Michael Hausfield brings class actions to the UK

Michael Hausfeld is a man on a mission, or as one US magazine profile recently put it, he is on “a crusade to export America’s legal system around the world”. He is also a man capable of arousing strong emotions in those who cross his path.

“Hausfeld could be sweetness and light one moment and anger and darkness the next,” wrote Covington & Burling partner Stuart Eizenstat, who came up against the civil litigator in the mid-1990s when Eizenstat was a special envoy for Holocaust-related issues for the US government.

Eizenstat accused US class action lawyers such as Hausfeld and Ed Fagan of “hijacking” the negotiations and ignoring diplomacy in favour of attention-grabbing litigation. Eizenstat described his adversary as “unpredictable and at times unreasonable”, but he added that Hausfeld “was central to any successful negotiation because he had a keen sense of where the bottom line was”.

Unpredictable? Unreasonable? How does Hausfeld plead? If you are going to be an effective advocate, acting in the best interests of your clients, then you are “going to have to be unpredictable” some of the time, he responds.

“Hausfeld is at the forefront of developing his brand of the law not only in the US, but internationally; and some would say that’s really bad news,” says one New York litigator who has come up against the lawyer on a number of occasions. “Unlike many of the folks on his side of the bar, he’s committed to what he’s doing as opposed to doing it just for the fees. Clearly he’s in that business as well, but he appears to believe that there are genuine principles at stake.”

The man himself was in London recently, speaking at a round table meeting hosted by Clifford Chance on the future of class actions. Given our own government’s antipathy to US-style compensation culture, it is amazing that Hausfeld ever made it through Customs.

Hausfeld, a name partner of Washington DC firm Cohen Milstein Hausfeld & Toll, is the doyen of group litigation. His clients have included native Alaskans hit by the 1989 Exxon Valdez oil spill, Texaco workers in a record-breaking $176m (£100.8m) racial discrimination suit and victims of the Holocaust in their action against the Swiss banks. He is currently representing victims of South Africa’s apartheid years.

The subject up for debate at Clifford Chance, according to documents prepared by the firm, was that class actions, which have “long been a feature of the American legal landscape”, were “likely to become a firm fixture in Europe”. The evidence for such a trend was first the action on behalf of 55,000 former shareholders against Railtrack over the Government’s decision to put it into administration, then the group shareholder action against Deutsche Telekom in Germany, followed by President Chirac’s proposals for mass actions in France.

Hausfeld takes exception to the idea that group actions are a uniquely US legal export. “The class action originally arose under the common law in Great Britain,” argues the lawyer. “It isn’t the invention of the US, nor is it its sole property. It’s become necessary in a modern day, intertangled commercial world,” he insists. That might be the case, but it is fair to say that the Americans in general, and Hausfeld in particular, do it so much better than we do.

Hausfeld has set his sights well beyond Europe and the lawyer is heading a unique international network of likeminded lawyers. “We share with each other cases that we think colleagues in the network might be interested in, and if they are we undertake them jointly,” he says.

The lawyer claims this network includes representative firms in “the UK, France, Germany, Italy, South Africa, Korea, Columbia, Panama, Australia and Canada” – so far. On this side of the Atlantic, Hausfeld has been in discussions with claimant personal injury specialist firm Irwin Mitchell about its Vioxx litigation against drug manufacturer Merck. He has also been talking with human rights lawyers about an environmental suit against Anglo American.

But is Hausfeld the kind of lawyer that can foster an international movement? “If there is someone from the plaintiff bar in the US who can do it, he can. He has both the intellect and the approach that might get the job done,” comments James Weidner, a New York-based litigation partner at Clifford Chance. “There is an argument to be made and, while there are abuses in the US, there are benefits. It is for the legislators and those that make public policy to see what makes sense for the UK and Europe. As a spokesman for this kind of group then, Hausfeld represents a good, if not a very good, start.”

So should those of us on this side of the pond take this initiative seriously? “At this time I would say it isn’t something that you should dismiss and, frankly, I suspect as time goes on you are going to be less able to dismiss it anyway,” he says. “But he carries with him the baggage that all plaintiff lawyers do in the US – the perception that they are only out there for the money alone, overreaching and exhorting huge settlements from defendants.”

While class actions have made a generation of ‘Lear Jet’ lawyers in the US wealthy through, for example, tobacco and asbestos litigation, in the UK lawyers have been lucky to make a decent living out of multi-party actions. So what impression does Hausfeld have of the success, or otherwise, of claimant lawyers here? “Almost no impression at all, because it’s a completely embryonic field,” says Hausfeld bluntly. “My experience in the UK is that there’s no such thing as a claimant lawyer as opposed to a defendant lawyer. Most firms in the UK will take both or either, unlike the US, where it clearly has a plaintiff bar and a defence bar.”

Hausfeld is currently acting on behalf of the Khulumani Support Group (the name means ‘speak out’ in Zulu) in a landmark action on behalf of those who suffered under the apartheid regime. Some 20 multinationals, including Barclays Bank and IBM, are being sued via a New York court under an arcane 18th-century statute, the Alien Tort Claims Act 1789, for their role in supporting the racist regime. The litigation has proved hugely controversial. Penuell Maduna, South Africa’s Justice Minister, has appealed directly to the US courts to kick the case out on the grounds that “corporate South Africa is already making a meaningful contribution to the broad national goal of rehabilitating the lives of those affected by apartheid”.

The case is currently on appeal, having been rejected by a US court in the Southern District of New York.

So how does Hausfeld counter the criticism that he, a US lawyer, is interfering in South Africa’s rehabilitation? “Their government has taken the view that matters relating to apartheid are within the sole jurisdiction of the sovereignty of South Africa and that the country has chosen a brand of reconciliation embodied in its Truth and Reconciliation Commission, which they’re claiming has complete jurisdiction over all of the issues relating to response by South African society,” he argues. “Yet we have the majority of the commissioners on the commission saying that that isn’t so, and that they never intended to include business, particularly with respect to civil accountability as regards a condition of an amnesty.

“More importantly, it was the conclusion of the commission that certain businesses did have a knowing participation and that they should be accountable under human rights law.”

Archbishop Desmond Tutu and dozens of international human rights groups have signed up to the Khulumani cause.

Hausfeld sees the action as a test case for the Alien Tort Claims Act, which he argues needs to be accepted by the international community. The controversial legislation allows companies to be sued in US courts for human rights breaches committed anywhere in the world. “There’s no reason why fundamental human rights are only litigated in the US,” he says. “If the courts in the US seem to recognise that these rights are universal, then every judicial system should have regard.”

What about the charge of opportunism that, as a lawyer, he is simply co-opting the causes of people he has no connection with? The Swiss bank dispute was personal for Hausfeld, who acted pro bono, he says. His own father fled Germany for New York in 1940, but most of his family were killed by the Nazis.

“I wish I had no opportunity,” the lawyer replies. “I only have an opportunity if someone has committed a mass wrong. We’re answering a need in a void. There’s a void in the sense that there aren’t many lawyers that practise at our level and undertake the cases that we do.”