This presentation by Professor Spencer Weber Waller, Loyola University Chicago School of Law, was made during the discussion on "Addressing competition challenges in financial markets" held at the 2017 Latin American and Caribbean Competition Forum (4-5 April 2017 – Managua, Nicaragua). More papers and presentations can be found at oe.cd/laccf.

1. Spencer Weber Waller
Professor and Director
Institute for Consumer Antitrust Studies
Loyola University Chicago School of Law

2.  “The class action is
one of the most
socially useful
remedies in history.”
 Abraham J.
Pomerantz, New
Developments in
Class Actions: Has
the Death Knell Been
Sounded?, 25
Business Lawyer
1259, 1259-60
(1970).
 “A form of legalized
blackmail”
 Milton Handler, The
Shift from
Substantive to
Procedural
Innovations in
Antitrust Suits, 71
Columbia Law Review
1, 9 (1970).

3.  Class Actions in Federal Court Governed by
Rule 23, Federal Rules of Civil Procedure as
Amended in 1966
 Almost all U.S. States Have Some Form of
Class Actions, most Modeled after FRCP 23
with Many Different Variations
 Basic Notion is that one or more Class
Representatives sue on Behalf of all Persons
Similarly Situated

4.  All Class Actions Must Satisfy All Four Prongs of
FRCP 23(A)
◦ Class Must be So Numerous that Joinder of All Members
would be Impractical
◦ There must be Questions of Law and Fact Common to all
Members of the Class
◦ The Claims and Defenses of the Class Representatives
Must be Typical of the Rest of the Class
◦ The Class Representatives Must Fairly and Adequately
Protect the Interests of the Class Members
 No Conflicts of Interest
 Have Capability to Adequately Conduct the Litigation

5.  Even After
Satisfying FRCP
23(a), the case
must fall within one
of three categories
listed in FRCP 23(B)
◦ “Automatic”
◦ Injunctive
◦ Catch-All

6.  Rule 23(b)(1) Allows Class Actions where
◦ There is a Risk of Inconsistent Outcomes or
◦ As a Practical Matter, the Case
 Will Dispose of the Claims of Others Similar Situated or
 Will Impair their Ability to Protect their Interests
 Examples:
◦ Whether a Borrower has Defaulted on the Terms of
a Loan or Bond
◦ Where There is a Limited Fund of Assets to Cover
Many Claims Arising out of the Same Incident

7.  Where the Party Opposing Claim has Acted or
Refused to act on Grounds Applicable to the
Whole Class and Relief sought is Primarily
Injunctive, FRCP 23 (B)(2)
 Probably the Main Reason Rule 23 was
Amended in 1966
 Examples:
◦ Civil Rights
◦ Environmental
◦ Institutional Reform

8.  FRCP 23(b)(3) allows Class Actions where
◦ Common Questions of Law and Fact Predominate over Individual
Issues and
◦ Class Action is Superior to other Available Means
 The court must consider
◦ Interests of Class Members in Individually Controlling the Case
◦ Any other Pending Litigation Relating to the Same Issues
◦ Desirability of Concentrating Litigation in one Forum
◦ Difficulties in Managing the Litigation
◦ Examples:
 Large Number of Small Claims
 Price Fixing
 Statutory Specified Damages
 Statutory Torts
 Antitrust
 Securities Fraud
 Consumer Protection

9.  For 23(b)(3) Class Actions Notice and Opportunity to Opt
Out is Required to all Potential Class Members at all Key
Stages
◦ Certification
◦ Settlement
 For the Other Types of Class Actions no Opt Out Available,
but Court has Power to Require Notice where Appropriate
 Plaintiffs Normally Responsible for Handling Notice and
Paying Costs of Notice
◦ Traditional 1st Class Mail
◦ More Recent Media, Electronic, and Social Media
 For 23(b)(3) Cases Parties have the right to opt out and
pursue claim on their own
◦ More Frequent for Corporate Buyers in Antitrust Cases
◦ Unusual for Individuals or for Small Claims Cases

10.  If Party Opts Out They are not Bound by
Anything that Happens in the Case but also
Cannot take Advantage of the Judgment or
Settlement Obtained for the Class
 Would Have to Bring their own Claim if They
Wish to Pursue
 If They do not Opt Out, the Party is bound by
Outcome or Settlement
 Still has Right to Object to Any Proposed
Settlement or Opt Out of Settlement

11.  Supposed to Occur as Early as Possible in the
Litigation
 Prior to Motion to Certify the Case is Just the
Named Plaintiffs versus the Defendants
 After Certification Case Becomes Entire Class
of Persons Certified by the Judge Versus the
Defendant
 Can Also Certify Sub-Classes and Certain
Issues for Class Treatment
 Risk of Mini-Trials of the Merits of the Case

12.  While Technically a “Procedural” Motion,
Certification has a “Substantive” Impact on the
Case
 More at Stake for the Defendant if Certified
 All Members of the Class Bound by Outcome
 Rarely Worth it for Plaintiff to Pursue as Individual
Case if Certification Denied
 Settlement After Certification Can Provide Global
Piece for Defendants and All Class Members
 Either Side Can Immediately Appeal the
Certification Decision

13.  Fear of Coercing Settlements
 Increasing Requirement of Establishing Merits of
Claims at Much Earlier Certification Stage
◦ Hydrogen Peroxide Antitrust Litigation
◦ Walmart v. Dukes
 Increased Emphasis on Predominance of
Common Issues
◦ Walmart v. Dukes
 Increasingly Strict Requirements of Showing Class
Wide Proof of Liability, Damages, and Expert
Opinions
◦ Comcast Corp. v. Behrend

14.  Approval of Settlements by Courts Necessary
Because All Members of Class Who do Not Opt
Out are Bound by the Settlement Once Approved
 Court Must Approve Fairness of Settlement,
Attorneys Fees, and Costs
 Question for Court is Ultimate Value to Plaintiff
and Class Members
◦ Analysis of Risks of Litigation and Work of Counsel
◦ Preference for Cash to Plaintiffs rather than Coupons or
Discounts
◦ Risk of Collusive Settlements
◦ Concern When Class Recovery is Small and Fees are High

15.  The U.S. Supreme Court Extremely Supportive
of Arbitration Clauses in both Merchant and
Consumer Contracts
 Courts will Enforce Commercial Arbitration
under Federal Arbitration Act even if State
Law would otherwise Bar Arbitration
◦ CompuCredit
 Courts will Only Require Class Arbitration if
Arbitration Clause Clearly Allows
◦ Stolt-Nielsen

16.  Supreme Court has Enforced Arbitration
Clauses Which Forbid Class Arbitrations even
when Contained in Fine Print in Consumer
Contracts
◦ ATT v. Concepcion
 Supreme Court Has Enforced Waiver of Class
Arbitrations even Where Plaintiffs Show that
Statutory Rights Cannot be Meaningfully
Enforced in Individual Arbitration
◦ American Express Merchant Antitrust Litigation

17.  Tyson Foods Upheld Employees’ Reliance on
“representative evidence” to Determine the Number of
Additional Hours that each Employee Worked, when
the Employer had Failed to Keep Adequate Records.
 Cambell-Ewald Holding That Offer of Full Settlement
with the Class Representative Does Not Moot the
Class Action
 Spokeo Failed to Definitively Decide Whether there is
Standing Where No Actual Damages
 Current Docket Has Case Whether Waiver of Class
Arbitration Violated National Labor Act
 Death of Justice Scalia May Affect Cases Taken and
Outcomes Depending on his Replacement

18.  The Fairness in Class Action Litigation Act of 2017 proposes to prohibit
federal courts from certifying class actions unless:
 in a class action seeking monetary relief for personal injury or economic
loss, each proposed class member suffered the same type and scope of
injury as the named class representatives;
 no class representatives or named plaintiffs are relatives of, present or
former employees or clients of, or contractually related to class counsel;
and
 in a class action seeking monetary relief, the party seeking to maintain
the class action demonstrates a reliable and administratively feasible
mechanism for the court to determine whether putative class members
fall within the class definition and for the distribution of any monetary
relief directly to a substantial majority of class members.
 The bill limits attorney's fees to a reasonable percentage of: (1) any
payments received by class members, and (2) the value of any equitable
relief.
 No attorney's fees based on monetary relief may: (1) be paid until
distribution of the monetary recovery to class members has been
completed, or (2) exceed the total amount distributed to and received by
all class members.

19.  Almost All Brought Under Section 1 of the
Sherman Act for Cartel Like Behavior
 All Difficult Claims Brought by Traders on
Markets Affected by the Cartel
 Most Relate to Rigging of “Benchmark” Interest
Rates
◦ Libor, Eibor, Forex, ISDA, Treasuries
 Others Relate to Exclusion of New Entrants to
Trading of Complex Financial Instruments
◦ Credit Default Swaps, Interest Rate Swaps
 All Cases Hotly Contested Lengthy Litigation
 Several Settled for Over One Billion US Dollars

20.  As Class Action Shrink in U.S., Many Jurisdictions
Recognize the Need for Some Form of Collective Action
 Vibrant Competition Class Action Bar in Canada Although
no Trials to Date
 Uneven Growth and Few Successful Outcomes in Antitrust
Cases in Any Jurisdiction Outside US and Canada
 Experimenting with Both Traditional Class (Collective)
Actions and Alternatives
◦ Super Complaints
◦ Claims buying Models
 Limitations
◦ General Private Litigation Issues
◦ Opt In Issues
◦ Contingent Fee Issues
 Very Cautious Recommendations in EU Private Rights
Initiative

21.  In Book Five of Mexico’s Federal Code of Civil
Procedure.
 Limited to environmental claims and
consumption of goods or services (includes
Antitrust).
 Three types: Diffuse actions, collective actions in
the strict sense and homogenous individual
actions.
 Opt-in.
 At least 30 members in the group.
 Damages are cost-to-repair and attorneys’ fees.
NO punitive damages.
 No Competition Collective Actions so Far

22.  Proposal in two pieces: A Recommendation and a
Communication.
 No numerical requirement.
 Opt-in.
 “Dissemination methods” (notice) must be wary
of the potential for ruining reputations of
defendants.
 Loser pays principle.
 Injunctions preferred, ADR Options, NO
contingency fees, NO punitive damages, NO
treble damages.
 Impose limits on attorneys’ fees.

23.  Uk’s Department for Business Innovation and
Skills (BIS) released consultation paper and
impact assessment
 Opt-out actions under limited circumstances for
UK Plaintiffs Only
 Expanded power of the Competition Appeal
Tribunal (CAT), with discretion to allow class
action and decide if it’s opt-in or opt-out.
 NO treble or exemplary damages, loser pays
principle, no contingency fees.
 1st Opt-Out Collective Action Filed in 2016
Regarding RPM Case Involving Mobility Scooters

24.  Differs among provinces.
 Quebec (civil law jurisdiction) had class-actions since
1978.
 Quebec: Class certification has four requirements: 1)
related questions of law or fact, 2) facts alleged justify
conclusion sought, 3) action cannot more easily be
brought as a joinder or by a representative, 4) the
representative adequately represents the interests of the
group.
 British Columbia and Ontario: Similar, both under Class
Proceedings Act of 1992, 1996 (respectively).
 Certification: requires two or more persons w/ common
issues and preferable method of trying the claims.
 Opt-out generally. In B.C. opt-out only for residents, opt-
in available for non-residents.

25.  Class or Collective Actions Vital for Deterrence
and Compensation of Small Claims Cases
 U.S. Class Actions Still Most Robust in the World
 Canada has Shown How One can Have Class
Actions Without Treble Damages
 However, no one yet has Shown How You can
Have Effective Collective Actions Without Some
Form of Opt-Out
 Everything Else is Negotiable
 But Anything less is Just Joinder and Not a True
Collective Action

26.  Spencer Weber Waller,
The Fall and Rise of the
Antitrust Class Action,
http://papers.ssrn.com/s
ol3/papers.cfm?abstract_
id=2641867
 Symposium: The Future
of Class Actions and its
Alternatives, 44 LOYOLA
UNIVERSITY CHICAGO LAW
JOURNAL (2012).
 LITIGATING CONSPIRACY: AN
ANALYSIS OF COMPETITION
CLASS ACTIONS ( Irwin
Press 2006).
 Or Contact:
 Spencer Weber Waller
 Professor and Director
 Institute for Consumer
Antitrust Studies
 Loyola University Chicago
School of Law
 swalle1@luc.edu
 http://www.luc.edu/antit
rust