Study Of U.s. Class Action To Exit The System

With the adjustment of economic structure, the differentiation of social interest and the development of political reform, group disputes gradually become objects of judicial adjudication when sharply increasing in amount and category. However, since there was no effective judicial process, most of time group disputes were handled administratively, or even semi-militarily in our history. In order to solve this contradiction, theorists, legislatures, administrations, courts and CPC all explore to seek the most scientific solution from respective angles. Also they did have achieved some research results and adopted some transitional measures. Nevertheless, generally speaking, we still have a long way to go to resolve social and economic or even political disputes by litigation and resolve complicated group disputes efficiently in due process. Accordingly, it is necessary for us to learn more from our counterparts abroad when we are exploring for group disputes solutions based on our practical situations. Among various solution systems for group disputes, American class action is the most effective and also controversial procedure. Opt-out, punitive damages and contingent fee, as generally acknowledged, are three backbones of American class action system. As punitive damages belong to substantive law and contingent fee also exists in other civil litigation besides class action, opt-out becomes the symbolic characteristic of class action in procedural law perspective. Based on empirical research data and judicial cases, this thesis analyses jurisprudence base of opt-out, probes into the judicial application condition of opt-out and suggests introduction of opt-out in some way.This thesis consists of five chapters besides Introduction. Chapter One gives a basic introduction for the following arguments; Chapter Two discusses primary theoretical issues of opt-out; Chapter Three and Chapter Four emphasize on the actual application status of opt-out system in judicial practice; last chapter briefly discusses the implication of opt-out for China. This thesis will focus on Chapter Two, Three and Four.Introduction begins with an internal trouble of the high rate of domestic group disputes with little effective judicial relief and an external trouble of the claim Chinese American-listed companies facing in class action. We are required to find out: what does opt-out imply? How does it actually work? Then, we will discuss the research status and significance of opt-out. Basic theory and actual operation status are main deficiencies of our opt-out research. Research on U.S.A class action helps us recognize substantive characteristics of opt-out system, find out essential defects in the opt-in system in our representative action and single action when used to resolve group disputes, and further understand procedure value and the tight relationship between procedural law and substantive law, between law and politics, and between constitution and statutes. Knowledge of the actual operation status of American class action opt-out system offers actual reference information for our legislatures and citizens to decide whether and how to introduce opt-out system, and helps enhance the consciousness of applying opt-in system in judicatures and improve litigation ability of Chinese American-listed companies when facing claims in American class action. Research methods, innovation attempts and main defects are demonstrated at the end of this part with emphasis on intentions and reasons of structure arrangement.Chapter One mainly introduces the necessary information of opt-out system which cannot properly appear in other chapters. It starts with the definition and content of opt-out system and then describes three phases of opt-out system development; In order to be aware of both the positive and negative information for opt-out system, various opinions about the actual effect and application scope of opt-out system, the litigation status of opt-outs are introduced in this chapter.Chapter Two mainly discusses jurisprudence, the constitutional basis of opt-out, function and essence of opt-out system. Group disputes solution system of U.S.A. is always searching for the maximally acceptable balance between the individual right of single plaintiffs to exert control over the fate of their claims and the judicial benefits of simultaneously resolving similar claims as a group. Class membership, i.e. opt-out, opt-in and compelled membership, plays an important role in this balance. Opt-out system actually reflects the basic knowledge and value orientation of group disputes solver about the relationship between individual and collective, citizen and society. This chapter suggests by analysis that since opt-out is mainly designed on collective basis to solve group disputes, the jurisprudence philosophy basis of opt-out is not individualism, but Communitarianism. At the same time the author argues that the constitutional basis of opt-out is due process and free express according to Amendment 1, 5, 14 of American Constitution. Prohibition or restriction on opt-out of class members may violate American Constitution for compelled express or association. Therefore, this section brings forward the Countermeasures: the court shall primarily determine whether there is minimum contact between the court and the class member or subject-matter. If negative, due process requires the court to permit potential class members to opt out; Even if the court has jurisdiction, in order to determine whether opt-out restriction may violate the constitutional principle of due process, it should still take various factors into consideration, such as individual interests of class members, interests of defendants, the risk of improper deprivation of rights, administrative and financial burden of court; in coordination with Amendment 1, political class action and commercial class action shall be treated differently. Then the author analyses several functions of opt-out system: expanding the Res Judicata of class action adjudication, consolidating the enforcement of substantive law, punishing mass tort infringing public interests, cleaning up potential danger for social stabilization and balance interests of class action parties. Based on the theoretical analysis and practical investigation in membership, we can preliminarily draw such a conclusion on "essence of opt-out": compared with opt-in, opt-out means that since the implication of silence is agreeing staying inside class and accepting unified settlement of group disputes, class members who wish to exit have procedural obligation to express such a will; compared with mandatory class action, opt-out means that as class members enjoy procedural right to exclude themselves from binding effect of class action judgment and settlement, it emphasize on the protection of individual member's interests and the respect for individual litigation right. The judicial policy American class action adopts on the class membership is to apply opt-out and mandatory as usual measures and opt-in as exception.Chapter Three mainly introduces the actual operation procedure of opt-out system. Three operation patterns of opt-out system are advanced: pure opt-out, opt-out & opt-in, and opt-out & mandatory. Then it introduces the content, sending scope and pattern of opt-out notice, opt-out application, and analyses main causes of opt-out rate. It then analyses the background of second opt-out right and discusses main factors courts may take into consideration when deciding whether to approve another opt-out and the influence of second opt-out on class settlement. Part four of this chapter discusses the appeal on opt-out, which is not so significant in America as in China. The last part of this chapter introduces such rules as claims-procedure to protect both the opt-outs and non-opt-outs. This chapter involves many cases, each of which is illustrated with courts' opinion and source of comment.Chapter Four intends to further probe into opt-out system by comparison with compelled membership and opt-in, and specifically analyses the reasonable restriction on opt-out. However, the focus of this thesis hereinafter shifts from information introduction to argumentation of relevant issues. It starts with emphasis on an important characteristic of American class action we often ignore: the right to opt-out is excluded in mandatory class action; it then introduces procedural characteristics of defendant class action with which we are unfamiliar and analyses the necessity of excluding opt-out right in defendant class action. Another point deserves more attention in relevant research is that opt-in also exists in American class action. This chapter briefly introduces that opt-out is commonly applied in three kinds of class action (FLSA, EPA and ADEA), and applied with discretion in other class action. Subsequently the author seeks the general cause for small size in opt-in classes. Though the exertion of opt-out right in opt-out class action is commonly thought to be absolute and free, the harm caused by the absolute use of opt-out right has aroused more attention of both practitioners and academics in America. Ten factors are suggested to be considered in reasonable restriction on the use of opt-out right in this chapter.The last chapter focuses on the final goal of opt-out research. To introduce such a brand-new legal system as opt-out requires not only the knowledge of the actual operation, jurisprudence basis and background in its original place, but also locating our systemic weakness in group disputes solution, analyzing the compatibility of domestic situation and opt-out system. The former one is the final goal of this thesis and the latter one guides it. Therefore, this chapter states the introduction and reconstruction of opt-out system by Canada and Australia, and also analyses the reason for which the Great Britain and Germany choose not to introduce in opt-out system for the purpose of protecting individual litigation rights and the statutory right to be heard and its implications for China. The traditional litigation system could not meet the needs of settling modern group disputes in this transitional period. This chapter proposes that our legal system could overcome most of the weakness in opt-out with its gradual improvement, that the certification of opt-out shall be confined in plaintiff class action, and that a new certification mechanism of "functionally complementary trinity" should be implemented in the Civil Procedure of PRC, including opt-out, opt-in and compulsory membership. Of course, we should not exaggerate the function of opt-out mechanism.