Michael Hausfeld has made a fortune suing global cartelists like vitamin makers in the United States from his base in Washington, D.C., but he slowly came to realize that global cartel enforcement required him to develop a vigorous overseas arm. In Hoffman-LaRoche v. Empagran (2004), the U.S. Supreme Court told Hausfeld that he couldn't recover in the U.S. when his clients' actions and injuries were wholly foreign. After a first collaboration in London reached a dead end ["Spreading the Word," Summer 2002], Cohen, Millstein, Hausfeld & Toll opened a London office, which became part of Hausfeld LLP after Michael Hausfeld left his old firm. In a sort of last hurrah for global claims in the U.S., Hausfeld in 2008 won a $200 million U.S. court settlement from British Airways and Virgin Atlantic for overcharging air passengers from the U.S. and the United Kingdom. But in the wake of Morrison v. National Australia Bank (2010), U.K. claims against U.K. defendants in the U.S. won't fly even when the conduct and injuries are not wholly foreign. So London claims must now stand on the strength of London filings. Enter Anthony Maton.
With an Oxbridge accent softened by a blokish style, Maton is Hausfeld's London ambassador. Since 2007 he has filed a dozen cases against other European cartels. While the cases wend their way through the courts, Maton has forged 30–40 partial U.K. settlements, for tens of millions of dollars. He aims to grow revenues fourfold over the next five years. Maton puts it this way: "Are we in all-singing, all-dancing U.S. class action mode? No. Are we working for a whole lot of clients running a successful practice? Yes."
Hausfeld LLP's British plaintiffs can choose from a grab bag of tricks for funding cases in the absence of a contingency fee, thanks to the creative ferment of London financial services. Beginning in 2000, winning lawyers in U.K. courts could recover up to double their fees. But such "success fees" made little difference until they were widely combined, in the last five years, with litigation insurance—which offsets the risk that losers will have to pay the winners' hefty fees—and third-party funding where needed.
Parliament recently turned this system on its ear, in the Legal Aid, Sentencing and Punishment of Offenders Act 2012. In addition to gutting legal aid, this law made success fees and litigation insurance premiums unrecoverable. At the same time, in a move that was once unthinkable, it legalized contingency fees. In the future, London trial lawyers expect to use a mix of case-funding techniques. But for current cases the new rules are irrelevant.
Using the standard-for-now combination of success fees and insurance, Maton sued the cargo cartel in London high court in 2008, in a suit captioned Emerald Supplies v. British Airways . He planned it as Europe's first opt-out class action. In other words, Maton claimed to speak for all cartel victims who don't opt out of the case, not just the victims who opt in. To Hausfeld's chagrin, the Court of Appeal rejected this gambit in 2010, on the grounds that the class members' interests were not uniform. U.K. judges had dealt a grave setback to plaintiffs' sacred quest for a U.S.–style class action.
And yet, according to DLA Piper's Martin Rees, who serves as one of the defense counsel: "I don't think it made much difference to Hausfeld." Maton simply recast his action as a claim by 300-odd large businesses, secure in the knowledge that English courts excel at managing this sort of mass litigation.
The catch is that small victims, whose claims are not worth pursuing individually, have no practical remedy. Maton estimates that he and CFI account for at most 40 percent of the freight overcharges. Without a class action or class settlement, the other 60 percent can't recover.
That's a shame for the little guys, and a shame for deterrence. But for Emerald Supplies et al., it's full steam ahead once the European Commission finally publishes the air cargo ruling that it announced in 2010. In the meantime, the plaintiffs can contemplate the novel legal experiment they have set in motion.
What made Emerald Supplies choose the English model, and why did 500 others favor the Dutch?
The most basic difference is that in England, the cartel victims sue in their own names. Although that exposes them to publicity, the victims get to decide if, when, and how to settle. On the Continent, where victims assign their claims to a single vehicle, the driver of that vehicle has total control.
