The Recognition, and Res Judicata Effect, of a United States Class Actions Judgment in England: A Rebuttal of V ivendi

AuthorRachael Mulheron
Publication Date01 Mar 2012
DOIhttp://doi.org/10.1111/j.1468-2230.2011.00896.x
The Recognition, and Res Judicata Effect,
of a United States Class Actions Judgment in England:
A Rebuttal of Vivendi
Rachael Mulheron*
United States’ courts have proven willing to certify multi-jurisdictional class actions which
purport to adjudicate the claims of both American and foreign (i.e., non-US-domiciled) class
members.This article contends, however, that a class actions judgment/settlement issued by a US
court would not be recognised,and would not be given preclusiveef fect,in England, should absent
English class members wish to re-litigate the same grievance before an English court. Specifically,
it is argued that two separate preconditions for such recognition and preclusive effect would fail,
viz, a US court would usually lack the requisite ‘personal jurisdiction’ over absent English class
members; and the necessary‘identity of parties’ would be absent.The article seeks to anticipate the
appropriate answer to a conundrum which is certain to arise for future English judicial consid-
eration, whilst acknowledging the uneasy fit which currently exists between English private
international law and multi-jurisdictional class actions.
INTRODUCTION
The interaction between multi-jurisdictional opt-out class actions, and the rules
of private international law, is an increasingly challenging area of class actions
jurisprudence. This article tackles the thorny question as to whether a class
actions judgment issued by a United States court (whether decided on the merits,
or a judicially-sanctioned settlement) would be recognised, and given preclusive
(res judicata) effect, in England, should absent English class members1wish to
re-litigate the same grievance before an English court.
The conundrum of whether a multi-jurisdictional class should be certified,
which includes absent foreign class members who do not opt-out, is by no means
limited to US class actions – the problem has arisen in Canadian class actions
jurisprudence too.2However, US jurispr udence is of particular interest, and the
*Professor, Department of Law, Queen Mary University of London. This article is based upon a
presentation to the British Institute of International and Comparative Law (BIICL) in London on 15
November 2010.The writer wishes to thank, in particular,Prof Douglas Edlin, Philip Rubens,Vincent
Smith, Anne Ware, and two anonymous referees, for constructive and thought-provoking feedback
about the issues considered in this article.The usual caveat applies.While the author is a member of the
Civil Justice Council of England andWales, the views expressed in this article are written in a personal
academic capacity,and should not be taken to necessarily represent the views of that body.
1 Defined, for the purposes of this article,to mean: a class member domiciled in England; who is not
a named representativeclaimant to the US class action; who falls within the defined class in the US
class action, because that class includes English class members;who does not actively participate in
the US class action in any respect; and who does not opt-out of the US class action. References
to ‘English’/‘England’ should be taken to include ‘Welsh’/‘Wales’ throughout.
2 eg, McKenna vGammon Gold Inc [2010] ONSC 1591 (McKenna) at [87] per Strathy J.The issue of
recognition/preclusiveeffect of a Canadian class actions judgment/settlement is presently disputed
in Nutech Brands Inc vAir Canada Cargo (Ont SCJ,20 June 2007), in which the writer is an expert
© 2012The Author.The Modern Law Review © 2012 The Modern Law ReviewLimited. (2012) 75(2) MLR 180–211
Published by BlackwellPublishing, 9600 Garsington Road, Oxford OX42DQ, UK and 350 Main Street, Malden,MA 02148, USA
focus of this article, for two reasons. First, given the continued unwillingness of
English legislators to enact an opt-out class action, some claimants domiciled in
England who have suffered a cross-border grievance have, unsurprisingly, cast
their eyes across to the US federal class action regime to seek redress.3Attempts
by English claimants – whether they be shareholders,4price-fixing victims,5or
consumers6– to form an ‘add-on’ sub-class to a US class action, to be bound by
(and to seek to benefit from) the outcome of the class action,have not always met
with success. However, a successful example of an ‘add-on’ English sub-class has
recently occurred in the cartel class action settlement involving British Airways
plc (BA) and Virgin Atlantic Airways Ltd (Virgin) in In re International Air
Transportation Surcharge Antitrust Litigation (the Fuel Surcharge Cartel Settlement),
approved by the District Court of the Norther n District of California in 2008
(with the settlement period concluding in December 2012).7These types of cases
suggest that an English court will, at some point, be required to rule on the
recognition and preclusive effect of US class actions judgments/settlements in
England (and, moreover, that English legislators need to improve urgently the
state of their own collective redress landscape8).
A second reason for the importance of the issue is that some American courts
have had to weigh into the debate (albeit somewhat ambivalently), and in
controversial terms. For example, in In re Vivendi Universal SA Securities Litigation9
(Vivendi), Judge Holwell remarked that:
While the issue is hardly free from doubt,based on the affidavits before it, the Court
concludes that English courts, when ultimately presented with the issue, are more
likely than not to find that US courts are competent to adjudicate with finality the
witness for one of the defendants. Foran insightful and detailed consideration of Canadian cour ts’
willingness to certify multi-jurisdictional classes, see, eg, J. Brown, ‘Seeking Recognition of
Canadian Class Action Judgments in Foreign Jurisdictions: Perils and Pitfalls’ (2008) 2 Canadian
Class Action Rev 220, 223–227; and Brown, ‘Canada–US Cross-Border Class Actions: Class
Certification and the Enforcement of the Resulting Class Action Judgments’(Paper for 2011 ABA
Annual Meeting,Toronto, 5 August 2011).
3 ie,the damages class action contained in r 23(b)(3) of the Federal Rules of Civil Procedure (FRCP).
4 eg, In re Parmalat Securities Litig 497 F Supp 2d 526 (SDNY 2007).
5 eg, Kruman vChristie’s Intl plc 284 F 3d 384 (2d Cir 2003).
6 eg, Gullone vBayer Corp 408 F Supp 2d 569 (ND Ill 2006), aff’d,484 F 3d 951 (7th Cir 2007).
7 Case No M:06-cv-01793-CRB (ND Cal 2008), with settlement website at: https://www.
airpassengerrefund.co.uk/Documents.aspx (last visited 2 December 2011). See especially, under
‘Important Documents’, Notice to Claimants (Long Form Notice), Claim Form, Settlement
Agreements, and Final Hearing Transcript.
8 An argument developed further by this writer in, eg,‘The Case for an Opt-Out Class Action for
European Member States:A Legal and Empirical Analysis’ (2009) 15 Columbia J of EuropeanLaw
409,441–448; Refor m of Collective Redress in England andWales:A Perspective of Need (ResearchPaper
for the Civil Justice Council of England andWales,Februar y 2008) 107–112;and The Class Action
in Common Law Legal Systems:A Comparative Perspective (Oxford: Hart Publishing,2004) ch 4.Also,
R. Nagareda,‘Aggregate LitigationAcross the Atlantic and the Future ofAmer ican Exceptionalism’
(2009) 62 Vanderbilt LR 1, 36–37 (non-recognition of US judgments abroad may ‘spur further the
development in European nations of their own distinctive avenues for aggregate redress for their
citizens’);and In reVioxx Litig 395 NJ Super 358, 374,aff’d, 936 A 2d 968 (2007) (England’s limited
civil procedure landscape is not‘a ticket to relief elsewhere,but rather, as a subject for legislative or
court reform, should such be warranted’).
9 242FRD 76 (SDNY 2007), involving German, Austrian, French, English and Dutch sub-classes.
Rachael Mulheron
© 2012 TheAuthor.The Moder n Law Review© 2012 The Modern Law Review Limited. 181
(2012) 75(2) MLR 180–211
claims of absent class members and, therefore, would recognize a judgment or
settlement in this action.10
To the contrary of this ‘Vivendi view’, it will be argued herein that English
courts, when confronted with the prospect of a dissatisfied absent English class
member (hereafter, ECM) seeking to re-litigate the same issues which were the
subject of the US class actions judgment/settlement, would not recognise that
judgment/settlement, unless that ECM has taken some proactive step in the US
class action. Moreover, even if the US class actions judgment/settlement were to
be recognised,it will be further contended that the US decision would not estop
the ECM from instituting a second action in England, for some of the require-
ments for the operation of res judicata arising from the US class action, as
between the ECM and the defendant, will not have been met.Therefore,ECMs
will not be precluded from re-suing the defendant, either unitar ily or collec-
tively, in England.11
It must be reiterated that the issue the subject of consideration in this article
falls away where ECMs simply cannot join a US class action at all. There have
been various reasons over the years for foreign class members being ‘dumped out’
of US class actions12 – eg, on the basis of forum non conveniens,13 or where the US
courts have disclaimed subject-matter jurisdiction over their claims14 (as recently
occurred in the so-called ‘f-cubed’ securities transaction15 in Morrison vNational
Australia Bank Ltd,16 whereby the US Supreme Court held that US securities law
does not have the extra-territorial effect necessary for the inclusion of foreign
shareholder class members – this will have an immediate effect upon English
shareholders considering joining suit in the US.) Nevertheless, the prospect of a
US class actions judgment/settlement purporting to bind ECMs remains very
real, if add-on English sub-classes are permitted on the basis the US court does
have subject-matter jurisdiction and is prepared to certify the class action.
10 ibid, 103 (similar conclusion reFrance/the Netherlands, but the opposite concluded for Germany/
Austria); with the position re French class members aff’d:2009 US Dist LEXIS 31198 (SDNY,31
March 2009).
11 Given the writer’s conclusion that a US class actions judgment/settlement will not be entitled to
recognition in England,the bar on ECMs recovering additional damages, per the Civil Jurisdiction
and JudgmentsAct 1982, s 34 would not apply (but for settling ECMs,see text accompanying notes
51–54 below); in any event, the criterion of ‘same parties, or their privies’ in s 34 will be lacking
(see text accompanying notes 115–129 below).
12 Discussed, eg, in: Mulheron,‘The Case for Opt-out’ n 8 above, 441–448.
13 Gullone n 6 above; Vioxx n 8 above.
14 eg: F Hoffmann-La Roche Ltd vEmpagran SA 542 US 155 (2004) (re non-application of the
Sherman Act).
15 ie, where a class of foreign claimant investors sues a foreign issuer in an American court for
violations of Securities Exchange Act §§10(b), 29(a),15 USC § 78a (1934), based on securities
transactions which occurred on foreign stock exchanges.See, eg H. Buxbaum,‘Multinational Class
Actions Under Federal Securities Law: Managing Jurisdictional Conflict’(2007) 46 Columbia J of
Transnational Law 14.
16 130S Ct 2869 (24 June 2010). Discussion of Morrison, and of its possible legislative reversal, lies
outside this article’s scope,but see: L.Wasserman,‘Transational ClassActions and Interjur isdictional
Preclusion’(2011) 86 Notre Dame LR 313; and for Morrison’s impact on the Vivendi litigation: 765
F Supp 2d 512 (SDNY 2011).
Recognition and Res Judicata Effect of US Class Actions Judgments
© 2012 TheAuthor.The Moder n Law Review© 2012 The Modern Law Review Limited.
182 (2012) 75(2) MLR 180–211

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