Mass Actions: How Litigation Investment Makes Class Actions Unnecessary

This paper explores why the mass action, previously impractical, becomes a practical vehicle for the resolution of large-scale claims when third-party investment in litigation is permitted. This vehicle renders Canada’s current vehicle of choice for large-scale claims — the class action — unnecessary. The class action works by having one plaintiff stand as representative of the group, and binding all group members to the result. The mass action works the same as any claim with more than one plaintiff. Prior to the advent of litigation investment, the mass action was not possible in the traditional two-party procedure because of problems of coordination, free riding, and inequality between plaintiffs and defendants. If plaintiffs are allowed to sell control of their claim, a third-party investor can coordinate the multitude of plaintiffs in a large-scale claim, convince most potential free riders to join, and stand on an equal footing with a large defendant. Unlike the vehicle it replaces, the mass action requires no procedural reform. In fact, both vehicles can exist in one procedural regime, and compete for the claims of plaintiffs.