Episode 3 – Managing the rise of legal activism

In the third episode of our Disputes Reimagined podcast, Partner Katie Chandler is joined by Winston & Strawn Partner Troy Yoshino, 4 Pump Court Barrister Rebecca Keating, and Lawyer at ClientEarth Alex Cooper, to discuss how rising activism is reshaping corporate strategy and driving climate-related disputes internationally. 

Transcript

SPEAKER_03 0:03

Disputes reimagined, discussing the future disputes landscape and what organizations need to do now to prepare for the disputes of tomorrow. In this episode, we discuss how increasing activism is influencing corporate strategy, accelerating climate-related disputes across global markets, and the new types of legal, reputational, and regulatory challenges emerging as a result.

SPEAKER_00 0:34

Hello and welcome to the third episode in our Disputes Reimagined podcast series, Activism Amplified. I'm Katie Chandler, a commercial litigation and product liability lawyer in our Disputes and Investigations team. And today I'm joined by Troy Yoshino, Rebecca Keating, and Alex Cooper. Troy is a partner in Winston and Strawn's San Francisco office. He is a seasoned litigator and defends class actions from consumer claims to employment, privacy, financial services, insurance, toxic torts, and more. He has experience defending clients in multiple jurisdictions and has handled appeals before the US Supreme Court, Federal Circuits, and State Appellate Courts. Troy is recognized in Law Dragon's 500 leading litigators in America and 500 leaders in crisis management for class actions, enforcement, investigations, and product liability. Rebecca is a barrister at Four Punk Court, whose practice cuts across commercial disputes technology and emerging areas of liability, particularly AI. She regularly acts in complex and high-profile disputes, including acting in three separate cases featured in various editions of the lawyer's top 20 cases. She's ranked as a leading junior by Chambers and Partners in IT and by Legal 500 in IT Telecom's crypto blockchain assets and is described as the standout technology barrister at her call. Finally, we're joined by Alex Cooper, who is a lawyer in the Accountable Corporations team at Client Earth. His work focuses on exploring and implementing legal strategies to mainstream climate-related risk and to foster accountability for the impacts of climate change. Before joining Client Earth, Alex worked on complex litigation, domestic and cross-border at Claimant Side firm Housefield and Defence Side at Slaughter and Maine. Alex also has experience in climate change and corporate law issues, having worked at the Commonwealth Climate and Law Initiative, a legal NGO. So we have a fantastic panel of speakers here today. Thank you all indeed for joining me. Activism continues to influence corporate agendas. Activists are increasingly focusing on environmental, social, and governance issues to influence a company's behavior, particularly in light of climate change. Corporations globally are increasingly being held accountable by litigants for their environmental impact. In sectors like energy and infrastructure, we've seen a real rise in climate change litigation. There are disputes over emissions reporting, construction delays and land use, ESG regulation, investor activism, and greenwashing claims are also driving new forms of litigation. Parties don't always seek financial address. Instead, they want structural change, pressuring companies to alter behaviour or improve governance. In our recent Disputes Reimagined report, over 63% of business leaders in the UK market said they anticipated that climate change-linked disasters will cause the greatest increase in disputes over the next 10 years. But that said, only 54% of business leaders have said that they are proactively preparing for this risk. How a company deals with an activist campaign and handles the situation can affect its reputation and board of directors significantly. And there are a number of actions that a company can take to ensure the situation is handled well and risks are mitigated. We're going to come on to explore those in the podcast today. But before we do, I think we need to start from the beginning. And I'm going to ask Alex, what do we actually mean by political activism? By 2035, do you think that we will see climate-related litigation and other types of activism litigation as routine? And could popular movements amplify the scale and frequency of these claims? What type of claims do you think we'll be seeing in the future?

SPEAKER_04 3:44

Thanks, Katie. So I think as an initial point, it's interesting to think about these as political cases. These can be politicized issues, but where litigation is brought, it's seeking to enforce the existing law or expand on the interpretation of that. It's not really, it's a little different to a to lobbying at a political level to change the law. Additionally, while can be politicized issues, public interest on these is often bipartisan. We've seen polling of UK voters, which reflects this in relation to climate change. The public's increasingly aware of environmental impacts and litigation can step in where governments or corporations are seen to be failing to regulate or act appropriately in respect of these. We think that the public is going to be increasingly interested in climate change litigation going forward. In some study carried out in 2024, 62% of the population surveyed said they would join a climate-related legal action if given the chance, and 51% they would do so for moral reasons. So this is expanding beyond a sort of compensational redress thing, and people see it as a moral imperative. As the physical effects of climate change increase and become more obvious, we should expect to see more claims brought. I wouldn't be surprised if we saw temperatures rising above 40 degrees in the UK again. That will increase the public awareness of these issues, and I think we should expect to see legal actions as a result. In terms of the cases, the legal framework's evolving rapidly. We've seen significant developments and findings in relation to greenwashing cases and corporate governance cases in the last few years, as well as in the tortious cases where these are taking place on a multi-jurisdictional level. We've seen liability findings against fossil fuel majors in the Netherlands, and we've got cases that are coming up in France and Belgium, which may expand on those. There's a New Zealand case called Smith and Fonterra, which these which is going to go to trial in 2027, which is quite interesting from an English law perspective given the similarities of the law there. And the Dutch case, which should have a judgment from the Supreme Court handed down this year, which will really be an opportunity to see how these liability findings are being solidified. These cases are all building on each other and courts learn from these findings. So we should expect to see rights-based approaches under the tort law, seeing support from these cases as they develop, as well as from legal international opinions such as the ICJ, and rulings from courts on human rights, such as the Niclumus and Jorin case. We're also seeing a shift from seeking injunctive relief to seeking damages as well. And the court in a German case has held that this is theoretically possible under German law. It didn't find the damages arose in that case, but the legal theory is advanced in there. Finally, I think it's important to note that these claims are multi-jurisdictional. While courts are generally seized in the jurisdiction in which the defendant is domiciled, that means that the UK courts can often be a choice of forum which claimants can use here. We saw the Mariana Dam case, ruling handed down last year to demonstrate that courts are willing to find liability in such cases. And we saw the claim launched at the end of last year where Philippine Islanders are seeking damages from Shell in relation to climate change damages arising from a hurricane or dead. Another interesting development on this is the ruling of the Belgian court in the Fowleys case, which came out quite recently. In that case, the court applied the Brussels One regulation and held that the claim could also be brought in the jurisdiction where the locus was the place of harm. So you have a situation where companies could be liable both in the jurisdiction in which they're domiciled and in the jurisdiction in which the harm occurred. And for something like climate change, that becomes quite a difficult issue. Would you also expect to see climate change cases go beyond sort of claims that are brought by environmental NGOs? As the effects of climate change arise, we should expect to see insurance claims or regulatory enforcements in particular, where we see things like successful damages claims established by NGOs first.

SPEAKER_00 7:15

It's really interesting. Thank you, Alex. Just keeping on the topic of the sort of global nature of this type of litigation and the impact on corporations globally. Troy, do you see any potential differences in the types of activist claims or indeed consumer class actions in the US? What do you think we'll be seeing in the future there?

SPEAKER_02 7:32

So far, the new breed of climate change cases have had mixed results in meeting threshold requirements in the US. About a month ago, the US Supreme Court granted review of a case called Suncor Energy. There, the court is expected to decide significant questions about whether private plaintiffs can bring climate change cases against companies in the U.S. You can say a lot of different things about the political environment in the United States, but on the bottom line, given the current constitution of the court, my guess is that it is about to get more difficult to file this new type of climate change litigation in the United States. Zooming out to the big picture though, one prediction is that the more things change, the more they will stay the same. This builds, I think, on Alex's comment that a lot of litigation works within the existing frameworks. And to explain that a little bit, the factual core of very common class action claims in the US is that a company concealed facts from me or that a company's product or service doesn't work the way I expected it to. And if I had known the truth, I never would have purchased the product or I would have made a different decision. I think this type of claim also is likely when we talk about ESG marketing or greenwashing or AI technologies or other emerging frontiers. For example, based on your ESG website and representations, I believe the use of your services was contributing to social justice, and I never would have purchased your services if I had known the truth. So now you owe me damages. To provide another example from a different front, there are also big questions about things like whether social media addiction claims will be the new tobacco litigation. And it's just another example, I think, of how the factual context will likely change dramatically, but what's old will probably be what's new again. Finally, I think given the way US litigation works with contingency fees and other things, I think money will always remain as a big driver of US litigation. But it's true that class action litigation almost always poses reputational risk, and in the future, I see that risk only growing. A big driver in increasing both that reputational risk as well as the financial risk is the globalization of products and services. Companies increasingly interact with many individuals and do so in a lot of different countries that allow for collective actions and class actions.

SPEAKER_00 10:06

I completely agree, Troy. And I think we really are going to see some of these new novel types of claims and litigation across all the jurisdictions that we've been discussing today. And you touched on AI. And Rebecca, do you have any thoughts on you know where we might see AI litigation going and in the context of a group action, a group litigation, whether that's you know a sort of public activist type movement or your more traditional class action? I think there could be scope there, couldn't there?

SPEAKER_01 10:30

Yeah, it's interesting, Katie, as you say, because as AI increasingly moves from a position of a few years ago, it was almost viewed as a kind of digital novelty, I would say. And now it's quite a pervasive element in certainly most businesses, but also in decision making, as you say. In terms of whether this will give rise to kind of new claims, I would say one, it's not a will, it's it's already happening. But as you say, I think there are new challenges in terms of that, both in terms of thinking about the substantive claim, but also the difficulties that are going to arise in terms of an evidential or a procedural issue. Um, as you say, historically, a lot of claims around data tend to have been focused on kind of traditional, almost data style claim. And I think the new category or certainly where we see the tech of AI changing that is, as you say, with bias claims. Unlike with human bias, which at least from the outside often can seem unique to the individual. What's obviously interesting about algorithmic bias is that if we take something like recruitment, for example, and an AI system penalizes, for example, a specific demographic, it should do that, at least one would think logically, from a more systematic point of view. And in some ways, this goes back to a group litigation point that obviously is a key ingredient in terms of the facts underlying the claim. I think going to what's going to be a bit difficult about that, or from a causation perspective, what will be difficult for parties to deal with is that one, there's obviously a transparency gap. That's not unusual in any uh group litigation. There are lots of examples of that. But what is different from a commercial AI model is that obviously claimants won't be able to see how variables are weighted, for example, and proving that, you know, factor X led to this harmful output and will at least be will be challenging. And the other is obviously the human in the loop defense again and kind of human rubber stamping decision making, I think will be difficult for claimants. And finally, just the complexity of these systems poses a unique challenge. It's not just claimants, I think, handling that, it's also defendants as well, trying to understand how these systems work. So I think you're certainly right that this will bring a new wave of types of claims and challenges in terms of that.

SPEAKER_00 12:39

Sticking on that for a moment, Rebecca, do you think that the existing case management process, I mean, particularly what we have here in the UK, is sort of fit for purpose for these types of claims, and indeed all the types of claims that we're discussing today. You know, we've seen that the courts, certainly in the UK, are grappling with different ways in which to sort of intervene in proactively case manage as they do in them, you know, taking the Pan-Knox diesel litigation as one example, and also some of the cases that Alex mentioned and that are going through the cat. But I think it's fair to say, isn't it, that there will be some reforms coming down the line and that there do have to be some changes to, you know, to really account for what's coming in the future.

SPEAKER_01 13:15

Yeah, I think you're right, Katie. I think there's two points from that. One is I think the courts have actually been quite good at adapting to these new cases. As you say, you know, Pan Knox is a good example where, you know, principles that maybe people might have thought before those cases might not apply, like cost budgeting and things like that, the courts have been very, very willing to do that and learning from lessons in, you know, previous cases where, you know, the amount of cost the parties spend can often then just outweigh what parties can expect to receive. And I think what that shows is that the courts are very good and willing to adapt. But I think you're right, Katie, at the same time, there are certainly lots of elements that don't work well and will have to be changed. I mean, that goes from something as mundane as just the infrastructure in place. I mean, in these large group litigations, sometimes even finding a room large enough to house people can be difficult, um, let alone thinking about, you know, how do we present evidence in a useful way to a judge. So I think you're certainly right, things need to change. But I also think it will be interesting to see what the UK takes from other jurisdictions, for example, the states or even other jurisdictions like the CAT. For example, like certification can be quite a good way of a claim to stop spurious claims, but also encourage litigation that does have merit to move through the courts. So, yes, I think there's cause for optimism in terms of how the courts have adopted, but also I think change will be needed to make sure that litigation can move in an efficient way for people that are engaging with it, which isn't perfect at the moment.

SPEAKER_00 14:38

And Troy, Rebecca mentions the US procedure and certifications. I mean, what's your take on it? Is that really strict enough to filter out claims that are sort of more politically motivated rather than actually with legal merit?

SPEAKER_02 14:49

So different than some other countries, pure merits questions are not legally relevant to the analysis at the certification stage in the United States. I think that means that the US system makes it possible to allege creatively impose high cost of discovery, generate adverse media coverage, and proceed to class certification before any real tests on the merits or the facts can occur. Additionally, as you all know, in many systems there are consequences for filing claims without proper evidentiary support. Uh, and in many systems, the loser pays the winner's cost of the litigation. At least as a practical matter, these types of protections against meritless claims do not exist in the United States. Certainly, as a defense attorney, I believe that such protections should exist. But trying to be objective about things, I think we can all agree that judicial resources are better spent addressing meritorious claims instead of meritless ones. And as you say, you know, the US style litigation explosion has always been a big challenge or a big concern for a lot of different countries, think rightfully so, and it and that type of explosive growth continues to be a challenge in the US itself.

SPEAKER_00 16:06

So then, Alex, are we going to have the US explosion in the UK? How do you see, you know, sort of activism in the future and bringing these claims in the current structure or indeed any changes that need to be made to the legal framework?

SPEAKER_04 16:20

So the class action structure is quite an interesting one from an activist perspective. I don't think that many environmental NGOs would be bringing a class action, predominantly due to the costs of doing so, but they allow a number of questions to be addressed which make them which have attractive features. So they address an access to justice issue by amalgamating lots of small claims into one which can bring the harm home to the wrongdoer. That's quite an attractive proposition for an environmental claim, for example. It also brings a lot of focus to a particular issue, both from the public and for the defendant, which can be helpful in sort of raising awareness on these things, which are part of the broader um goals that an environmental NGO might have. And there's also an element of attraction from the commercial funders. And if you're able to identify a claim which can work from a commercial perspective, then the broader effects of that can be can be larger, which makes them, again, quite attractive for an NGO. There's lots of reform going on, I think, in the UK base at the moment. We've seen the CAT talk a lot about wanting to see cost budgets from both sides. We've seen the Supreme Court ruling on the merits test being brought forward to the certification stage, at least to some degree. And I think these are welcome because as Troy says, we don't want court resources spent on meritless claims. What should happen then is we should have stronger claims that are better resourced and better thought through from an earlier stage. That's obviously a challenge for claimants, but I think it's a welcome challenge. I think we will see environmental class actions start to arise. We've seen it already for things like Thames Water and the Cat and competition law is expanding in that degree in the US, with the there's been a complaint in Michigan. We should also expect to see it for opt-in claims. I think PFAS and other plastics, other sort of broad environmental harms are ripe for this sort of thing. The reform is going to adjust how these claims are taken forward, but I think it's a very broad area with lots to be done.

SPEAKER_00 18:02

Yeah, I do really agree. And it's quite a challenge, I think, for companies to prepare for what's coming and you know, changes in the regimes and managing these sorts of claims globally across the different jurisdictions. And I think as I mentioned earlier in the podcast, we were quite surprised by our um survey results, whereby, you know, a number of businesses are not really thinking about this. They're aware of it, they know it's coming, but they're not really preparing in a sort of proactive way. So I think as we sort of round up these discussions, perhaps we could just think about what practical steps companies should be taking. And Rebecca, do you have any thoughts on that?

SPEAKER_01 18:35

Yeah, so I think one point that's probably underpinned a little bit of our discussion is this idea of kind of a politically motivated or a case kind of motivated by activists. And in terms of kind of thinking about practical steps, I think that's probably the wrong way for a business to think about claims in the sense that I think often we can view claims with kind of a sense of retrospect or hindsight. We read a judgment at the end, you know, sometimes there's a TV show about it, or people read or write articles. And I think it can make people see the case in a slightly different way. And the relevance for that is I think that probably organizations need to approach every potential piece of litigation or complaint with a view to not thinking whether this is or isn't politically motivated because the case will change over time. So you might be approached with, you know, one individual, one complaint. I mean, obviously Alex raised the possibility of things like insurance claims, for example, in the context of climate litigation. At first blush, that won't seem like a case that to a business that's kind of got a politically motivated angle to it, or even a case that people might be interested in. But I would say that's kind of the maybe not the way that businesses should look about at it. So with that kind of view in mind, a couple of things. One, I would say increasingly where organizations rely on maybe certification by others to do with, you know, maybe environmental standards or even, you know, something as simple they might think of how an AI model works. I think interrogating that information from the outset, not with a view to litigation, and but with a view to maybe being able to justify later on the decisions you've made as an organization. And then obviously, if litigation does come and being able to explain that and evidence is always useful. A point, obviously, we've been talking a lot about group litigation, but also thinking about how if you are maybe potentially the primary person that people will come to for liability, how do you pass on that liability to others and thinking about the total framework in which you operate, I think is really important for businesses. And the final point I'd say is obviously as lawyers, we always think about what the right answer is legally. Um, but as you say, you know, particularly with group claims, there's a huge reputational risk that comes with this kind of litigation. So I think having a conversation when these claims emerge, not just about what the legally correct or um or wrong answer might be, but also kind of reputationally what stance the organization wants to take and thinking about it from a broader picture, I think increasingly is something that organizations should do.

SPEAKER_00 20:52

And Troy, do you see anything sort of particularly different companies in the US or anything um you know that distinguishes it from what Rebecca was saying?

SPEAKER_02 21:02

I I completely agree with everything that Rebecca said, and particularly the last point. I think everyone needs to um analyze risks more globally. Going back to her first point, too, I think in different countries, the same set of facts can be viewed very differently and come into focus very differently. A large part of my personal practice is coordinating the defense of class, mass, and collective actions threats globally. And as more countries bring devices to aggregate claims online, I think the challenges of thinking about interactions between cases and between countries become bigger and bigger. And as one example, it can be tempting to look at a small population country and think about settlement just to be done with that battlefront. But I think companies also need to think about questions like will settlement or aggressive litigation? Or another course of action help to best sequence proceedings in a favorable manner so that, for example, document discovery remains unavailable in civil law countries, or so that favorable precedent might be developed in one form or another before a big wave of litigation is adjudicated? How will the company's actions be portrayed in in different places by the media and on social media and in other commentary? And even if the claims are of low value in a certain country, do similar claims give rise to more reputational risk or larger amounts of damages in other jurisdictions? And thinking about kind of all of these different factors in designing a litigation strategy even in a particular forum is very important here.

SPEAKER_00 22:50

And Alex, do you have any comments from the sort of claimant side? We're giving away our defensive strategies here. What what might be the challenges on your side?

SPEAKER_04 22:59

I don't think I disagree with anything that Troy or Rebecca have said. I think it's important to view for companies to be viewing this in a, especially in a globalized manner. Troy mentioned earlier that as products and services become increasingly globalized, uh you are seeing claims which are applied to the essentially existing law and just explore these in multiple jurisdictions. That's going to continue to be the case. And it's important that companies are aware of these risks and spotting them as they can. We see a number of cases in which public interest is led by investigative journalism, which then leads to regulatory responses, increasing scientific research on these issues, and could eventually lead to litigation. That's in the climate sphere, but environmental cases more broadly. And I think companies should be well, well aware of what's going on and able to spot the ripples before they hear the splash. That could be a it could be for things like PFAS and BFOA, but just other things which are in the public eye. If corporations are being proactive and risk managing in a sensible way, then that will be the most sensible thing they can do to reduce their litigation risk and the reputational harms that can follow.

SPEAKER_00 23:58

Yeah, I completely agree, Alex. And we certainly concluded in our Disputes Reimagined report that those businesses that are able to be agile and resilient and really sort of flexible to the challenges and the way in which it's changing globally are probably going to fare best in the in the future disputes landscape. Well, thank you so much. We've really enjoyed the discussion here today and really appreciate all of the interesting insights, especially on a sort of cross-border, multi-jurisdictional basis. I think it's been really interesting. And thank you everybody for listening.

SPEAKER_03 24:29

We hope you enjoyed our final episode of Disputes Reimagined, discussing how activism is reshaping corporate strategy across global markets. If you'd like to learn more about the disputes of tomorrow and how you can start preparing now, visit our website to read our full report.