Problems with Mass Tort Litigation

In recent years the number of European Mass Tort cases has increased forcing European Governments to alter statues regarding Mass Tort cases.  Most have used the United States as an example for such reforms.  A familiar difficulty of these cases is the even should the plaintiff be awarded a decision in their favor, the problem of the recovery the awards.

In 2008, the Commission of the European Communities released its latest Green Paper on Consumer Collective Redress. It cites several current problems for consumers in Europe, one of which is a weak enforcement framework:

    15. As a consequence of the weaknesses of the current redress and enforcement framework in the EU, a significant proportion of consumers who have suffered damage do not obtain redress. In mass claim cases that affect a very large number of consumers, although sometimes the harm may be low for the individual consumer, it can be high for the size of the market. As these markets become more cross-border in nature, effective cross-border access to the mechanisms of redress become necessary. Today, close to 10% of collective redress claims have a cross-border element. For example, a UK company recently distributed scratch cards in Irish newspapers offering "free" holidays, whereas in reality this offer cost each consumer a minimum of EUR 130. With further integration of the markets this percentage is likely to rise.

Another major problem with Mass Tort litigation is that the plaintiffs may encounter legal costs that they may not be able to afford.  This is known by defendants, who are usually major corporations with great ability to afford these costs.  The defendants, although they are usually able to afford legal costs, they very often side toward settlement over litigation.  Such settlements have a greater chance of recovery.

When settlement is not an option and the suit is awarded to the plaintiff, the collection of the award often becomes a long and difficult battle.  The defendant often dissolves the company leaving the plaintiffs to seek retribution through the defendant’s insurance company and insurance companies are not an easy solution.  The insurance companies have at times refused to accept liability for the insured company.  If this is the case, then the award can only be recovered through discovery of the liable company’s assets.

Two major cases:

The Air Cargo Cartel

Complaints started from the United States but have expanded to many other countries trying to receive compensation for price gouging by several airlines who were active in cargo transportation.

European law firms have also begun to file suits against the airlines involved in the price gouging of European shipping companies.  The law firms have stated that companies hurt by the airlines have been slow to come forward.  There are expected suits to be filed.  These suits are to compensate nearly €8 billon that was unfairly charged to European shipping companies. 

The United States, Australia, New Zealand, and Korea have also filed suits which alleges that a number of airlines conspired to price fix through the imposition of a security surcharge immediately following the 9/11 terrorist attacks. 

Genetically Modified Organisms

Several suits have been filed against companies who are involved in the production and marketing of Genetically Modified Organisms (GMO) which are considered to be a hazard to the environment as well as a hazard to human health. 

There have been a number of comparisons made between GMOs and different classes of activities. The closest comparison is between organisms created through genetic modification techniques and those created through other methods, from controlled pollination and hybridization to mutagenesis and cloning.

The European Union has been the most vocal in the worry of GMO’s.  Major concerns have been environment hazards.  Maize has been the only GMO to be allowed in Europe to date.  Major companies have pulled out of the European markets due to poor public opinion.  Recently, research from Austria has proven that genetically modified maize, particularly a variety modified to produce a pesticide within the plant itself.

The cases filed against GMO’s are interesting as they involve not only antitrust complaints but also personal injury suits.  Insurance companies have been apprehensive of insuring GMO companies and are moving to end such insuring due to the increase in suits.

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