March 20(Reuters) - On the face of it, Thembekile Mankayi's case against his South African employer didn't look like much.
In a $300,000 lawsuit, Mankayi claimed he had developed silicosis -- a disease caused by inhaling gold-mine dust -- when he was working for mine operator AngloGold Ashanti. Historically, South African law had prevented workers from suing their employers for occupational injuries, and Mankayi, an impoverished miner, would be an unlikely first.
But last March, South Africa's Constitutional Court not only granted Mankayi's request, it also cleared the way for something even more legally remarkable: a potential class action involving tens of thousands of miners, all ailing from silicosis and related lung diseases.
The United States has made some noteworthy contributions to globalization. The assembly line. The fast food industry. iEverything. Now it is possible to add to that list the massive class action. More than 25 countries have introduced some sort of group litigation rules, up from only around three in 2000, according to a 2011 report by Stanford Law School professor, Deborah Hensler. Early adopters range from democracies like Italy, England and Israel to authoritarian strongholds like Indonesia. Since 2008, even Bulgaria has recognized the upside of allowing citizens to sue en masse.
As exports go, the massive class action has a clear sting to its tail: the development has put the U.S. business community on high alert, prompting the U.S. Chamber of Commerce to warn colleagues in Europe about the dangers such lawsuits pose.
"It's pretty scary stuff," said Lisa Rickard, president of the U.S. Chamber of Commerce's Institute for Legal Reform. Her office is especially worried about outside investors funding class actions, as has happened already in Australia. Rickard fears this will "fuel" more litigation.
HOME FIELD NARROWS
For U.S. firms that specialize in filing suits, however, class-action sprawl couldn't come at a better time. Some recent Supreme Court rulings have caused many to worry it will become more difficult to make a living by filing class actions at home.
An early blow came in 2010 when the court ruled that U.S. securities laws only apply to companies listed on U.S. exchanges in Morrison v. National Australia Bank, wiping out an investors' class action against one of Australia's largest banks. Last year, the high court allowed companies to use arbitration clauses in customer contracts in a case between wireless carrier AT&T Mobility and phone customers Vincent and Liza Concepcion -- a decision that dealt a blow to consumer class actions. Wal-Mart v. Dukes, a sexual discrimination case brought on behalf of 1.5 million current and former Wal-Mart employees, was the biggest setback of all, raising the bar for what a group of people must have in common to qualify as a single class.
"You've seen a narrowing of options for class actions in the United States," said Brian Ratner, a lawyer at the law firm Hausfeld. When firms have strong cases they can no longer bring at home, they're looking abroad for places to file them, he said.
Even in the United States, class actions are pretty new. The government first adopted the modern class action in 1966, allowing lawyers to file on behalf of unnamed individuals and collect contingency fees - a right to a share of any winnings. But the genre didn't really catch on until the 1990s, when the tobacco and asbestos litigations minted millionaires out of plaintiffs' attorneys like Richard Scruggs and Ronald Motley.
Some English-language countries followed suit, with several Canadian provinces adopting class actions in the 1990s. Australia introduced class actions in 1992. England, which historically has allowed representatives to sue on behalf of numerous people with identical claims, adopted group litigation procedures for related claims in 2000.
A handful of U.S. plaintiffs firms have been quick to seize the evolving opportunities. Milberg, a securities-litigation firm, was an early player in Canada: senior partner Michael Spencer took the Ontario bar exam so he could practice part-time in Toronto. Washington, D.C.-based Hausfeld planted a flag in the United Kingdom in 2008, when it took on a price-fixing case against British Airways. It has since opened a London office and taken on cases from Barbados to Panama. Hausfeld recently settled a case against Shell Western Supply & Trading Company Ltd on behalf of Barbados farmers and landowners and is handling a vitamin price-fixing case in Panama.
FAT FEES FOR WINNERS
Early and aggressive players have already begun collecting dividends. In mid-January, Bernstein Litowitz Berger & Grossman was one of three U.S. firms to win a $58.4 million settlement for a group of investors in a Dutch court. The investors, from Europe, Canada and Australia, accused the reinsurance company Converium of securities fraud. The Dutch court allowed the U.S. lawyers to take 20 percent of the settlement, which was more than local law would have allowed for Dutch lawyers.
In 2009, three U.S. law firms walked away with $47 million when the Dutch court approved a similar class action settlement between shareholders and Royal Dutch Shell. Observers of South Africa's silicosis lawsuit say that if a class action comes together, it could involve tens of billions of dollars.
But there are still plenty of barriers for class action lawyers on the hunt for plaintiffs abroad. One of the most challenging is the fact that many countries still have "loser pays" laws. These require the side that loses a lawsuit to foot the other side's legal bills. While South Africa leaves the allocation of fees up to courts, the costs are often shifted to the losing side in practice. Other stumbling blocks range from deeply ingrained suspicion of American litigiousness to rules barring the contingency fees that make class actions so lucrative.
"The law has to mature and develop in other countries before we'll have any idea whether these kinds of actions are going to have legs," said Max Berger, a lawyer at Bernstein Litowitz which represented investors in the Dutch settlements.
The silicosis case could be the next testing ground. While gold miner Thembekile Mankayi died just days before his court victory, lawyers plan to use the ruling to benefit thousands of others. Hausfeld has paired up with one local attorney and plans to file suits against mining companies in South Africa and England in coming months.
Richard Spoor, a solo practitioner in Johannesburg who represented Mankayi, has enlisted South Carolina-based Motley Rice, known for its tobacco and asbestos mega-suits. He reached out to the firm a few months ago and they responded with classic American timing, said Spoor.
"They showed a willingness to make a quick assessment and make a commitment fast."
(Reporting By Terry Baynes)
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