Sydney Morning Herald reports on Geoffrey Miller's criticism of American class action system at Australian conference
The Sydney Morning Herald reports that Geoffrey Miller, Stuyvesant Comfort Professor of Law, said at a March 10 conference in Sydney on investor class actions that Australia has the most liberal class action regime in the world and that there are “gigantic” procedural differences between its system and that of the United States.
“An American class action practitioner would think they died and went to heaven seeing these differences,” Miller said.
He criticized as too expensive the U.S. rule that all potential class members must be notified by first-class mail, and he said that the need for American judges to certify at the outset that a case was appropriate for a single trial with multiple plaintiffs resulted in “a big mess” of “mini-trials” being heard at the time of certification.
Miller also described problems with the U.S. fraud-on-the-market doctrine, which holds that if the market for a company’s shares is efficient, then all shareholders will suffer a loss if the company misleads the market. The rule was developed as a way of finessing the requirement that a class action can only proceed if the issues common to all plaintiffs are the predominant issues at stake. Plaintiffs can now claim reliance on the integrity of the markets.
Miller said such a system was flawed because it relied on the efficient markets hypothesis, which is a “contested theory of corporate finance” that judges “know nothing about” and that investors could not gain redress if they bought shares in a company with inefficient trading.
“Frauds also occur in inefficient markets, but you can’t bring [class actions] in them in the U.S.,” Miller said.