96, 117-18, 121
(2007) [hereinafter Hodges, Europeanization].
(36) See Resolution, supra note 20, [paragraph] 2; see also
Bignami, supra note 5, at 460; Hodges, Europeanization, supra note 35,
at 115; Valguarnera, supra note 19, at 3, 19-21.
(37) Failure to recognize the regulatory effect of a particular
procedure can lead to unintended overdeterrence. See Giuseppe
Dari-Mattiacci & Gerrit De Geest, Carrots, Sticks, and the
Multiplication Effect, 26 J.L. ECON. & ORG. 365, 377 (2010);
Russell, supra note 34, at 151 n.47.
(38) Creation of the new mechanism for cross-border collective
redress will follow the ordinary legislative procedure. See Resolution,
supra note 20, [paragraph] 29; see also Consolidated Version of the
Treaty on the Functioning of the European Union art. 294, Mar. 30, 2010,
2010 O.J. (C 83) 173 [hereinafter TFEU] (outlining the ordinary
legislative procedure, also known as the co-decision procedure). The
European Commission is scheduled to disclose its first proposed
initiative in the fourth quarter of 2012. See Annex to the Communication
from the Commission to the European Parliament, the Council, the
European Economic and Social Committee and the Committee of the Regions,
at 20, Item 110, COM (2011) 777 final (Nov. 15, 2011), available at
http://ec.europa.eu/atwork/pdf/ cwp2012_annex_en.pdf; Commission Actions
to be Adopted, 30/03/2012-31/12/ 2012, Legislative Proposals, available
(39) Nagareda, supra note 10, at 13; see also Resolution, supra
note 20, [paragraph][paragraph] H, 19 (emphasizing the cross-border
nature of the Resolution).
(40) See Ralf Michaels, The Functional Method of Comparative Law,
in THE OXFORD HANDBOOK OF COMPARATIVE LAW 339, 357 (Mathias Reiman &
Reinhard Zimmerman eds., 2006).
(41) New governance theory attempts to identify new regulatory
mechanisms that fall between traditional command and control models of
regulation and deregulated markets. See On Amir & Orly Lobel,
Stumble, Predict, Nudge: How Behavioral Economics Informs Law and
Policy, 108 COLUM. L. REV. 2098, 2100 (2008) (reviewing RICHARD H.
THALER & CASS R. SUNSTEIN, NUDGE (2008) and DAN ARIELY, PREDICTABLY
IRRATIONAL (2008)) ; see also R. DANIEL KELEMEN, EUROLEGALISM (2011) ;
DANIEL YERGIN & JOSEPH STANISLAW, THE COMMANDING HEIGHTS (1998);
Kenneth W. Abbott & Duncan Snidal, Strengthening International
Regulation Through Transnational New Governance: Overcoming the
Orchestration Deficit, 42 VAND. J. TRANSNAT’L L. 501 (2009);
Francesca Bignami, From Expert Administration to Accountability Network:
A New Paradigm for Comparative Administrative Law, 59 AM.J. COMP. L.
859, 872-73 (2011); Michael C. Doff & Charles F. Sabel, A
Constitution of Democratic Experimentalism, 98 COLUM. L. REV. 267
(1998); Charles F. Sabel & William H. Simon, Minimalism and
Experimentalism in the Administrative State, 100 GEO. L.J. 53, 54
(2011); Scott, supra note 1, at 652.
(42) New governance theory supplies a new critical perspective on
questions of institutional design. See IAN AYRES & JOHN BRAITHWAITE,
RESPONSIVE REGULATION 3 (1992) (“Good policy analysis is not about
choosing between the free market and government regulation…. [S]ound
policy analysis is about understanding private regulation … and how it
is interdependent with state regulation …. “); Michael C. Dorf,
Legal Indeterminacy and Institutional Design, 78 N.Y.U.L. REV. 875, 882
(2003) (suggesting “the way past the current impasse is to return
to [a] commitment to a legal decisionmaking process that is deeply
informed about the institutions with which legal actors interact”).
(43) See Resolution, supra note 20.
(44) See id.
(45) See Susan D. Franck, Integrating Investment Treaty Conflict
and Dispute Systems Design, 92 MINN. L. REV. 161, 177-78 (2007) (noting
dispute systems design “is not a dispute resolution methodology
itself” but instead reflects “the intentional and systematic
creation of an effective, efficient, and fair dispute resolution process
based upon the unique needs of a particular system”).
(46) See ROBERT A. KAGAN, ADVERSARIAL LEGALISM 9 (2001); KELEMEN,
supra note 41; ANDREW P. MORRISS ET AL., REGULATION BY LITIGATION 171
(2009) (concluding that “regulation by litigation is [not]
appropriate”); REGULATION THROUGH LITIGATION (W. Kip Viscusi ed.)
(2002); Gillian K. Hadfield, Don’t Forget the Lawyers: The Role of
Lawyers in Promoting the Rule of Law in Emerging Market Democracies, 56
DEPAUL L. REV. 401, 401, 405 (2007); Samuel Issacharoff, Regulating
After the Fact, 56 DEPAUL L. REV. 375, 377 (2007); Andrew P. Morriss et
al., Regulation by Litigation, 9 ENGAGE: J. FEDERALIST SOC’Y PRAC.
GROUPS 109 (2008); William B. Rubenstein, Why Enable Litigation? A
Positive Externalities Theory of the Small Claims Class Action, 74 UMKG
L. REV. 709, 710 (2006).
(47) See Resolution, supra note 20.
(48) See id.; supra notes 23-26 and accompanying text.
(49) See Hensler, supra note 15, at 13; Hodges, Resolving, supra
note 34, at 338; see also supra note 17. Interestingly, U.S. courts have
begun to identify differences between class and collective procedures.
See Velez v. Perrin Holder & Davenport Capital Corp., 769 F. Supp.
2d 445, 446-47 (S.D.N.Y. 2011); JetBlue Airways Corp. v. Stephenson, 931
N.Y.S.2d 284, 288-89 (N.Y. App. Div. 2011).
(50) Public Consultation, supra note 21, [paragraph] 7.
(51) See Brussels I Regulation, supra note 23; see also supra note
(52) Proposal for a Regulation of the European Parliament and of
the Council on Jurisdiction and the Recognition and Enforcement of
Judgments in Civil and Commercial Matters (Recast), art. 37(3)(b) (as
amended) COM (2010) 748 final (Dec. 14, 2010). The Council of the
European Union approved the final revisions to the Brussels I Regulation
just as this Article was going to press, and this definition was not
included in the final approved draft. See Brussels I Recast, supra note
(53) See Directorate General, supra note 19, at 38.
(54) See FED. R. CIV. P. 23.
(55) See Nagareda, supra note 10, at 13.
(56) See Hensler, Future, supra note 14, at 250-55.
(57) The economic relationship between the European Union and the
United States is the largest in the world, with trade flows of
approximately $3.6 billion a day. See European Union, OFFICE OF THE
UNITED STATES TRADE REPRESENTATIVE, http://
(last visited Sept. 19, 2012) (citing figures from 2010).
(58) See Directorate General, supra note 19, at 43.
(59) See id.
(60) See Resolution, supra note 20, [paragraph] H.
(61) Id. [paragraph] G (noting “in some Member States the
overall performance of the existing consumer redress and enforcement
tools designed at EU level is not deemed satisfactory, or such
mechanisms are not sufficiently well known, which results in their
limited use”). Commentators have also found large scale litigation
to be problematic on an intra-European basis. See Peter Barnett, The
Prevention of Abusive Cross-Border Re-Litigation, 51 INT’L &
COMP. L.Q. 943, 957 (2002); Fairgrieve & Howells, supra note 34, at
380; Hodges, Collective, supra note 34, at 370; Mulheron, Opt-Out, supra
note 27, at 426-27; Rizzuto, supra note 34, at 29-30; Strong, Brussels
I, supra note 30; Strong, Quo Vadis, supra note 34.
(62) See AMERICAN BAR ASSOCIATION, ABA PROTOCOL ON COURT-TO-COURT
COMMUNICATIONS IN CANADA-U.S. CROSS-BORDER CLASS ACTIONS & ABA
NOTICE PROTOCOL: COORDINATING NOTICE(S) TO THE CLASS(ES) IN
MULTIJURISDICTIONAL CLASS PROCEEDINGS (2011), available at
http://www.cba.org/cba/resolutions/pdf/11-03-A-bckd.pdf; AMERICAN LAW
INSTITUTE & INTERNATIONAL INSOLVENCY INSTITUTE, GUIDELINES
APPLICABLE TO COURT-TO-COURT COMMUNICATIONS IN CROSS-BORDER CASES
(2003), available at http:/
AMERICAN LAW INSTITUTE, PRINCIPLES OF THE LAW OF AGGREGATE LITIGATION
(2010); CANADIAN BAR ASSOCIATION, CONSULTATION PAPER: CANADIAN JUDICIAL
PROTOCOL FOR THE MANAGEMENT OF MULTIJURISDICTIONAL CLASS ACTIONS (2011);
INTERNATIONAL BAR ASSOCIATION, GUIDELINES FOR RECOGNISING AND ENFORCING
FOREIGN JUDGMENTS FOR COLLECTIVE REDRESS (2008), available at
q=guidelines%20for%20Recognising%20and%20enforcing; see also Betsy M.
Adeboyejo, Protocols for Cross-Border Cases … Will They Work?, ABA Now
(Aug. 6, 2011), http://www.abanow.org/2011/08/protocols-for-cross-border-cases-%E2%80%A6-will-they-work/.
(63) See Bermann, supra note 14, at 94; Buxbaum, Securities, supra
note 10, at 35; Choi & Silberman, supra note 14, at 465; Dixon,
supra note 14, at 134; Mulheron, Vivendi, supra note 14, at 181-82;
Mulheron, Opt-Out, supra note 27, at 426-27; Nagareda, supra note 10, at
11-12; Stiggelbout, supra note 14, at 433.
(64) See supra notes 62-63 and accompanying text.
(65) See Buxbaum, Securities, supra note 10, at 52-56; Buxbaum,
Transnational, supra note 10, at 257-72; Nagareda, supra note 10, at
(66) See Nagareda, supra note 10, at 13; Richard B. Stewart, The
Global Regulatory Challenge to U.S. Administrative Law, 37 N.Y.U. J.
INT’L L. & POL. 695, 699-703 (2005).
(67) These regulatory bodies typically must be set up by
international agreement, since no state has worldwide authority over
regulatory concerns. See Nagareda, supra note 10, at 13; see also
Statute of the International Atomic Energy Agency, 8 U.S.T. 1093, 276
U.N.T.S. 3 (1956), available at http://www.iaea.org/About/statute.html#
A1.1 (acting as worldwide regulator of matters relating to nuclear
(68) See Stewart, supra note 66, at 703 (describing international
regulation as involving “a web of interactions and influences,
horizontal, vertical, and diagonal, among a diverse multiplicity of
different regimes and actors, resembling nothing so much as a Jackson
Pollock painting”); see also Benedict Kingsbury & Stephan W.
Schill, Investor-State Arbitration as Governance: Fair and Equitable
Treatment, Proportionality and the Emerging Global Administrative Law,
in 50 YEARS OF THE NEW YORK CONVENTION, 14 ICCA CONG. SER. 10-11 (Albert
Jan van den Berg ed., 2008).
(69) See Sungjoon Cho & Claire R. Kelly, Promises and Perils of
New Global Governance: A Case of the G20, 12 CHI. J. INT’L. L. 491,
494 (2012) (noting “international regulations, if any, may not come
as quickly as the urgency of the problems would demand”) ; Richard
N. Gardner, The Bretton Woods-GATT System After Sixty-Five Years: A
Balance Sheet of Success and Failure, 47 COLUM. J. TRANSNAT’L L.
31, 43 (2008).
(70) Glover, supra note 2, at 1146.
(71) Luff, supra note 8, at 96 (quoting ANDREW P. MORISS ET AL.,
REGULATION BY LITIGATION 1 (2009)); see also Buxbaum, Transnational,
supra note 10, at 252-53.
(72) See Jodie A. Kirschner, Why is the U.S. Abdicating the
Policing of Multinational Corporations to Europe?: Extraterritorialism,
Sovereignty, and the Alien Tort Statute, 29 BERKELEY J. INT’L L.
(forthcoming 2012); Marco Ventoruzzo, Like Moths to a Flame?
International Securities Litigation After Morrison: Correcting the
Supreme Court’s “Transactional Test,” 52 VA. J.
INT’L L. 405, 405 (2012).
(73) See Buxbaum, Securities, supra note 10, at 52-56; Buxbaum,
Transnational, supra note 10, at 252-53, 257-72; Nagareda, supra note
10, at 14-41.
(74) See Coffee, supra note 2, at 345.
(75) See id.
(76) See supra note 46 and accompanying text.
(77) Interestingly, this appears to be the most common analytical
paradigm for issues relating to transnational regulatory litigation. See
supra note 14 and accompanying text.
(78) See Buxbaum, Securities, supra note 10, at 18-67; Buxbaum,
Transnational, supra note 10, at 272-93; Kirschner, supra note 72;
Nagareda, supra note 10, at 19-41; S.I. Strong, Mass Torts and
Arbitration: Lessons From Abaclat v. Argentine Republic, in UNCERTAINTY
AND MASS TORT: CAUSATION AND PROOF (Jose Ferrer Beltran et al. eds.)
(forthcoming 2013) [hereinafter Strong, Mass Torts]; Ventoruzzo, supra
note 72, at 443.
(79) See supra note 14. However, difficulties can arise even when
procedures in the two countries are similar. See S.I. Strong, Resolving
Mass Legal Disputes Through Class Arbitration: The United States and
Canada Compared, 37 N.C. J. INT’L L. & COM. REG. 921, 926-27
(2012) [hereinafter Strong, Canada].
(80) See In re Vivendi Universal, No. 02 Civ. 5571, 2009 WL 855799,
at *3 (S.D.N.Y. Mar. 31, 2009); Monestier, supra note 11, at 44-45;
Mulheron, Opt-Out, supra note 27, at 426-27.
(81) See Buxbaum, Transnational, supra note 10, at 297-305.
(82) Id. at 282; see also Nagareda, supra note 10, at 37; Stewart,
supra note 66, at 697. As the Second Circuit stated recently:
[F]oreign companies are creatures of other states. They are subject to corporate governance and government regulation at home. They are often engines of their national economies, sustaining employees, pensioners and creditors--and paying taxes.... American courts and lawyers [do not] have the power to bring to court transnational corporations of other countries, to inquire into their operations in third countries, to regulate them--and to beggar them by rendering their assets into compensatory damages, punitive damages, and (American) legal fees.
Kiobel v. Royal Dutch Petroleum Co., 642 F.3d 268, 270 (2d Cir.
2011) (discussing claims under the Alien Tort Claims Act).
(83) See Anne Orford, Jurisdiction Without Territory: From Holy
Roman Empire to the Responsibility to Protect, 30 MICH. J. INT’L L.
981, 981-82, 1013 (2009) (noting that these views arose in the sixteenth
and seventeenth centuries).
(84) See Nagareda, supra note 10, at 37; see also Hensler, Future,
supra note 14, at 250-55.
(85) Buxbaum, Transnational, supra note 10, at 260; see also id. at
297-305; Nagareda, supra note 10, at 13.
(86) See Alberto Cassone & Giovanni B. Ramello, The Simple
Economics of Class Action: Private Provision of Club and Public Goods,
32 EUR. J. L. & ECON. 205, 209-12, 222-23 (2011); Giovanni B.
Ramello, Aggregate Litigation and Regulatory Innovation: Another View of
Judicial Efficiency, 32 INT’L REV. L. & ECON. 63, 64 (2012).
(87) This scenario may be most readily seen in the context of
antitrust or competition law, in that developing countries without
robust antitrust or competition law regimes “may leave
anti-competitive conduct entirely unregulated,” thus requiring
other countries to step in so as to “ensure better regulation of
markets everywhere.” Buxbaum, Transnational, supra note 10, at 261.
However, problems with comparative under-regulation can also arise in
other fields, such as those involving securities, pharmaceuticals, or
the environment. See id.
(88) See Russell, supra note 34, at 151 n.47.
(89) See Buxbaum, Transnational, supra note 10, at 261; Alan Devlin
& Michael Jacobs, Antitrust Divergence and the Limits of Economics,
104 Nw. U. L. REV. 253, 267-68 (2010) (discussing inconsistent actions
taken by the U.S. Department of Justice and the European Commission with
respect to Microsoft, as well as the proposed merger between Honeywell
and General Electric); see also William E. Kovacic, The Institutions of
Antitrust Law: How Structure Shapes Substance, 110 MICH. L. REV. 1019,
1036 n.67 (2012) (discussing three transatlantic scrapes between the
U.S. Department of Justice and European entities.); Stewart, supra note
66, at 695 (“[T]he past twenty-five years have witnessed a dramatic
shift of regulatory authority from the nation state to a dizzying
variety of global regulatory regimes, including international
organizations, transnational networks of national regulatory officials,
and private or hybrid private-public regulatory bodies.”).
(90) See Buxbaum, Transnational, supra note 10, at 254-57.
(91) Id. at 257; see also id. at 254-55.
(92) Id. at 254.
(93) See Buxbaum, Securities, supra note 10, at 63-64 (noting
“concerns that an expansive assertion of jurisdiction by [one
nation’s] courts plays in other countries as an instrument of
regulatory hegemony”); see also Buxbaum, Transnational, supra note
10, at 270.
(94) See Buxbaum, Transnational, supra note 10, at 255 (citing
examples under U.S. antitrust law, securities law, and the Racketeering
Influenced and Corrupt Organizations Act (RICO)). This is assuming that
the forum state can find a means of applying national law
extraterritorially. National legislatures typically do not intend their
laws to have extraterritorial effect, particularly in the politically
sensitive realm of regulatory law. See id. at 268; see also Ventoruzzo,
supra note 72, at 436.
(95) See Buxbaum, Securities, supra note 10, at 37; see also
Kirschner, supra note 72. For example, U.S. courts may be disinclined to
decline jurisdiction on grounds of forum non conveniens in cases where
“the claims of U.S. nationals … strongly implicate local
regulatory interests.” Buxbaum, Securities, supra note 10, at 38.
(96) See Bermann, supra note 14, at 94; Monestier, supra note 11,
(97) See FED. R. CIV. P. 23(b)(3); Buxbaum, Securities, supra note
10, at 66-67.
(98) See Bermann, supra note 14, at 93; Buxbaum, Securities, supra
note 10, at 35; Choi & Silberman, supra note 14, at 465; Dixon,
supra note 14, at 134; Monestier, supra note 11, at 44-45; Mulheron,
Vivendi, supra note 14, at 181-82; Nagareda, supra note 10, at 11-12;
Wasserman, supra note 11, at 331-69.
(99) See The ANNALS, supra note 15 (discussing thirty different
(100) Some commentators have suggested that the European Union and
its individual Member States may be replacing the United States as the
leading jurisdiction to police the wrongdoing of multinational actors.
See Kirschner, supra note 72.
(101) Silver v. Imax Corp.,  O.J. No. 5573 (Can. Ont. Sup.
Ct. J.); Silver v. Imax Corp.,  O.J. No. 5585 (Can. Ont. Sup. Ct.
(102) Mark Gelowitz, Court Certifies Class Action Against Imax:
Liability May be Coming Soon to a Theatre Near You, LAW. WKLY., Feb. 19,
index.php?section=article&articleid=1103 (last visited Sept. 29,
2012); see also Silver,  O.J. No. 5573; Silver,  O.J. No.
5585; Monestier, supra note 11, at 75 n.260; Strong, Canada, supra note
79, at 927.
(103) See Morrison v. Nat’l Austl. Bank Ltd., 130 S. Ct. 2869,
2894 n.11 (2010) (Stevens, J. concurring) (defining
(104) See Arjan de Boode & Allard Huizing, The Netherlands as
an Alternative Forum for Cross Border Class Settlements and the
Potential Consequences for Claims by “Foreign Cubed”
Plaintiffs under U.S. Securities Laws, GREENBURG TRAURIG ALERT (Jan.
2010), http:// www.gtlaw.com/News-Events/Publications/Alerts/132898/The-Netherlands-as-an-Alternative-Forum-for-Cross-Border-Class-
Settlements-and-the-Potential-Consequences-for-Claims-by-Foreign-Cubed-Plaintiffs-under-US-Securities-Laws (last visited Sept. 28, 2012); Ianika
Tzankova & Daan Lunsigh Scheurleer, The Netherlands, in The ANNALS,
supra note 15, at 149, 153-55. The Amsterdam Court of Appeal has
recently confirmed a settlement involving a pan-European class. See
Hofs-Amsterdam 17 Januari 2012, (Scor Holding (Switz.)
AG/Liechtensteinische Landesbank AG) (Neth.), English translation
available at http://www.converiumsettlement.com/
referring to the settlement itself as SCOR Holding (Switzerland)
AG/Zurich Fin. Serv. Ltd. Stichting Converium Sec. Compensation
(105) See Resolution, supra note 20. Some private organizations
have attempted to address this issue. See supra note 62 and accompanying
(106) See Resolution, supra note 20; see also infra notes 323-80
and accompanying text. Because the European Union has the political
power to regulate certain matters within the European Union, the
Resolution may be unique in the world of transnational regulatory
litigation. See TFEU, supra note 38, arts. 3, 5 (noting one area of
European competence involves the operation of the internal market);
Resolution, supra note 20, [paragraph][paragraph] M, 4, 6, 8.
(107) See supra notes 23-26 and accompanying text.
(108) See Resolution, supra note 20; see also infra notes 323-80
and accompanying text.
(109) See infra Part III.
(110) However, regulatory litigation is reflected in a number of
statutes and rules, as well as various common law principles. See
Buxbaum, Transnational, supra note 10, at 256.
(111) See Coffee, supra note 2, at 350; Dorf, supra note 42, at
879-80; Glover, supra note 2, at 1146.
(112) See Coffee, supra note 2, at 344-45.
(113) See Michael M. Karayanni, A Model Typology for Class Actions:
Lessons From Israel, in Cross Border Class Actions, Brussels, Belgium,
27 April 2012; see also DEBORAH R. HENSLER ET AL., CLASS ACTION DILEMMAS
121-22 (2000); MULHERON, supra note 9, at 63, 66 (explaining the
different objectives of different nations’ class action regimes);
Elizabeth Chamblee Burch, Securities Class Actions as Pragmatic Ex Post
Regulation, 43 GA. L. REV. 63, 74-76 (2008) (arguing that private
enforcement is a cost-effective way to protect public rights).
(114) Bignami, supra note 5, at 460 (“This empirical work is
equally or more likely to find institutional resistance to change as it
is to find Americanization.”).
(115) Michaels, supra note 40, at 357 (discussing equivalence
functionalism); see also Victoria Nourse & Gregory Shaffer,
Varieties of New Legal Realism: Can a New World Order Prompt a New Legal
Theory?, 95 CORNELL L. REV. 61, 74-76 (2009); Mark Tushnet, The
Possibilities of Comparative Constitutional Law, 108 YALE L.J. 1225,
(116) See supra notes 41-42 and accompanying text.
(117) Michaels, supra note 40, at 357; see also id. at 342.
(118) See id. at 342.
(120) It may be that regulatory litigation is particularly
appropriate in cases involving cross-border legal injuries. See supra
notes 56-73 and accompanying text.
(121) Luff, supra note 8, at 114.
(122) Id. at 113.
(123) See id. at 80; see also MORRISS ET AL., supra note 46,
passim; viscusi, supra note 46, passim.
(124) Abram Chayes, The Role of the Judge in Public Law Litigation,
89 HARV. L. REV. 1281, 1282 (1976); see also Jack Greenberg, Civil
Rights Class Actions: Procedural Means of Obtaining Substance, 39 ARIZ.
L. REV. 575, 576-77 (1997) (explaining the regulatory role of the
courts); Luff, supra note 8, at 101 (analyzing theories of regulatory
(125) This view is not limited to Europe. See Michael L. Rustad
& Thomas H. Koenig, Reforming Public Interest Tort Law to Redress
Public Health Epidemics, 14 J. HEALTH CARE L. & POL’Y 331, 368
(126) Valguarnera, supra note 19, at 19 (discussing MIRJAN DAMASKA,
THE FACES OF JUSTICE AND STATE AUTHORITY (1986)).
(127) Valguarnera, supra note 19, at 19.
(128) See id.
(129) See id. at 3; see also Jason Marisam, The Interagency
Marketplace, 96 MINN. L. REV. 886, 886 (2012) (“Federal agencies
routinely contract with each other to exchange money, regulatory power,
and governmental services.”).
(130) See Ronald A. Brand, Private Law and Public Regulation in
U.S. Courts, in 2 CENTER FOR INTERNATIONAL LEGAL EDUCATION (CILE)
STUDIES 115, 115 (2005).
(131) See id.
(132) Luff, supra note 8, at 89-90 (citations omitted).
(133) For example:
When faced with gaps and ambiguities in the law, judges need not simply choose between the Scylla of deference and the Charybdis of usurpation. Trial courts can address some broad social problems without directly taking over responsibility for running institutions like prisons, schools, and police forces, while appellate courts need not themselves fill the gaps in constitutional and other open-ended legal norms; they can instead (or at least additionally) instigate reform by other actors.
Dorf, supra note 42, at 882-83; see also supra notes 41-42 and
(134) See Bignami, supra note 5, at 418; Hodges, ANNALS, supra note
20, at 336-38; Sabel & Simon, supra note 41, at 54.
(135) Cassone & Ramello, supra note 86, at 223.
(136) See infra notes 347-80 and accompanying text.
(137) See Luff, supra note 8, at 113-14. Regulatory litigation can
also be seen as a means of addressing other types of market distortions,
although those issues are beyond the scope of this Article. See Hodges,
ANNALS, supra note 20, at 337.
(138) Luff, supra note 8, at 113 (citations omitted).
(140) Id.; see also Eric A. Posner, Tobacco Regulation or
Litigation?, 70 U. CHI. L. REV. 1141, 1155 (2003) (reviewing W. KIP
VISCUSI, SMOKE-FILLED ROOMS (2002)) (arguing that it is not new to have
regulation by litigation); Cassandra Burke Robertson, The Impact of
Third-Party Financing on Transnational Litigation, 44 CASE W. RES. J.
INT’L L. 159, 174 (2011) (“Both regulation and litigation
ultimately have a regulatory effect.”).
(141) European regulations are immediately enforceable in the
European Union and do not need to be given domestic effect through the
enactment of any enabling legislation by the individual Member States.
See European. Commission, What are EU Regulations?,
visited Sept. 28, 2012). As such, regulations exist in the same form in
all Member States. See id. European directives, on the other hand, must
be implemented by national legislatures before taking effect. See id. As
a result, the principles embodied in a European directive will be
available in slightly different form in individual Member States,
although the directive should theoretically have the same effect
throughout the European Union. See id.
(142) See Regulation 261/2004 of the European Parliament and of the
Council of 11 February 2004 Establishing Common Rules on Compensation
and Assistance to Passengers in the Event of Denied Boarding and of
Cancellation or Long Delay of Flights, and Repealing Regulation (EEC)
295/91, 2004 O.J. (L 46) (EC) [hereinafter Regulation on
Passengers’ Rights]; see also KELEMEN, supra note 41, at 1-5
(considering European Union’s passenger rights regulation)
(143) See KELEMEN, supra note 41, at 1-5. The regulation primarily
operates as an administrative mechanism, in that it sets the rate of
compensation, but specifically states that it does not limit the right
to judicial relief. Regulation on Passenger’s Rights, supra note
142, [paragraph] 22, arts. 7-8, 12-13.
(144) See Regulation on Passengers’ Rights, supra note 142;
supra note 20.
(145) The problems of unanticipated regulatory issues are readily
apparent in the context of the recent financial crisis. For example, as
one commentator noted:
Identifying unanticipated risk is hard and there is no reason to think that the same busy federal officials, who apparently overlooked these risks in 2006 and 2007, will become more prescient simply because they serve together on an elite Council. The presence of the one independent expert is helpful, but there was no lack of experts in the late 2000s who warned of an impending financial collapse. There were also some savvy investors and economists who anticipated the collapse, but the financial regulators and the US intelligence community apparently took no notice of that.
Steve Charnovitz, Addressing Government Failure Through
International Financial Law, 13 J. INT’L ECON. L. 743, 748 (2010)
(146) Luff, supra note 8, at 113; see also Robertson, supra note
140, at 175.
(147) Luff, supra note 8, at 113.
(148) Id.; see also Dorf, supra note 42, at 935-54 (discussing
“experimentalist” judging undertaken by
“problem-solving” courts that act similarly to
(149) Luff, supra note 8, at 113-14. One potential area of
disagreement relates to whether a conscious intent to regulate is really
necessary or whether a regulatory effect is sufficient. Other
differences of opinion arise over the necessary extent of the regulatory
effect, with some commentators suggesting that the effect must be felt
by an entire industry while others believe that only the individual
defendant needs to be affected. See id. at 96; Strong, Canada, supra
note 79, at 967-70; see also MULHERON, supra note 9, at 64 (discussing
what constitutes regulatory effect).
(150) For example, this definition can be used to consider whether
certain types of mass, class, or collective arbitration constitute a
form of “regulatory arbitration.” See S.I. Strong, Mass
Procedures as a Form of “Regulatory Arbitration”–Abaclat v.
Argentine Republic and the International Investment Regime, 38 J. CORP.
L. (forthcoming 2013), available at
Strong, Regulatory Arbitration].
(151) See Luff, supra note 8, at 75, 113.
(152) See 1 DAN B. DOBBS, LAW OF REMEDIES [section] 1.1, at 1-11
(2d ed. 1993); see also Lorian Hardcastle, Government Tort Liability for
Negligence in the Health Sector: A Critique of the Canadian
Jurisprudence, 37 QUEEN’S L.J. 525, 541 (2012) (contrasting
judicial remedies, including damages, injunctions, and declaratory
relief, with remedies available to other regulators, including
“ombudsmen, commissioners and auditors” whose powers are
typically limited to “publicity and persuasion”).
(153) See Parham v. J.R., 442 U.S. 584, 616 (1979) (referring to
“class-action remed[y]”); Jock v. Sterling Jewelers Inc., 646
F.3d 113, 127 (2d Cir. 2011) (referencing “class remedies”),
cert. denied, 132 S. Ct. 1742 (2012); Pendergast v. Sprint Nextel Corp.,
592 F.3d 1119, 1139 (11th Cir. 2010) (referring to “class action
remedy”); Canfield v. United States, 14 Ct. Cl. 687, 689 (1988)
(distinguishing the class remedy under the Fair Labor Standards Act and
the Federal Rules of Civil Procedure); CHARLES ALAN WRIGHT, THE LAW OF
FEDERAL COURTS [section] 72, at 740 (4th ed. 1983) (describing class
actions as “one of the most socially useful remedies in
history”) (citation omitted) ; Antonio Gidi, Issue Preclusion
Effect of Class Certification Orders, 63 HASTINGS L.J. 1023, 1063 &
n.185 (2012) [hereinafter Gidi, Issue Preclusion] (citing PRINCIPLES OF
THE LAW OF AGGREGATE LITIGATION [section] 2.04, at 118-29 (2010)).
(154) See infra notes 224-32 and accompanying text.
(155) See Andrew Le Sueur, Access to Justice Rights in the United
Kingdom, 5 EUR. H.R.L. REV. 457, 469-74 (2000); J. Harvie Wilkinson III,
The Dual Lives of Rights: The Rhetoric and Practice of Rights in
America, 98 CAL. L. REV. 277, 287-89 (2010); see also infra notes
(156) See infra notes 223-37 and accompanying text.
(157) See Luff, supra note 8, at 113.
(158) See MULHERON, supra note 9, at 63-66; see infra notes 314–30
and accompanying text.
(159) ,See FED. R. CIV. P. 23. Not all class actions are the same,
even within the United States. For example, courts have recognized that
class relief under the Fair Labor Standards Act is different than that
which is available under the Federal Rules of Civil Procedure. See Fair
Labor Standards Act of 1938, Pub. L. No. 75-718, ch. 676, [section] 16,
52 Stat. 1060, 1069 (codified at 29 U.S.C. [section] 216 (2006)); FED.
R. CIV. P. 23; Raniere v. Citigroup, Inc., 827 F. Supp. 2d 294, 310
(160) See Luff, supra note 8, at 113; see also supra note 148 and
accompanying text (defining bottom-up litigation).
(161) See FED. R. CIV. P. 23(b)(2). Bilateral injunctions could
also constitute a form of regulatory litigation, if the regulatory
effect only needs to be felt by the target and not by the industry as a
whole. See Luff, supra note 8, at 113-14; see also supra note 148.
(162) See FED. R. CIV. P. 23(b)(1), (b)(3); HENSLER ET AL., supra
note 113, at 68, 71-72.
(163) HENSLER ET AL., supranote 113, at 119; see also Russell,
supranote 34, at 145-48 (analyzing the deterrence value of class
(164) See HENSLER ET AL., supra note 113, at 68, 71-72.
(165) Id. at 68; see also Sonja B. Starr, Rethinking
“Effective Remedies”: Remedial Deterrence in International
Courts, 83 N.Y.U. L. REV. 693, 754 (2008) (considering how compensatory
relief serves regulatory ends).
(166) See Russell, supra note 34, at 145-48. The most well-known
example of this kind of seemingly callous cost-benefit analysis involves
Ford Motor Company’s approach to design defects in the Pinto
automobile. See Gary T. Schwartz, The Myth of the Ford Pinto Case, 43
RUTGERS L. REV. 1013, 1020 (1991).
(167) See W. Kip Viscusi, Corporate Risk Analysis: A Reckless Act?,
52 STAN. L. REV. 547, 569 (2000).
(168) See FED. R. CIV. P. 23(b)(3). Sometimes treble damages are
available as a matter of statutory law. See Insider Trading Sanctions
Act of 1984 [section] 2, 15 U.S.C. [section] 78u-1(a) (2006); Racketeer
Influenced and Corrupt Organizations (RICO) Act, 18 U.S.C. 1964(c)
(2006); Agency Holding Corp. v. Malley-Duff & Assocs., 483 U.S. 143,
151 (1987) (“Both RICO and the Clayton Act are designed to remedy
economic injury by providing for the recovery of treble damages, costs,
and attorney’s fees.”); Glover, supra note 2, at 1151. Other
times, multiplers are imposed as a matter of common law. See Jim Gash,
The End of an Era: The Supreme Court (Finally) Butts Out of Punitive
Damages for Good, 63 FLA. L. REV. 525, 531 (2011).
(169) See Nagareda, supra note 10, at 2; Strong, Mass Torts, supra
(170) See HENSLER ET AL., supra note 113, at 71-72; Hensler, supra
note 15, at 25-26; Hodges, Resolving, supra note 34, at 336.
(171) See Hodges, Resolving, supra note 34, at 336; see also Luff,
supra note 8, at 113; supra note 148 and accompanying text.
(172) The paradigmatic example here involves disputes involving a
limited fund. See FED. R. CIV. P. 23(b)(1); Ortiz v. Fibreboard Corp.,
527 U.S. 815 (1999).
(173) See FED. R. CIV. P. 23(b)(1). For example, while the
substantive law in question could provide for punitive or treble
damages, there may not be sufficient commonality among the plaintiff
group to allow the effective imposition of such damages. Compare Ortiz,
527 U.S. at 864 (suggesting that “it would be essential that the
fund be shown to be limited independently of the agreement” and
“that the class include all those with claims unsatisfied at the
time of the settlement negotiations, with intraclass conflicts addressed
by recognizing independently represented subclasses”), with FED. R.
CIV. P. 23(b)(1) (not requiring commonality of facts or law).
Furthermore, parties to a Rule 23(b)(1) case may sometimes agree to
limit the availability of any punitive damages claims. See id. 23(b)(1);
Ortiz, 527 U.S. at 827.
(174) 131 S. Ct. 2541, 2558 (2011) (reasoning that individual
monetary claims belong in Rule 23(b)(3) and are not to be combined with
classwide relief in a Rule 23(b)(2) class); see also FED. R. CIV. P.
23(b) (explaining ways a class action may be maintained).
(175) See Wal-Mart Stores, 131 S. Ct. at 2558 (“Classes
certified under (b)(1) and (b)(2) share the most traditional
justifications for class treatment–that individual adjudications would
be impossible or unworkable, as in a (b)(1) class, or that the relief
sought must perforce affect the entire class at once, as in a (b)(2)
class.” (citation omitted)). A full functional or empirical
analysis of Rule 23(b)(1) cases is beyond the scope of this Article. See
FED. R. CIV. P. 23(b)(1).
(176) See 28 U.S.C. [section] 1407 (2006); Hensler, supra note 15,
at 16-17; HENSLER ET AL., supra note 113, at 99; Glover, supra note 2,
(177) Some U.S. commentators believe that use of aggregative
techniques such as MDL is likely to rise because of the difficulties
associated with certification of classes in mass torts cases. See Ortiz,
527 U.S. at 815; Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997);
Thomas E. Willging & Emery G. Lee III, From Class Actions to
Multidistrict Consolidations: Aggregate Mass-Tort Litigation After
Ortiz, 58 U. KAN. L. REV. 775, 776-77, 806 (2010).
(178) See Wal-Mart Stores, 131 S. Ct. at 2541; AT&T Mobility
LLC v. Concepcion, 131 S. Ct. 1740 (2011); Stolt-Nielsen S.A. v.
AnimalFeeds Int’l Corp., 130 S. Ct 1758 (2010). Not all
commentators read these decisions as being entirely negative. See Judith
Resnik, Comment, Fairness in Numbers: A Comment on AT&T v.
Concepcion, Wal-Mart v. Dukes, and Turner v. Rogers, 125 HARV. L. REV.
78 (2011); S.I. Strong, Does Class Arbitration “Change the
Nature” of Arbitration? Stolt-Nielsen, AT&T and a Return to
First Principles, 17 HARV. NEGOT. L. REV. 201 (2012) [hereinafter
Strong, First Principles].
(179) Willging & Lee, supra note 177, at 794.
(180) 28 U.S.C. [section] 1407.
(181) Id. (“Each action so transferred shall be remanded by
the panel at or before the conclusion of such pretrial proceedings to
the district from which it was transferred….”); see also Hensler,
supra note 15, at 16-17 (noting that once the pretrial process is
finished, mass claims are “disaggregated and dispersed to the
courts where they were initially filed for final disposition”).
(182) See Hensler, supra note 15, at 16-17.
(183) See 28 U.S.C. [section] 1407; Luff, supra note 8, at 113. See
generally DOBBS, supra note 152 (discussing availability of remedies and
their effect on future conduct).
(184) Luff, supra note 8, at 113. This focus on “the
settlement equivalent” raises the question of whether actions under
Rule 23(b)(1) can also be considered regulatory. See FED. R. CIV. P.
23(b)(1); see also supra notes 172-175 and accompanying text (discussing
Rule 23 of the Federal Rules of Civil Procedure). While a regulatory
effect is theoretically possible, empirical work would be helpful to
determine whether such effect exists as a functional matter.
(185) See Hensler, supra note 15, at 16-17 (noting most aggregated
claims settle); see also Jeremy T. Grabill, Judicial Review of Private
Mass Tort Settlements, 42 SETON HALL L. REV. 123 (2012)
(“Settlement is the ‘endgame’ of mass tort litigation.
And with the general demise of class actions in this field, mass tort
litigation is increasingly resolved through non-class aggregate
settlements.”); id. at 139-53 (discussing the evolution of
non-class aggregate settlements); HENSLER ET AL., supra note 113, at
(186) See Glover, supra note 9, at 1913-14 (suggesting MDL
procedures can operate in a regulatory manner). Thus far, much of the
scholarly focus on MDL has been on procedural issues rather than
regulatory or policy concerns regarding matters of institutional design.
See Judith Resnik, Money Matters:Judicial Market Interventions Creating
Subsidies and Awarding Fees and Costs in Individual and Aggregate
Litigation, 148 U. PA. L. REV. 2119 (9000); Charles Silver &
Geoffrey P. Miller, The Quasi-Class Action Method of Managing
Multi-District Litigations: Problems and a Proposal, 63 VAND. L. REV.
(187) See supra notes 158-71 and accompanying text.
(188) See Resolution, supra note 20; see also infra Part IV
(explaining regulatory litigation in Europe).
(189) See Luff, supra note 8, at 75, 113-14.
(190) Commentators have, of course, questioned whether regulatory
litigation actually fulfills its regulatory objectives effectively and
without any undue ancillary effects and market distortions, but that is
a different question than the one posed here. See Hodges, ANNALS, supra
note 20, at 336.
(191) Luff, supra note 8, at 113. Of course, other commentators
view the existence of regulatory gaps as reflecting a need for private
action. See Kevin R. Johnson, International Human Rights Class Actions:
New Frontiers for Group Litigation, 2004 MICH. ST. L. REV. 643, 654-659
(noting this need may arise particularly in cases where there has been
“political failure” or where those with “no potential for
[political] redress” have been affected).
(192) Luff, supra note 8, at 113. Top-down regulatory litigation
has not suffered from these same kinds of criticisms, since it grows out
of “statutory designs that evince a conscious choice on the part of
the legislators to vest regulatory enforcement authority in private
parties.” Id. at 95. Indeed, the European Union already utilizes
top-down regulatory litigation, as shown by the passengers’ rights
example. See Regulation on Passengers’ Rights, supra note 142; see
also supra notes 141-46 and accompanying text (analyzing top-down
regulatory litigation involings the European regulation on passenger
(193) Some distinction could be made between risk that was
unanticipated and risk that was unable to be anticipated, but that
discussion will be left for another day. See supra note 145 (noting a
risk that was anticipatable, but not anticipated by the relevant
(194) See Luff, supra note 8, at 75.
(195) Glover, supra note 2, at 1137. This consistency becomes more
apparent when the various elements of regulatory litigation are
identified. See supra note 149 and accompanying text. Notably, public
means of enforcement do not need to fail completely before private
remedies can be sought. Glover, supra note 2, at 1155. Furthermore, any
system that allows both public and private forms of regulation must be
careful to avoid duplication of efforts and over-deterrence. See id. at
(196) Glover, supra note 2, at 1158; see also Lesley K. McAllister,
Regulation by Third-Party Verification, 53 B.C. L. REV. 1, 4 (2012)
(describing the interplay between public and private concerns in
(197) See Nathan Howe, The Political Question Doctrine’s Role,
in Climate Change Nuisance Litigation: Are Power Utilities the First of
Many Casualties?, 40 ENVTL. L. REP. NEWS & ANALYSIS 11229, 11238-40
(2010) (discussing courts’ views on the propriety of litigation
prior to the enactment of legislation); Andrew P. Morriss et al.,
Choosing How to Regulate, 29 HARV. ENVTL. L. REV. 179, 248 (2005). Some
public bodies may consciously choose not to act in some cases, although
“[o]ne of the most significant risks of executive-driven moratoria
is their likelihood to invite legal battles.” Kathryn A. Watts,
Regulatory Moratoria, 61 DUKE L.J. 1883, 1927 (2012).
(198) Deposit Guar. Nat’l Bank v. Roper, 445 U.S. 326, 339
(1980). While this statement could be read as implicating certain
concerns relating to compensation and efficiency, the reference to
“injuries unremedied by the regulatory action of government”
establishes a firm link to regulatory concerns. Id.
(199) Id. Actually, this language could be read even more broadly
to include risks that were anticipated but left unregulated for whatever
reason. See supra note 197.
(200) See Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 613 (1997)
(discussing that Rule 23 cannot “abridge, enlarge or modify”
any substantive right (citation omitted)). A pre-existing substantive
norm constitutes the second element of the three-prong test for
bottom-up regulatory litigation. See supra note 149 and accompanying
(201) See Luff, supra note 8, at 75, 113.
(202) See Deposit Guar. Nat’l Bank, 445 U.S. at 339; see also
Abaclat (formerly Beccara) v. Argentine Republic, ICSID Case No.
ARB/07/5, Decision on Jurisdiction and Admissibility, [paragraph] 483
(Aug. 4, 2011) [hereinafter Abaclat Award], available at http://
italaw.com/documents/AbaclatDecisiononJurisdiction.pdf; S.I Strong, From
Class to Collective: The De-Americanization of Class Arbitration, 26
ARB. INT’L 493, 502 (2010) [hereinafter Strong,
(203) See Deposit Guar. Nat’l Bank, 445 U.S. at 339; see also
Abaclat Award, supra note 202, [paragraph] 483; Strong,
De-Americanization, supra note 202, at 502.
(204) See Deposit Guar. Nat’l Bank, 445 U.S. at 339.
(205) See Parklane Hosiery Co. v. Shore, 439 U.S. 322, 330 n.14
(1979); Ellis v. Ga.-Pac. Corp., 550 So. 2d 1310, 1318 (La. Ct. App.
(206) See Strong, Regulatory Arbitration, supra note 150, at 73-74
(discussing how investment law failed to foresee problems of
inconsistent results). The possibility of inconsistent .judgments is
considered relevant to the creation of some (but not all) types of class
actions, although those suits are not necessarily regulatory in nature.
See FED. R. Cry. P. 23(b)(1)(A); see also supra notes 172-175 and
accompanying text (describing fairness and consistency of judgments).
(207) This is particularly true given that there is some
legislative oversight of judicial rule-making. See Rules Enabling Act,
28 U.S.C. [section][section] 2071-72, 2074 (2006) (requiring
Congressional approval of rules of court, including the Federal Rules of
Civil Procedure); see also Shady Grove Orthopedic Assocs. v. Allstate
Ins. Co., 130 S. Ct. 1431 (2010); Allan Ides, The Standard for Measuring
the Validity of a Federal Rule of Civil Procedure: The Shady Grove
Debate Between Justices Scalia and Stevens, 86 NOTRE DAME L. REV. 1041,
1066-67 (2011) (discussing legislative limits on judicial rule-making).
(208) The one exception would be in constitutional cases in legal
systems where the courts have the final say on such matters. See
Dimitrios Kyritsis, Constitutional Review in Representative Democracy,
32 OXVORD J. LEGAL STUD. 297, 320-24 (2012).
(209) Many of these enactments have focused on the availability or
scope of the class mechanism rather the underlying substantive law,
which not only suggests that the legislature is acting in a
counter-regulatory manner but also supports the notion that regulatory
litigation focuses on procedural, rather than substantive, risks. See
Class Action Fairness Act of 2005, Pub. L. No. 109-2, [section] 2(a)
(4), (b), 119 Stat. 4, 4-5 (2005) (codified at 28 U.S.C. [section] 1711
(2006)); Omnibus Consolidated Recessions and Appropriations Act of 1996,
Pub. L. No. 104-134, [section] 504(a)(7), 110 Stat. 1321, 1321-53 (1996)
(limiting availability of legal aid in class actions); Prison Litigation
Reform Act of 1995, Pub. L. No. 104-134, 110 Stat. 1321-66 (1996)
(codified at 18 U.S.C. [section] 3626, 28 U.S.C. [section][section]
1915, 1915(f), and 42 U.S.C. [section] 1997e (2006)); Glover, supra note
2, at 1165; Greenberg, supra note 124, at 579; Johnson, supra note 191,
at 646-47; George Rutherglen, Wal-Mart, AT&T Mobility, and the
Decline of the Deterrent Class Action, 98 VA. L. REV. IN BRIEF 24, 28
(2012), available at http://www.virginialawreview.org/
inbrief.php?s=inbrief&p=2012/04/14/post. Although most subsequent
measures have focused on limiting judges’ and litigants’
ability to obtain class relief, legislators have also taken steps to
correct situations where the courts have improperly restricted class
relief, thus returning the scope or availability of the class device to
its previously expansive state. See Greenberg, supra note 124, at 585-86
(discussing employment discrimination).
(210) See supra notes 207-209 and accompanying text.
(211) Although commentators have focused heavily on the analysis of
default rules in the context of contract and corporate law, relatively
little attention has been paid to default provisions in the realm of
regulatory litigation and other questions of institutional design. See
Ian Ayres & Robert Gertner, Filling Gaps in Incomplete Contracts: An
Economic Theory of Default Rules, 99 YALE L.J. 87, 89 (1989) (noting
lack of scholarship on default rules); see also Ian Ayres, Valuing
Modern Contract Scholarship, 112 YALE LJ. 881, 885 (2003) (supporting
modern contract scholarship and results it provides in “clarifying
… contract rules,” “illuminating … default rule [s],”
and “underscoring … renegotiation”); Ian Ayres & Robert
Gernter, Majoritarian vs. Minoritarian Defaults, 51 STAY. L. REV. 1591,
1591 (1999) (discussing optimal default rules for contractual
incompleteness through understanding underlying reasons for the
incompleteness); Ian Ayres & Robert Gernter, Strategic Contractual
Inefficiency and the Optimal Choice of Legal Rules, 101 YALE L.J. 729,
729-30 (1992) (explaining gap-filling for incomplete contracts) ; Jason
Scott Johnston, Strategic Bargaining and the Economic Theory of Contract
Default Rules, 100 YALE L.J. 615, 615 (1990) (analyzing the economic
impact of Hadley v. Baxendale); Eric A. Posner, Economic Analysis of
Contract Law After Three Decades: Success or Failure?, 112 YALE L.J.
829, 834, 839 (2003) (comparing how contract lawyers and economists
construct default rules about contracts).
(212) See Orin S. Kerr, The Fourth Amendment and New Technologies:
Constitutional Myths and the Case for Caution, 102 MICH. L. REV. 801,
840-70 (2004); Michael D. Sant’ Ambrogio, Agency Delays: How a
Principal-Agent Approach Can Inform Judicial and Executive Branch Review
of Agency Foot-Dragging, 79 GEO. WASH. L. REV. 1381, 1387 (2011).
(213) See supra note 46 and accompanying text. Notably, however,
many questions about whether regulatory litigation is inherently better
than traditional forms of regulation typically cannot be answered
empirically. Thus, for example, while it might be useful to ask which
regulatory mechanism–regulatory litigation or traditional
regulation–is capable of responding most speedily to changed or
changing circumstances, no definitive answer appears to exist. See Kerr,
supra note, at 840-70 (considering whether courts are at a comparative
disadvantage in regulating areas that are rapidly changing due to
difficulties in revising judicial doctrines and precedent); Sant’
Ambrogio, supra note 212, at 1387 (discussing problems associated with
(214) This problem is not limited to regulatory litigation, since
traditional forms of regulation can often be equally difficult to
interpret and predict. See McAllister, supra note 196, at 22.
(215) See Luff, supra note 8, at 114; see also Dorf, supra note 42,
at 876-77; supra notes 149, 152 and accompanying text (explaining
bottom-up regulatory litigation).
(216) The type of precautions to be taken depends on the nature of
the substantive risk in question and not on the likelihood of bilateral
versus multilateral litigation. For example, a pharmaceuticals
manufacturer might undergo additional testing so as to avoid any
potential claims that personal injuries that might arise from the use of
a particular drug were negligently caused, while a national corporation
might require extensive management training and voluntary internal
audits of regional hiring or promotion practices so as to anticipate and
avoid claims of employment discrimination. See Daphne Richemond-Barak,
Regulating War: A Taxonomy in Global Administrative Law, 22 EUR. J.
INT’L L. 1027, 1056-67 (2011). Although some critics see these
sorts of “defensive” measures as unnecessarily costly and
socially undesirable to the extent they delay certain products (such as
pharmaceuticals) from reaching the market or increase the cost of those
items, self-restraint (like self-regulation) may be preferable to
mandatory forms of public regulation, which could be more onerous. See
Frank B. Cross, Tort Law and the American Economy, 96 MINN. L. REV. 28,
29-30 (2011); see infra notes 257-270 and accompanying text.
(217) However, the possibility of regulatory litigation may provide
the incentive to undertake the precautionary measures in question,
although the desire to avoid regulatory litigation does not depend on
whether the suit involves class or collective relief. See Glover, supra
note 2, at 1190-91 (suggesting that in some situations–such as
large-scale RICO actions–aggregative or class-expanding mechanisms may
not be necessary, since the treble damages provisions alone are
sufficient to provide a regulatory effect).
(218) See Luff, supra note 8, at 113; see also supra notes 149-152
and accompanying text (discussing the role substantive law plays in
bottom-up regulatory litigation).
(219) See supra note 149 and accompanying text.
(220) See supra notes 172-87 and accompanying text.
(221) See supra notes 148, 172-87 and accompanying text.
(222) See Resolution, supra note 20; see also infra Part IV
(analyzing regulatory litigation in Europe).
(223) Some authorities frame the ability to proceed as class or
collective as a remedy. See Parham v. J.R., 442 U.S. 584, 616 (1979);
Jock v. Sterling Jewelers Inc., 646 F.3d 113, 127 (2d Cir. 2011), cert.
denied, 132 S. Ct. 1742 (2012); Pendergast v. Sprint Nextel Corp., 592
F.3d 1119, 1139 (11th Cir. 2010); Canfield v. United States, 14 C1. Ct.
687, 689 (1988); Gidi, Issue Preclusion, supra note 153, at 1065 &
n. 185; WRIGHT, supra note 153, [section] 72, at 740. Others suggest it
may be some type of right. See Amchem Prods., Inc. v. Windsor, 521 U.S.
591, 613 (1997); Gidi, Issue Preclusion, supra note 153, at 1065 &
(224) Although detailed consideration of this issue is beyond the
scope of this Article, it would be very useful to conduct a
rights-balancing analysis concerning class and collective relief, on the
one hand, and regulatory concerns on the other. Some general information
on this topic is available. See Robert G. Bone, Agreeing to Fair
Process: The Problem with Contractarian Theories of Procedural Fairness,
83 B.U.L. REV. 485, 535 (2003); Virgilio Afonso da Silva, Comparing the
Incommensurable: Constitutional Principles, Balancing and Rational
Decision, 31 OXFORD J. LECAL STUD. 273, 284-299 (2011); Le Sueur, supra
note 155, at 473.
(225) See Luff, supra note 8, at 113. Interestingly, the two
concepts do not have to be mutually exclusive. See Margaux J. Hall &
David C. Weiss, Human Rights and Remedial Equilibration: Equilibrating
SocioEconomic Rights, 36 BROOK. J. INT’L L. 453, 501 (2011)
(discussing how rights may incorporate a remedy) ; see also Strong,
Regulatory Arbitration, supra note 150, at 64-81 (discussing how
investment law may recognize a right to a remedy).
(226) Daryl J. Levinson, Rights Essentialism and Remedial
Equilibration, 99 COLUM. L. REV. 857, 870-71 (1999) (citations omitted)
(discussing Owen M. Fiss, Foreword: The Forms of Justice, 93 HARV. L.
REV. 1 (1979)); see also id. at 857-58 (explaining difference between
rights and remedies). The notion that remedies are in some way
subordinate to rights may also be reflected in the laws of some European
Member States. See Antony Lester, The Human Rights Act 1998–Five Years
On, 2004 EUR. H.R. L. REV. 258, 260.
(227) See Amchem Prods., 521 U.S. at 613; see also Shady Grove
Orthopedic Assocs., v. Allstate Ins. Co., 130 S. Ct. 1431 (2010);
Bisaillon v. Concordia University,  1 S.C.R. 666
[paragraph][paragraph] 15, 17 (Can.); Strong, Canada, supra note 79, at
(228) See Jamie Dodge, The Limits of Private Procedural Ordering,
97 VA. L. REV. 723, 733 (2011); see also Abaclat (formerly Beccara) v.
Argentine Republic, ICSID Case No. ARB/07/5, Decision on Jurisdiction
and Admissibility, Dissenting Opinion 86 (Oct. 28, 2011), available at
(229) The elevation of substance over procedure may be more
apparent in civil law than in criminal law. See Dodge, supra note 228,
at 731-57. Indeed, some commentators have suggested that criminal law
protects procedure more than substance. See Nancy Gertner, On
Competence, Legitimacy and Proportionality, 160 U. PA. L. REV. 1585,
1595 n.57 (2012); Jessica Brooks, Note, Two-Way Video Testimony and the
Confrontation Clause: Protecting Vulnerable Victims After Crawford, 8
STAN. J. CIV. RTS. & CIV. LIBERTIES 183, 184 (2012).
(230) Dodge, supra note 228, at 725.
(231) Id. at 725-26.
(232) For example, courts have been known to rely solely on the
placement of the right in the relevant rules of civil procedure. See
Amchem Prods., 521 U.S. at 613 (discussing Federal Rules of Civil
Procedure and noting that Rule 23 cannot “abridge, enlarge or
modify” any substantive fight and should, as such, be considered
procedural in nature); see also Shady Grove, 130 S.Ct. at 1442
(describing what constitutes a procedural right); Deposit Guar.
Nat’l Bank v. Roper, 445 U.S. 326, 332 (1980) (noting the fight of
a litigant to employ Rule 23 of the Federal Rules of Civil Procedure or
the collective action procedures under the FLSA “is a procedural
right only, ancillary to the litigation of substantive claims”);
Bisaillon, 1 S.C.R. 666, [paragraph][paragraph] 15, 17; Strong, Canada,
supra note 79, at 965-75.
(233) See Gidi, Issue Preclusion, supra note 153, at 1063 &
n.185; Greenberg, supra note 124, at 577 (regarding injunctive relief);
Strong, Canada, supra note 79, at 965-75.
(234) Resolution, supra note 20, [paragraph] 15.
(235) See Hall & Weiss, supra note 225, at 501 (discussing how
rights may incorporate a remedy); Wilkinson, supra note 155, at 288.
(236) This may be the case in international investment law. See
CAMPBELL McLACHLAN ET AL., INTERNATIONAL INVESTMENT ARBITRATION
[section] 3.01 (2007) (suggesting that “[t]he protection offered to
investors by the dispute resolution provisions of treaties is
sufficiently important to rise to the level of a substantive principle
in its own right”). See generally Strong, Regulatory Arbitration,
supra note 150, at 64-81 (discussing how investment law may recognize a
right to a remedy).
(237) See Shady Grove, 130 S. Ct. at 1444-46; Sibbach v. Wilson
& Co., 312 U.S. 1, 13-14 (1941) (noting the term “substantive
right” did not include procedural rights, even if they were
“important” or “substantial”); Ides, supra note 207,
(238) The U.S. Supreme Court recently addressed certain issues
regarding potential overlaps between substantive and procedural rights
in the context of federal diversity class actions, which may generate
more detailed analysis by both courts and commentators. See Shady Grove,
130 S. Ct. at 1442-48. Justice Stevens’ concurrence, which controls
the plurality opinion, is particularly interesting in this regard. See
id. at 1448-50 (Stevens., J., concurring); see also Julia B. Strickland
et al., 2010 Class Action Developments, 1946 PLI/CORP. 537, 541-43 (Apr.
9-10, 2012) (explaining the Shady Grove decision).
(239) See Resolution, supra note 20, [paragraph] 15.
(240) Id. [paragraph] A; see also id. [paragraph][paragraph] E, 17
(noting importance of procedural rights).
(241) See Burkhard Hess, Procedural Harmonisation in a European
Context, in CIVIL LITIGATION IN A GLOBALIZING WORLD 159, 169-72 (X.E.
Kramer & C.H. van Rhee ed., 2012); Le Sueur, supra note 155, at 475;
see also Mauro Cappelletti, Fundamental Guarantees of the Parties in
Civil Litigation: Comparative Constitutional, International, and Social
Trends, 25 STAN. L. REV. 651, 652 (1973) (examining “the more
significant aspects of procedural gurantees”). See generally
Strong, Quo Vadis, supra note 34 (examining new European resolution
creating an avenue for regional collective relief).
(242) See Le Sueur, supra note 155, at 458. See generally Strong,
Quo Vadis, supra note 34 (discussing European adoption of cross-border
collective redress claims). The notion of an effective remedy also
underlies U.S. jurisprudence, though more implicitly. See Deposit Guar.
Nat’l Bank v. Roper, 445 U.S. 326, 339 (1980).
(243) European Convention on Human Rights, art. 13, effective June
1, 2010 (as amended by Protocols Nos. 11 & 14), available at
http://conventions.coe.int/Treaty/ en/Treaties/Html/005.htm; see also Le
Sueur, supra note 155, at 457-58 (discussing the right to an effective
remedy under the European Convention on Human Rights).
(244) Charter of Fundamental Rights of the European Union, 2000/C
364/1, art. 47, 18 Dec. 2000; see also Pieter Van Cleynenbreugel,
Judge-Made Standards of National Procedure in the Post-Lisbon
Constitutional Framework, 37 EUR. L. REV. 90, 95-97 (2012) (discussing
the “fundamental right to an effective ‘remedy'”);
Hess, supra note 241, at [section] 8.4; Sionaidh Douglas-Scott, The
Charter of Fundamental Rights as a Constitutional Document, 2004 EUR.
H.R.L. REV. 37, 46 (explaining the current limited system of remedies
for private parties).
(245) See KELEMEN, supra note 41, at 14 (noting “the broad
empowerment of private actors to assert their legal rights”);
Abaclat Award, supra note 202, [paragraph] 483; Glover, supra note 2, at
1137; Strong, De-Americanization, supra note 202, at 502; see also supra
notes 202-219 and accompanying text (analyzing procedural risks).
(246) See Dodge, supra note 228, at 770-83 (explaining the
public-private distinction). Western legal analysis tends to focus on
individual rights and remedies rather than group rights. See Mark
Tushnet, The Constitution of Religion, 18 CONN. L. REV. 701, 734 (1986).
However, large-scale litigation includes a number of public benefits.
See Patrick A. Luff, Bad Bargains: The Mistake of Allowing Cost-Benefit
Analyses in Class Action Certification Decisions, 41 U. MEM. L. REV. 65,
74 n.36 (2010) [hereinafter Luff, Memphis]; HENSLER ET AL., supra note
113, at 121-22; MULHERON, supra note 9, at 63, 66; Burch, supra note
113, at 74-76
(247) Dodge, supra note 228, at 771-72.
(248) See AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740
(2011) ; see also Strong, First Principles, supra note 178, at 227-29
(analyzing use of waivers in class arbitration context).
(249) See AT&T Mobility, 131 S. Ct. at 1744, 1753.
(250) See Dodge, supra note 228, at 772-83; Strong, Canada, supra
note 79, at 965-71; Strong, First Principles, supra note 178, at 211-40
(analyzing whether class arbitration meets the standards necessary to
properly be considered arbitration).
(251) See AT&T Mobility, 131 S. Ct. at 1753; Strong, Canada,
supra note 79, at 965-71; Strong, First Principles, supra note 178, at
240. The dissent took a more holistic view of the issues at stake. See A
T&T Mobility, 131 S. Ct. at 1760-61 (Breyer, J., dissenting).
(252) Lisa Blomgren Bingham et al., Dispute System Design and
Justice in Employment Dispute Resolution: Mediation in the Workplace, 14
HARV. NEG. L. REV. 1, 17 (2009).
(253) Bingham et al., supra note 252, at 5; see also Amy J. Cohen,
Dispute Systems Design, Neoliberalism, and the Problem of Scale, 14
HARV. NEGOT. L. REV. 51, 80 (2009).
(254) Richard A. Posner, The Summary Jury Trial and Other Methods
of Alternative Dispute Resolution: Some Cautionary Observations, 53 U.
CHI. L. REV. 366, 368 (1986).
(255) Raniere v. Citigroup Inc., 827 F. Supp. 2d 294, 310 (S.D.N.Y.
2011); see also Dodge, supra note 228, at 772-83; Charles L. Knapp,
Taking Contracts Private: The Quiet Revolution in Contract Law, 71
FORDHAM L. REV. 761, 796 nn.118-19 (2002) (citing cases regarding
waivers). But see LaVoice v. UBS Fin. Serv., Inc., No. 11 Civ. 2308(BSJ)
(JLC), 2012 WL 124590, at *6 (S.D.N.Y.Jan. 13, 2012) (declining to
(256) The assumption is that the elimination of class or collective
remedies will result in the abandonment of the claims by the private
individuals. See Strong, First Principles, supra note 178, at 238
(noting non-certification of a class, mass, or collective often sounds
the “death knell” to such proceedings).
(257) See Dodge, supra note 228, at 782.
(258) In the United States, these functions are often carried out
by the Department of Justice and state attorneys general, although other
enforcement agencies also exist. See Baer, supra note 9, at 612-25;
Luff, supra note 8, at 113-14; Meyer, supra note 9, at 886.
(259) See AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740
(2011); Dodge, supra note 228, at 782; Christopher R. Drahozal &
Peter B. Rutledge, Arbitration Clauses in Credit Card Agreements: An
Empirical Study, 9 J. EMPIRICAL LEGAL STUD. 536, 544, 565 (2012) (noting
class waivers are widespread in some types of consumer transactions but
not in others); Glover, supra note 2, at 1165-67 (noting increasing use
of waivers of class arbitration and litigation).
(260) See Glover, supra note 2, at 1153-55; see also infra notes
276-281 and accompanying text (analyzing limitations on public bodies).
(261) See Glover, supra note 2, at 1153; see also Dodge, supra note
228, at 782.
(262) See Glover, supra note 2, at 1154 (noting scarce public
resources have long been “the rule, not the exception” in the
United States) ; see also Catherine R. Albiston & Laura Beth
Nielsen, The Procedural Attack on Civil Rights: The Empirical Reality of
Buckhannon for the Private Attorney General, 54 UCLA L. REV. 1087,
1132-34 (2007) (predicting the aftermath of Buckhannon will reduce
private enforcement efforts and acknowledging it is “unlikely that
there will be an infusion of funds into state and federal enforcement to
fill the breach”); Eloise Pasachoff, Special Education, Poverty,
and the Limits of Private Enforcement, 86 NOTRE DAME L. REV. 1413,
1415-16 (2011) (noting “more public enforcement is actually
necessary to effectuate the goals of a statute,” as evidence
suggests an overreliance on private action results in
“under-enforcement of the law”); Heidi Mandanis Schooner,
Private Enforcement of Systemic Risk Regulation, 43 CREIGHTON L. REV.
993, 1000-04 (2010) (acknowledging the limits of public enforcement).
(263) See Bignami, supra note 5, at 412.
(264) See Burch, supra note 113, at 70-77, 128; Luff, supra note 8,
at 113-14; Robertson, supra note 140, at 162, 175.
(265) See Burch, supra note 113, at 70-77, 128; Strong, Canada,
supra note 79, at 980.
(266) See Richard A. Nagareda, Outrageous Fortune and the
Criminalization of Mass Torts, 96 MICH. L. REV. 1121, 1197-98 (1998);
Byron G. Stier, PIP Breast Implants and Mass Torts in Europe, MASS TORT
LITIGATION BLOG (Jan. 30, 2012),
http://lawprofessors.typepad.com/mass_tort_litigation/2012/01/pip-breast-implants-and-mass-torts- in-europe.html [hereinafter PIP Breast
Implants] (describing the traditional European approach as “more
reliant on criminal law than tort for deterrence, compensatory damages
are limited because of the comparatively extensive governmental social
insurance, punitive damages are unavailable, and class actions are
traditionally not embraced.”). See generally Frank J. Vandall, The
Criminalization of Products Liability: An Invitation to Political Abuse,
Preemption, and Non-Enforcement, 57 CATH. U. L. REV. 341 (2008) (arguing
the criminalization of products liability is “neither necessary,
(267) See Butch, supra note 113, at 70-77, 128; Jules L. Coleman,
Mistakes, Misunderstandings, and Misalignments, 121 YALE L.J. ONLINE
541, 564-65 (2012), available at
http://yalelawjournal.org/the-yale-law-journal-pocket-part/tort-law/mistakes,-misunderstandings,-and-misalignments/; Stier, supra note 266.
(268) See Greenberg, supra note 124, at 585-86; Ventoruzzo, supra
note 72, at 439.
(269) Id.; see also supra notes 208-209 and accompanying text
(describing the interaction of legislatures and courts with regards to
(270) See AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740
(2011); Arbitration Fairness Act of 2011, S. 987, 112th Cong. (2011);
Arbitration Fairness Act of 2011, H.R. 1873, 112th Cong. (2011).
(271) See Butch, supra note 113, at 70-77, 128; Strong, Canada,
supra note 79, at 980.
(272) See Dodge, supra note 228, at 729 (noting dangers of
uncontextualized procedural analysis); Matthew C. Stephenson, Public
Regulation of Private Enforcement: The Case for Expanding the Role of
Administrative Agencies, 91 VA. L. REV. 93, 106-21 (2005).
(273) Luff, supra note 8, at 88 (footnote omitted).
(274) See MULHERON, supra note 9, at 63-66; see also supra notes
172-86 and accompanying text (discussing types of large-scale litigation
available in the United States).
(275) Luff, supra note 8, at 114; see also id. at 75.
(276) See supra Part III.A.
(277) Glover, supra note 2, at 1153.
(278) See id. at 1140, 1145-46.
(279) See id. at 1153 (discussing situations where “public
governmental enforcement bodies have limited resources that are …
insufficient to perform the functions with which they are tasked”).
(280) Id. at 1154; see Albiston & Nielsen, supra note 262, at
1132-34; Pasachoff, supra note 262, at 1415-16; Schooner, supra note
262, at 1000-04.
(281) Bignami, supra note 5, at 412 (claiming, however, that has
not led to regulatory litigation but to “cooperative
(282) See Directorate General, supra note 19, at 38.
(283) Glover, supra note 2, at 1154.
(284) See Matthew C. Stephenson, Information Acquisition and
Institutional Design, 124 HARV. L. REV. 1422, 1431 (2011).
(285) Glover, supra note 2, at 1154.
(286) Id. at 1154-55.
(287) See Abigail C. Moncrieff, Cost-Benefit Federalism:
Reconciling Collective Action Federalism and Libertarian Federalism in
the Obamacare Litigation and Beyond, 38 AM. J. L. & MED. 288, 304-05
(2012) (noting size affects informational asymmetries).
(288) See Glover, supra note 2, at 1155.
(289) Id. at 1184; see Fair Labor Standards Act of 1938, Pub. L.
No. 75-718, ch. 676, [section] 16, 52 Star. 1060, 1069 (codified at 29
U.S.C. [section] 216 (2006)). This would support the decision not to
allow parties to waive their rights to collective action in Fair Labor
Standards Act (FLSA) suits. See Raniere v. Citigroup Inc., 827 F. Supp.
2d 294, 314 (S.D.N.Y. 2011) (holding the right to proceed collectively
under the FLSA cannot be waived).
(290) Glover, supra note 2, at 1182.
(291) See supra notes 169-170 and accompanying text.
(292) See FED. R. CIV. P. 26; Stephenson, supra note 284, at
1428-29, 1447-53 (considering judicial informational disadvantages).
Generous rules regarding notice pleading eliminate the need for
plaintiffs to have evidence of their allegations at the time of filing,
although recent Supreme Court decisions have tightened the pleading
standard in the United States. See Bell Atl. Corp. v. Twombley, 550 U.S.
544, 556 (2007); Scott Dodson & James M. Klebba, Global Civil
Procedure Trends in the Twenty-First Century, 34 B.C. INT’L &
COMP. L. REV. 1, 3-8 (2011) (comparing pleading standards inside and
outside the U.S.).
(293) See Nagareda, supra note 10, at 13.
(294) See Dodson & Klebba, supra note 292, at 7-8. Of all the
European Member States, only England recognizes a right to discovery
similar to that used in the U.S., although even then, the scope of
disclosure is construed much more narrowly than in the United States.
See S.I. Strong, Jurisdictional Discovery in United States Federal
Courts, 67 WASH. & LEE L. Rev. 489, 501-03, 522-23 (2010).
(295) See Nagareda, supra note 10, at 2.
(296) Resolution, supra note 20, [paragraph] 20.
(297) Glover, supra note 2, at 1155.
(298) Einer R. Elhauge, Does Interest Group Theory Justify More
Intrusive Judicial Review?, 101 YALE L.J. 31, 43 (1991); see Glover,
supra note 2, at 1204.
(299) See Public Consultation: Towards a Coherent European Approach
to Collective Redress, EUROPEAN COMMISSION, DIRECTORATE-GENERAL JUSTICE,
news/consulting_public/news_consulting_0054_en.htm (last visited Oct. 6,
2012) (containing approximately 19,000 submissions made as part of the
European Commission’s public consultation on collective redress);
Valguarnera, supra note 19, at 1-2.
(300) See Frank B. Cross, Shattering the Fragile Case for Judicial
Review of Rulemaking, 85 VA. L. REV. 1243, 1322-23 (1999); Thomas W.
Merrill, Capture Theory and the Courts: 1967-1983, 72 CHI.-KENT L. REV.
1039, 1069 (1997). But see Andrew P. Morriss & Craig Allen Nard,
Institutional Choice & Interest Groups in the Development of
American Patent Law, 19 SUP. CT. ECON. REV. 143, 217-18 (2011) (arguing
“courts and Congress each present interest groups with different
costs and benefits,” and in certain conditions seeking a federal
court opinion is “significantly less” costly than lobbying
Congress for a statutory change).
(301) See Richard J. Lazarus, Advocacy Matters Before and Within
the Supreme Court: Transforming the Court by Transforming the Bar, 96
GEO. L.J. 1487, 1490-91, 1505-07 (2008) (discussing the strategy and
success rate of the U.S. Chamber of Commerce, a non-profit advocacy
group formed by corporate interests to promote a pro-business agenda at
the Supreme Court).
(302) See Eric A. Posner, Tobacco Regulation or Litigation?, 70 U.
CHI. L. REV. 1141, 1155-57 (2003); see also Cassone & Ramello, supra
note 86, at 223 (suggesting that that “[c]lass action can thus
re-establish the alignment between public and individual interests where
there are no credible alternatives”).
(303) Sophie Harnay & Alain Marciano, Seeking Rents Through
Class Actions and Legislative Lobbying: A Comparison, 32 EUR. J.L. &
ECON. 293, 303 (2011).
(304) Reza Rajabiun, Private Enforcement and Judicial Discretion in
the Evolution of Antitrust in the United States, 8 J. COMP. L. &
ECON. 187, 200 (2012).
(305) See Michaels, supra note 40, at 342, 357.
(306) See id.
(307) When public bodies fail to provide a sufficient level of
regulation through traditional or litigation-oriented means, the levels
of legal injury will rise. If private forms of bilateral litigation are
not enough to address the injuries in question (because of unanticipated
procedural risks), then regulatory litigation may be appropriate. See
supra notes 202-206 and accompanying text.
(308) See Resolution, supra note 20. Although some commentators
take the view that regulatory litigation requires intent on the part of
the litigants or judge, it is also possible to achieve an unintended
regulatory effect. See Dari-Mattiacci & De Geest, supra note 37, at
377; Luff, supra note 8, at 113; Russell, supra note 34, at 151 n.47.
(309) See infra Part IV.
(310) Luff, supra note 8, at 113.
(311) See Regulation on Passengers’ Rights, supra note 142;
see also supra notes 142-144 and accompanying text (exploring European
regulation of passenger rights as an example of top-down regulatory
(312) See Resolution, supra note 20; Luff, supra note 8, at 113.
(313) See Directorate General, supra note 19, at 6 (stating that
“[m]arket outcomes may be efficiently corrected by government or
courts provided that access information and organisation are facilitated
and kept at minimum cost to avoid creating externalities” (emphasis
omitted)); see also id. at 7 (suggesting that “[a]nother response
to market failure or government failure may be judicial
(314) For example, the European Parliament’s own-initiative
report is somewhat ambiguous in this regard. See Lehne Report, supra
note 21, [paragraph] 4 (“[A]ction is needed at EU level in order to
improve the current EU regulatory framework so as to allow victims of
infringements of EU law to be compensated for the damage they sustain
and thus contribute to consumer confidence and smoother functioning of
the internal market.”); see also id. [paragraph] 9 (noting
“that there are gaps in the existing regulatory framework” and
stressing “the added value of a coherent EU action for the
establishment of a common framework in the field of collective redress
to address the shortcomings and lack of effectiveness of the existing EU
legal instruments, the diversity of situations at national level, the
potential evolution and reforms of existing national collective redress
systems or the introduction of collective redress systems in Member
States where such instruments do not yet exist”). However, it may
be that the European Commission will undertake a full regulatory
analysis in its forthcoming impact report. See Resolution, supra note
20, [paragraph] 4.
(315) Bignami, supra note 5, at 412 (referring to the new European
style as “cooperative legalism”).
(316) Hodges, Europeanization, supra note 35, at 115.
(317) See Michaels, supra note 40, at 342 (discussing methodology
(318) See supra note 20.
(319) See Resolution, supra note 20, [paragraph] G.
(320) See Michaels, supra note 40, at 342.
(321) See Resolution, supra note 20; see also supra note 17
(listing forms of collective redress).
(322) See Resolution, supra note 20.
(323) Although the type of intent necessary for bottom-up
regulatory litigation involves that of the judge or the litigants rather
than that of the legislature or executive, it is nevertheless useful to
consider whether and to what extent European authorities appear to be
contemplating the use of regulatory litigation as a matter of
institutional design. See Luff, supra note 8, at 113-14; see also
Strong, Regulatory Arbitration, supra note 150 (discussing legislative
intent in regulatory litigation and arbitration).
(324) Resolution, supra note 20, [paragraph] 1; see also id.
[paragraph] E (noting collective redress is appropriate because
individual consumers “often face significant barriers in terms of
accessibility, effectiveness and affordability owing to sometimes high
litigation costs, potential psychological costs, complex and lengthy
procedures, and lack of information on the available means of
(325) Id. [paragraph] K; see also id. [paragraph][paragraph] 20, 22
(regarding representative bodies).
(326) Id. [paragraph] 6.
(327) Id. [paragraph] J.
(328) See id. [paragraph][paragraph] E, J-K, 1, 6, 20, 22.
(329) See supra notes 242-45 and accompanying text.
(330) See supra notes 242-245 and accompanying text. Furthermore, a
particular mechanism can simultaneously fulfill compensatory and
regulatory aims; there is no need for one function to exclude the other.
See HENSLER ET AL., supra note 113, at 121-22; MULHERON, supra note 9,
at 63, 66; Burch, supra note 113, at 74-76; Luff, Memphis, supra note
246, at 74.
(331) See supra notes 187-88 and accompanying text.
(332) See Resolution, supra note 20, [paragraph][paragraph] H-J, 4,
6. The Resolution also notes that seventy-nine percent of European
consumers support the adoption of a collective redress mechanism. See
id. [paragraph] D.
(333) Id. [paragraph][paragraph] M, 4. European authorities are
only authorized to act in certain areas as a matter of fundamental
European law. One such area of competence involves the operation of the
internal market. See TFEU, supra note 38, arts. 3, 5.
(334) Resolution, supra note 20, [paragraph] H; see also id.
[paragraph][paragraph] I-J, 4, 6.
(335) See id. [paragraph][paragraph] H-I, L, 15.
(336) See id. [paragraph][paragraph] D, H-J, L, 4, 6, 15; Luff,
supra note 8, at 75, 113-14.
(337) Resolution, supra note 20, [paragraph] G; see also id.
[paragraph] 3 (welcoming the “efforts of Member States to
strengthen the rights of victims of unlawful behavior by introducing or
planning to introduce legislation aimed at facilitating redress”).
(338) Id.[paragraph] G.
(339) See Luff, supra note 8, at 113-14.
(340) Resolution, supra note 20, [paragraph] F.
(342) Luff, supra note 8, at 113.
(343) Resolution, supra note 20, [paragraph] I.
(344) Id. [paragraph] 12.
(345) Id. [paragraph] 13; see also id. [paragraph] 23 (regarding
(346) See Glover, supra note 2, at 1140, 1145-46.
(347) See Resolution, supra note 20; see also supra note 3 and
accompanying text (noting the perception that European nations prefer
formal to private regulation).
(348) See Resolution, supra note 20; see also supra note 33 and
(349) Instead, the European Parliament has asked the European
Commission to conduct an impact assessment that demonstrates
“action is needed at EU level in order to improve the current EU
regulatory framework so as to allow victims of infringements of EU law
to be compensated for the damage they sustain and thus contribute to
consumer confidence and smoother functioning of the internal
market.” Resolution, supra note 20, [paragraph] 4; see also TFEU,
supra note 38, art. 294 (detailing the ordinary legislative procedure);
Resolution, supra note 20, [paragraph] 29 (indicating “that the
European Parliament must be involved … in any legislative initiative
in the field of collective redress”).
(350) The European legislative process is still in the very early
stages of development, with a significant amount of opportunity for
future development. See Resolution, supra note 20, [paragraph] 29; see
also TFEU, supra note 38, art. 294 (outlining the ordinary legislative
(351) See Francis E. McGovern, Second-Generation Dispute System
Design Issues in Managing Settlements, 24 OHIO ST. J. ON DISP. RESOL.
53, 53 (2008) (“Second-generation learning can benefit as much from
understanding why designs fail as it can from understanding why they
(352) Resolution, supra note 20, [paragraph] 2; see also id.
[paragraph] 9 (citing evidence that “collective redress mechanisms
available within the EU have not generated disproportionate economic
consequences”); Directorate General, supra note 19, at 9
(concerning benchmarks regarding collective redress mechanisms).
(353) See Resolution, supra note 20, [paragraph] 20; see supra
notes 14, 34 and accompanying text.
(354) See Resolution, supra note 20.
(355) Id. [paragraph] 20.
(356) See id. [paragraph] 2; see also Bignami, supra note 5, at 460
(noting European nations have resisted Americanization and tended
towards a model of cooperative legalism); Hodges, Europeanization, supra
note 35, at 115; Valguarnera, supra note 19, at 3, 19-21 (comparing the
manner in which American and European market regulation impacts the
legal system and propensity for litigation).
(357) See Resolution, supra note 20, [paragraph] 20. The emphasis
on the need to protect the individual right to assert one’s claim
is particularly interesting because of certain difficulties involving
European rules of civil procedure. See Strong, Brussels I, supra note
30; Strong, Quo Vadis, supra note 34.
(358) See Resolution, supra note 20, [paragraph] 20. Many of the
more abusive aspects of U.S. class actions do not arise as a result of
the nature of class action procedures themselves but because of the
interaction between those procedures and background principles of U.S.
civil procedure. See Nagareda, supra note 10, at 2; Strong, Mass Torts,
supra note 78.
(359) See Resolution, supra note 20, [paragraph] 20 (stating
“there can be no action without financial risk”).
(360) See id.
(361) See id. [paragraph][paragraph] 1, 15-24, 26; see also supra
(362) Resolution, supra note 20, [paragraph] 9; see FED. R. Cry. P.
23. Some types of class or collective relief are available in the United
States on a sectoral basis. See Fair Labor Standards Act of 1938, 29
U.S.C. [section] 216 (2006).
(363) See Hensler, supra note 15, at 15.
(364) Nagareda, supra note 10, at 28; see also Hensler, supra note
15, at 22-25 (noting the need to balance incentives for group action
against concerns about abusive litigation). However, “even the
stated resistance to the ‘litigation culture’ of the United
States on the part of European systems will not–indeed,
cannot–immunize Europe from the kinds of structural dynamics exhibited
by U.S.-style aggregate litigation.” Nagareda, supra note 10, at 8.
See also infra note 405 and accompanying text.
(365) See Hensler, supra note 15, at 22-23; Mulheron, Opt-Out,
supra note 27, at 452-53; Sarah A. Westby, Note, Associations to the
Rescue: Reviving the Consumer Class Action in the United States and
Italy, 20 TRANSNAT’L L. & CONTEMP. PROBS. 157, 195-96 (2011).
(366) See Resolution, supra note 20, [paragraph] 20.
(367) The problem is that opt-out procedures do not provide
adequate assurance for some countries that all plaintiffs have
consciously chosen to exercise their individual litigation rights in
this way and at this time. See In re Vivendi Universal, No. 02 Civ.
5571(RJH) (HBP), 2009 WL 855799, at *3 (S.D.N.Y. Mar. 31, 2009);
Buxbaum, Securities, supra note 10, at 32-34; Monestier, supra note 11,
at 38-39; Strong, Quo Vadis, supra note 34.
(368) See Hensler, supra note 15, at 22-23; Mulheron, Opt-Out,
supra note 27, at 452-53; Westby, supra note 365, at 195-96.
(369) See Mulheron, Opt-Out, supra note 27, at 452-53. For example,
“[o]pt-in systems could be burdensome and cost-intensive for
consumer organisations which have to do preparatory work such as
identifying consumers, establishing the facts of each case, as well as
running the case and communicating with each plaintiff.” Green
Paper on Consumer Collective Redress, supra note 20,
[paragraph][paragraph] 55-56; see also Mulheron, Opt-Out, supra note 27,
at 451 (advocating for an opt-out alternative to effectuate collective
redress within the European Member States).
(370) See Mulheron, Opt-Out, supra note 27, at 452-53; see also
supra notes 241-45 and accompanying text (discussing the procedural
justice and efficacy of remedies in class claims).
(371) See Resolution, supra note 20, [paragraph] 20.
(372) See Samuel P. Baumgartner, Class Actions and Group Litigation
in Switzerland, 27 Nw. J. INT’L L. & BUS. 301, 310-11 (2007);
Antonio Gidi, Class Actions in Brazil A Model for Civil Law Countries,
51 AM. J. COMP. L. 311, 322, 324 n.22 (2003).
(373) See Westby, supra note 365, at 195-96; see also Cassone &
Ramello, supra note 86, at 222-23 (discussing the ramifications of class
action remedies that only partially compensate victims); Hensler, supra
note 15, at 22-25.
(374) See Hensler, supra note 15, at 22-23; Hodges, ANNALS, supra
note 20, at 343.
(375) See Coffee, supra note 2, at 350-51; Hensler, supra note 15,
at 22-23; Marco de Morpurgo, A Comparative Legal and Economic Approach
to Third-Party Litigation Funding, 19 CARDOZO J. INT’L & COMP.
L. 343, 360-66 (2011); Robertson, supra note 140, at 161-62.
(376) See Resolution, supra note 20, [paragraph] 20.
(377) Hensler, supra note 15, at 23; see also Coffee, supra note 2,
at 350-51 (suggesting third party litigation funding is not implausible
and “its impact has already been felt”).
(378) Cassone & Ramello, supra note 86, at 222-23.
(379) See Hensler, supra note 15, at 22-23; see also Strong, Quo
Vadis, supra note 34.
(380) See Hensler, supra note 15, at 22-23; Thomas D. Rowe, Jr.,
Shift Happens: Pressure on Foreign Attorney-Fee Paradigms from Class
Actions, 13 DUKE J. COMP. & INT’L L. 125, 146-48 (2003);
Strong, De-Americanization, supra note 202, at 517-22.
(381) See Resolution, supra note 20, [paragraph] 20.
(382) Franck, supra note 45, at 178.
(383) See Lisa Blomgren Bingham, Reflections on Designing
Governance to Produce the Rule of Law, 2011J. DISP. RESOL. 67, 76-78
(2011); Cohen, supra note 253, at 54-60; Franck, supra note 45, at
177-78; Francis E. McGovern, Dispute System Design: The United Nations
Compensation Commission, 14 HARV. NEGOT. L. REV. 171, 176 (2009)
[hereinafter McGovern, DSD]; Erin Ryan, Negotiating Federalism, 52
B.C.L. REV. 1, 23, 130 (2011) ; Anna Spain, Integration Matters:
Rethinking the Architecture of International Dispute Resolution, 32 U.
PA. J. INT’L L. 1, 46-47 (2010) (discussing areas where DSD has
(384) A full DSD analysis requires consideration of “at least
eight initial variables,” including “function, metaphor,
authority and funding, size and similarity, organization and
implementation, eligibility criteria, damage methodology, and
compensation.” McGovern, DSD, supra note 383, at 176.
(385) See supra Part III.A.
(386) Glover, supra note 2, at 1144; see also Luff, supra note 8,
at 113-14 (describing how risk regulation through litigation effectively
establishes a rule that “takes the form of the remedy that attempts
to influence future behavior”); McGovern, DSD, supra note 383, 176
(describing how certain claims resolution processes can correct the
“perceived slowness, expense, and detriment to individual
claims” experienced in international arbitration); Spain, supra
note 383, at 46-47 (“The use of DSD approaches has been considered
in the context of resolving international investment disputes … and
shows that they can increase effectiveness, efficiency, and
(387) Glover, supra note 2, at 1144-45; see McGovern, DSD, supra
note 383, 176; Spain, supra note 383, at 46-47.
(388) See Resolution, supra note 20.
(389) Glover, supra note 2, at 1144.
(390) See id. at 1179-80.
(391) See id. at 1180.
(392) See id. at 1191.
(393) See Resolution, supra note 20, [paragraph] 20.
(394) See Karayanni, supra note 113; Nagareda, supra note 10, at
7-9; Strong, Mass Torts, supra note 78.
(395) Resolution, supra note 20, [paragraph] 21.
(396) See Russell, supra note 34, at 147, 174.
(397) See Resolution, supra note 20, [paragraph] 15
(“[U]ncoordinated EU initiatives in the field of collective redress
will result in a fragmentation of national procedural and damages laws,
which will weaken and not strengthen access to justice within the EU
(398) See id.
(399) See supra Part II.
(400) See Nagareda, supra note 10, at 13 (noting problems when
“no formal political state has authority of a scope commensurate
with modern global business”) ; see also supra note 333 and
accompanying text (describing the legal parameters in which European
authorities are authorized to act). Issues relating to the way in which
the coherent European approach to cross-border collective redress will
interact with the regulatory regimes of individual Member States are
beyond the scope of this Article, although such concerns are important
for the European authorities to consider.
(401) Glover, supra note 2, at 1189.
(402) Id.; see also Coffee, supra note 2, at 344 (acknowledging the
difficulties associated with structuring adequate deterrence); Kovacic,
supra note 89, at 1041 (noting the “U.S. style of private rights of
action … pose  serious risks of overdeterrence”); Luff,
Memphis, supra note 246, at 81 (“Following administrative action
with class actions, according to critics, yields only excessive
penalities rather than increased deterrence.”).
(403) Glover, supra note 2, at 1144.
(404) See Buxbaum, Transnational, supra note 10, at 261.
(405) See Resolution, supra note 20, [paragraph] 20; see supra
notes 364-73 and accompanying text.
(406) See Michaels, supra note 40, at 342; see supra notes 317-19
and accompanying text.
(407) See Resolution, supra note 20, [paragraph][paragraph] [I G-H,
3; see supra notes 317-19 and accompanying text.
(408) Glover, supra note 2, at 1202; see also id. at 1144
(suggesting that private enforcement mechanisms account for “ex
post mechanisms to a regime’s comprehensive regulation of harm that
is difficult to prevent ex ante”).
(409) Luff, supra note 8, at 113; see supra notes 200-04 and
(410) See supra Part III.B.2.
(411) Luff, supra note 8, at 113.
(412) Glover, supra note 2, at 1204; see also id. at 1144-45
(“[T]o the extent regulatory experience indicates a pattern of
underenforcement by the public regulatory body, appropriate enforcement
mechanisms should be allocated to private parties to ensure the proper
achievement of regulatory goals.”).
(413) See id. at 1204.
(414) See Bignami, supra note 5, at 413; Luff, supra note 8, at
(415) See supra note 46 and accompanying text.
(416) See supra Part III.
(417) See supra Part II.
(418) See supra note 9 and accompanying text.
(419) See supra Part II.
(420) See THE ANNALS, supra note 15.
(421) Sometimes the hostility toward U.S. class actions is based on
faulty information. For example, many people oppose class actions
because of concerns about punitive damages, contingency fees, and
broad-ranging judicial discovery, even though those features are not
actually part of the class or collective mechanism. See Baumgartner,
supra note 372, at 310-11; Gidi, supra note 372, at 322, 324 n.22, 337.
Similarly, class actions are commonly criticized as primarily involving
frivolous claims, even though empirical evidence suggests that is not
the case. See Burch, supra note 113, at 85; Russell, supra note 34, at
(422) See supra notes 36-38, 360-81, and accompanying text.
(423) See Resolution, supra note 20; see also supra Part IV.
(424) An ineffective mechanism would not only be harmful to the
European Union’s regulatory aims, it would also have an equally
detrimental effect on any compensation that was to be provided under the
(425) See supra note 38 and accompanying text.
(426) See supra Part III.B.2.
(427) See supra Part IV.D.
(428) See supra note 62 and accompanying text.
(429) See supra Part II.
(430) See supra notes 36-38, 87-89, and accompanying text.
(431) See supra notes 15-16 and accompanying text.
(432) See MULHERON, supra note 9, at 63-66. This is not to say that
every legal system should use class or collective relief as a regulatory
mechanism, but countries should be aware of the regulatory potential of
such devices so that any unintended regulatory effects do not arise to
upset the regulatory equilibrium established by political actors.
(433) See Zumbansen, supra note 4, at 201; see also Scott, supra
note 1, at 651.
(434) See supra notes 41-42 and accompanying text.
(435) See supra Part II.
S.I. Strong, D.Phil., University of Oxford (U.K.); Ph.D. (law),
University of Cambridge (U.K.); J.D., Duke University; M.P.W.,
University of Southern California; B.A., University of California,
Davis. The author, who is admitted to practice as a solicitor in England
and Wales and as an attorney in New York and Illinois, is Associate
Professor of Law at the University of Missouri. This Article was written
in part while the author was the Henry G. Schermers Fellow at the Hague
Institute for the Internationalisation of Law and the Netherlands
Institute for Advanced Study in the Humanities and Social Sciences, and
the author gratefully acknowledges the contributions of both
institutions. The author also thanks participants in the Schermers
Workshop on “Collective Redress in the Cross-Border Context:
Arbitration, Litigation, Settlement and Beyond” for their helpful
comments on research relating to this Article.