 Securities Litigation Site:
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by Stephen T. Maher
As published in Steve's Lawyering and the Internet Column in Law Products Magazine,
January/February 1997
Securities fraud class action litigation is of interest to a wide public
audience yet involves a finite number of cases. The enactment of the Private Securities
Litigation Reform Act of 1995 provided the impetus for a project to study the effects of
major statutory reform. As a result, the Stanford Law School's Class Action Clearinghouse
site was created to be a new sort of research tool; a database on securities fraud class
action litigation.
The site (http://securities.stanford.edu) goes beyond the usual digital copies of the
texts of judicial decisions to provide detailed case information, including the full text
of securities class action complaints, motions and other major class action filings. The
site's objective is to provide enough information so "the public will be able to form
its own opinion as to whether litigation is with or without merit, whether too few or too
many companies are being sued, and whether recoveries are too small or too large."
This site demonstrates how the web can, and in the future will, change the practice of
law. By creating a digital litigation database that aspires to include all litigation in a
particular substantive area, including docket sheets, court filings and summaries of the
allegations made in the various cases, together with settlement information, the project
brings to the Internet detailed information about securities fraud litigation that
otherwise would essentially be unavailable because of the costs involved in retrieving it.
By making that information searchable and accessible from any computer on the Internet,
the project dramatizes the versatility and value of digitized information today.
The most active court handling cases of this kind is the U.S. District Court for the
Northern District of California, which is near Stanford and is cooperating with the
project.
Just as electronic filings at the SEC (http://www.sec.gov) make it feasible for EDGAR to
make commission filings quickly available, electronic court filings could drive the
creation of sites like the Stanford site. Not surprisingly, the Northern District of
California has proposed a local rule that would require counsel to post certain documents
in securities fraud cases on a designated Internet site.
The rationale for such posting was explained in the commentary that accompanied the
proposed rule. "Notification to class members traditionally involves a combination of
mailings and newspaper advertisements that are expensive, employ small type, convey little
substantive information, and that may be difficult for members of the class to locate. The
rapid growth of Internet technology provides a valuable means whereby extensive amounts of
information can be communicated at low cost to all actual or potential members of a class,
as well as to other members of the public. Consistent with Congressional intent to promote
the use of 'electronic or computer services', this rule seeks to employ Internet
Technology to disseminate broadly information related to class action securities fraud
litigation."
The Stanford site also will provide a place for researchers and scholars to study this
kind of litigation. This should reduce the cost of such research by reducing the need for
field work. Assuming the development of a database that everyone agrees is complete, this
kind of approach also could improve the accuracy and reliability of such scholarship.
Securities fraud litigation has been politically charged in recent years, with the
enactment of the Private Securities Litigation Reform Act and last fall's campaign in
California to adopt Proposition 211. For controversial litigation, a site like this has
the potential to provide real numbers for the debate and to keep the debate focused on
what is really happening, not what people merely believe to be true. The success of such
sites is likely to promote ideas like requiring electronic filings in court cases,
especially in areas where public policy disputes over the effect and value of litigation
traditionally have flared.
Another potential effect of such sites is increased pressure towards the standardization
of pleadings and forms. The move towards standardization might first come voluntarily, as
lawyers borrow from good examples within the database as they create the file documents.
Courts also may push lawyers in that direction. Information is easier to compare case to
case if everyone is using the same form. Forms already have become common in some areas of
practice, such as probate and guardianship, where oversight by the Court is facilitated by
requiring counsel to answer questions about the case. Artful pleadings can obscure
information. Forms can flesh it out.
This new Stanford site is likely to chart a course that we all might eventually find
ourselves following.
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