Oral arguments on Stoneridge v. Scientific Atlanta are today. Last week in the Wall Street Journal, Norman Lamont, Ex-Chancellor of the Exchequer, wrote the Stoneridge case and other securities lawsuits threatened the special relationship between Britain and the United States, the special economic relationship, that is. (Subscription required.)
Should the plaintiffs in Stoneridge prevail, any non-U.S. business — whether it be a law firm, accounting firm, banker, buyer or seller — that has U.S.-listed companies as customers, suppliers or clients will risk being sucked into America’s securities litigation vortex. As former U.S. Attorney General Dick Thornburgh wrote recently, what the Supreme Court “must decide is whether class action lawyers should be allowed to game the legal system to extort exorbitant settlements.” Every business dealing with U.S.-listed companies would have to examine the possibility of fraudulent bookkeeping in every transaction — an utterly impractical proposition. In essence, U.K. companies would either end up paying protection money to do business in the U.S. and with U.S.-listed companies, or decide the cost was not worth it.
And in today’s Washington Times, Juergen Thumann, the president of the NAM’s German counterpart, the Federation of German Industry, sees real progress in the development of trans-Atlantic economic ties, but warns of the consequences of Stoneridge:
While it is perfectly legitimate that U.S. lawmakers design the legal environment as they see fit, companies in Europe are worried by a growing tendency to impose U.S. legal regulations directly on foreign companies or in ways that make their effects felt beyond the country’s borders.
P.S. Tennessee blogger Bill Hobbs posted a comment to an earlier post, saying a decision for the plaintiffs would dramatically alter existing law, adding, “If the Stoneridge case is decided for the plaintiffs, the number of such lawsuits would skyrocket, putting a huge “scheme liability” tax on the economy.” Good background there.
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