Collective Redress & Class Actions 2021

Last Updated November 09, 2021

UK

Law and Practice

Authors



Kennedys is a global law firm with particular expertise in litigation and dispute resolution, especially in defending insurance and liability claims. It has 67 offices, associations and co-operations across the UK and Europe, the Americas, Asia Pacific and the Middle East. The firm has a market-leading team handling product safety and regulation, large-scale product liability, recall and "mass tort" litigation and international claims. The core team is comprised of nine partners in London supported by more than 40 associates, as well as many partners and colleagues across Kennedys' international offices. A number of the firm's lawyers have qualified in law following careers in relevant industries (such as engineering, construction and medicine), which deepens the firm's expertise for clients’ benefit. Kennedys acts for parties across various industries and has gained valuable experience in high-profile and complex matters involving a wide range of products, including automotive, chemical and pharmaceutical goods, medical devices, healthcare products and consumer goods.

Law of Equity

A mechanism for collective redress has existed in England for over 200 years. It originated under the law of equity in the Chancery Courts so that a group of parties with “a common interest and a common grievance” could be represented by one or more members of that group. One of the earliest instances of such an action was where certain creditors of a deceased debtor were able to bring a claim on behalf of all creditors.

Rules of the Supreme Court

Eventually, towards the end of the 19th century, Rules of the Supreme Court were introduced to codify the law and to bring the common law and the law of equity in this area, and generally, into line. The rules stated that where there are numerous persons with the “same interest”, one or more of those persons may sue or be sued for the benefit of all of the interested persons.

CPR

While English courts were, and still are, able to use their case management powers to manage a group of claims informally, other formal mechanisms became available following the introduction of the Civil Procedure Rules in 1999 (CPR). The introduction of these mechanisms under the CPR was largely in response to an increase in multiparty litigation over the 1980s and 1990s.

Amendments since 2000

Representative actions procedure

Rule 19.6 was added to the CPR in May 2000 and provides for a representative actions procedure which, similar to the earlier Rules of the Supreme Court, permits a party to sue, or be sued, as the representative of a class of individuals, provided that one or more of the persons in that class has the same interest as the representative. Historically, this mechanism has been infrequently used due to the strict interpretation and limited scope of the phrase “the same interest”.

However, it has recently been put under the spotlight by virtue of Lloyd v Google [2021] UKSC 50, a high-profile, large-scale data breach action that came before the UK Supreme Court (UKSC) in April 2021. In its long-awaited judgment handed down on 10 November 2021, the UKSC overturned the ruling of the Court of Appeal, thereby disallowing data privacy actions that require an individual assessment of loss or damage to be brought on an “opt-out” basis pursuant to the representative actions procedure. The UKSC’s decision affirms the court’s stringent approach to the “same interest” test (see 1.2 Basis for the Legislative Regime, including Analogous International Laws; 4.4 Class Members, Size and Mechanism (Opt In/Out)).

GLOs

The amendments to the CPR in May 2000 also introduced Group Litigation Orders (GLOs) in response to the perceived inadequacy of the existing collective action mechanisms and in order to allow the court to properly manage claims brought by a large number of claimants whose claims shared common issues of fact and law. 

CPOs

In a similar vein, in 2015, an opt-out collective proceedings regime was established by the Consumer Rights Act 2015 (CRA) for bringing private competition claims in the Competition Appeal Tribunal (CAT) as the existing regime for such claims, which operated on an opt-in basis only, was considered to be too narrow to provide effective redress to claimants. Similar to the representative actions procedure, this regime has been used very little to date, although it is expected to be used more frequently following the recent UKSC decision in Merricks v Mastercard (2020) UKSC 51 (the "Mastercard litigation"). That case ruled the matter was suitable for a hearing under the regime, and granted, on 18 August 2021, the first-ever collective proceedings order (CPO) by the CAT since the introduction of the regime in 2015. 

In the above case, the UKSC rationalised the "opt out" collective proceedings regime by quoting from Judge Posner in a US case: "The realistic alternative to a class action is not 17m individual suits, but zero individual suits, as only a lunatic or a fanatic sues for $30."

Hot on the heels of this matter, in September 2021, the CAT granted a CPO to Justin Le Patourel, founder of the consumer group, Collective Action on Landlines, giving him the green light to pursue an opt-out collective proceedings action as class representative of over two million BT landline customers. 

Representative actions and GLOs are not modelled on the regime of any other country, having arisen spontaneously and then been enshrined in law.

The representative action and collective proceedings regimes are similar to the US class action regime as they are opt-out regimes. However, both are more limited in scope than the US class action regime, as representative actions are subject to the “same interest” requirement, and only private competition claims can be brought under the collective proceedings regime.

There is no applicable information in this jurisdiction.

The court can use its case management powers pursuant to CPR 3 to manage claims brought by multiple claimants without the use of a formal mechanism. Multiple claimants can bring their claims by issuing a single claim form against one or more defendants. The court also has power under CPR 3.1 to consolidate multiple, similar individual claims into a single set of proceedings (CPR 3.1(g)); try two or more claims on the same occasion (CPR 3.1(h)); or add new claimants to existing proceedings (CPR 19.4). These types of actions are referred to in this chapter as “informal group action mechanisms”. 

Test cases may be utilised as part of a GLO, but as noted above, they can also be used outside the GLO regime.

Representative Actions

Representative actions are governed by CPR 19.6, while CPR 19.6(1) sets out the “same interest” test outlined above. 

GLOs

The rules governing GLOs are set out in Part III of CPR 19, and Practice Direction 19B. CPR 19.10 defines a GLO as an order “to provide for the case management of claims which give rise to common or related issues of fact or law (the ‘GLO issues’)”.

CPR 19.11 empowers the court to make a GLO where there are, or are likely to be, a number of claims giving rise to the GLO issues and it states that a GLO must:

  • contain a direction to establish a group register listing the relevant claims;
  • specify the GLO issues which will identify the claims to be managed as a group under the GLO; and 
  • specify the court which will manage the claims on the group register.

Collective Proceedings

Collective proceedings before the CAT are governed by the Competition Act 1998 (“CA98”) as amended by the Consumer Rights Act 2015. All referenced sections below are to the CA98.

Section 47B(1) provides that collective proceedings may only be brought before the CAT in relation to two or more claims to which Section 47A applies, namely:

  • a claim for damages;
  • any other monetary claim; and
  • a claim for an injunction within proceedings in England and Wales or Northern Ireland.

Collective proceedings may continue only if the CAT makes a CPO (Section 98(4)). 

Section 47B(6) provides that claims are eligible for inclusion in collective proceedings “only if the Tribunal considers that they raise the same, similar or related issues of fact or law and are suitable to be brought in collective proceedings”. Pursuant to Section 47B(7), a CPO must include the authorisation of the person who brought the proceedings to act as representative, a description of a class of persons whose claims are eligible for inclusion in the proceedings, and it must specify whether an opt-in or opt-out mechanism is to be used. The CAT may authorise a person to act as the class representative even if the representative does not fall within the class itself, provided that the CAT considers it just and reasonable for that person to be appointed as representative (Section 47B(8)). 

Opt-in collective proceedings are defined as collective proceedings which are brought on behalf of each class member who opts in by notifying the representative, in a manner and by a time specified, that the claim should be included in the collective proceedings (Section 47B(10)). 

Opt-out collective proceedings are those where any class member can opt-out by notifying the representative, in a manner and by a time specified, that the claim should not be included in the collective proceedings, although Section 47B(11)(b) excludes class members who are not domiciled in the UK at the time specified and who do not opt in to the proceedings in a manner and by a time specified. 

Schedule 8 of the CRA 2015, the Competition Appeal Tribunal Rules 2015 (CATR) and the (“CAT Guide”) set out the relevant procedure for bringing claims in the CAT, as described in 4.2 Overview of Procedure

In principle, there is no limitation on the areas of law or types of dispute in relation to which informal group action mechanisms or representative actions can be brought. 

In practice, representative actions have, to date, only been brought in a small number of claims, although they have included claims by stallholders seeking to restrain the owner of Covent Garden from overcharging them (Duke of Bedford v Ellis (1901) A.C. 1); ship-owners against a lead underwriter and the subscribing market for payment of sums ordered to be paid under an arbitration agreement (Irish Shipping Ltd v Commercial Union Assurance Co plc (1991) 2 QB 206); by both owners and housing association sub-tenants living in a block of flats in relation to generic defects in the block (Millharbour Management Ltd v Western Homes (2011) EWHC 661 (TCC)); and more recently, large-scale data breach actions.

GLOs can be brought in respect of claims in a variety of areas including product liability, shareholders’ actions, pension disputes and financial services. They are frequently brought in relation to product liability claims, often those involving pharmaceuticals and medical devices, care home or school abuse claims, taxation disputes, environmental cases (eg, claims relating to landfill and bad odours), and employment-related personal injuries.

Collective proceedings may be brought in relation to two or more claims for damages, another sum of money, or an injunction in relation to competition claims regarding, among other things, agreements preventing, restricting or distorting competition and abuse of dominant position.

Representative Actions

CPR 19.6 defines representative actions as: "Where more than one person has the same interest in a claim (a) the claim may be begun; or (b) the court may order that the claim be continued, by or against one or more of the persons who has the same interest as representatives of any other persons who have that interest."

The term “same interest” has been considered by the courts on numerous occasions in cases going back over 100 years. The Court of Appeal’s recent judgment in Jalla v Shell International Trading and Shipping Co Ltd [2021] EWCA Civ 1389, sets out the following requirements and limitations with regard to representative actions, which also included a helpful summary of the relevant case law.

  • A representative action requires congruity of interest between representative and represented and the need for certainty at the outset about the membership of the represented class.
  • The representing parties must have "the same interest in a claim" as the parties they represent.
  • "The same interest" is a statutory requirement which cannot be abrogated or modified and has been described as "a non-bendable rule".
  • The represented parties need to have the same interest in a claim as the representative because they are bound by the result of the representative action.
  • The court will adopt a common-sense approach to this issue. It must be the same interest "for all practical purposes" (Irish Shipping) or it must be "in effect the same cause of action or liability" (Millharbour Management).
  • In cases where "the wrong is the same, the loss claimed is the same” (Lloyd v Google (2019)) the parties do have the same interest.
  • A representative action is not precluded simply because the represented parties have separate claims for damages, especially where the damages claimed are secondary to, for example, injunctive relief (Duke of Bedford).
  • It is necessary to consider the available defences and, if there are different defences available in each claim, it is unlikely the represented parties have the same interest.

The UKSC's judgment in Lloyd v Google (2021) provides clarity on the interpretation of the “same interest” requirement in the context of large-scale data breach actions. In this action, Mr Lloyd brought a claim against Google alleging that they had breached their duty as a data controller under the old Data Protection Act 1998 (DPA 1998) by tracking the internet activity of Apple iPhone users, without their knowledge, and thereafter selling the acquired data. Mr Lloyd brought a representative action on behalf of the class of affected iPhone users (estimated to be approximately 4.4 million), claiming damage for distress and anxiety in relation to the loss of control of the data. The Court of Appeal held that (i) damages are, in principle, capable of being awarded for loss of control of data, even where there is no pecuniary loss or distress suffered by an individual claimant; and (ii) Mr Lloyd met the requirements of a representative action on the basis that those he sought to represent did have the “same interest”. The Court of Appeal held that “the data in possession of Google will be able to identify who is, and who is not, in the class”. 

Google appealed to the UKSC, which unanimously allowed the appeal.  The UKSC held that to bring a claim for compensatory damages for a breach of the DPA 1998, a claimant must establish that there has been a breach, and that damage, in the form of material damage or distress, has been suffered as a result. As this would involve an assessment of individual damages and loss, the claim could not proceed as a representative action under CPR 19.6 as the “same interest” requirement had not been met.

In cases requiring an individual assessment of damages, the UKSC suggested that the representative action procedure could still be used to determine common issues of fact or law, leaving issues that require individual determination to be dealt with subsequently. 

GLOs

CPR 19.10 defines a GLO as: "an order made under rule 19.11 to provide for the case management of claims which give rise to common or related issues of fact or law (the "GLO issues").

CPR 19.11 gives the court the discretion to make a GLO when “there are or are likely to be a number of claims giving rise to the GLO issues”. The granting of a GLO is at the discretion of the court rather than the parties’ right. The court may set up a GLO of its own volition.

There is no minimum number of claims required before the court can grant a GLO: it must be “far more than two” (Alyson Austin v Miller Argent (South Wales) Limited (2011) EWCA Civ 928) but can be fewer than 20 (The Corby Group Litigation).

The test of “common or related issues” is not as narrow as the “same interest” test for representative actions. By way of example, the following were found to fulfil the test:

  • claims to establish whether British Airways (BA) was liable to the claimants, or any of them, in relation to breaches of BA’s IT systems and, if so, which claimants were entitled to damages; and
  • claims against the Post Office regarding false allegations against employees resulting in the suspension or termination of their employment and the pursuit of civil proceedings and/or criminal charges against them.

The following were found not to be suitable for a GLO:

  • unfair contract claims by borrowers against a bank, as it would be necessary to examine each claimant’s individual circumstances (Tew v BOS (Shared Appreciation Mortgages) No 1 plc (2010) EWHC 203 (Ch));
  • claims against a hospital regarding a wide range of complaints (Various v Barking, Havering & Redbridge University Hospitals NHS Trust (2014) (QB)); and
  • “[a]typical” claims in relation to hip replacements by anonymised and foreign claimants (Schmitt and others v DePuy International Ltd (2016) EWHC 638 (QB)) (although GLOs have been granted in relation to a number of other actions concerning allegedly defective hip replacements).

Despite the GLO regime being introduced over 20 years ago, only 109 GLOs have been authorised by the court, out of which just 31 were granted in the last ten years.

Collective Proceedings

Section 47B(6) of CA98 states that claims are eligible for inclusion in collective proceedings “only if the Tribunal considers that they raise the same, similar or related issues of fact or law and are suitable to be brought in collective proceedings”.

This is supplemented by rule 79(1) of the CATR which states that the CAT must be satisfied that the claims “are brought on behalf of an identifiable class of persons... raise common issues... and... are suitable to be brought in collective proceedings”.

When deciding whether the claims are suitable, the CAT takes into account all matters it sees fit, including a number of specific matters:

  • whether collective proceedings are an appropriate means for the fair and efficient resolution of the common issues;
  • the costs and the benefits of continuing the collective proceedings;
  • whether any separate proceedings making claims of the same or a similar nature have already been commenced by members of the class;
  • the size and the nature of the class;
  • whether it is possible to determine in respect of any person whether that person is or is not a member of the class;
  • whether the claims are suitable for an aggregate award of damages; and
  • the availability of alternative dispute resolution and any other means of resolving the dispute, including the availability of redress through voluntary schemes.

This definition has recently been interpreted by the Supreme Court, and applied by the CAT, in the Mastercard litigation, which made the following findings.

  • The evident purpose of the statutory scheme for collective proceedings was to facilitate rather than to impede the vindication of the rights of consumers arising out of a proven infringement.
  • Both of the main issues in the case were common issues which was an important plus factor in the balance.
  • The matters listed in Rule 79(2) were not to be treated as hurdles but rather as factors to be weighed in the balance.
  • The court should construe suitability in the relative sense, and take into account the need to consider whether individual proceedings were a relevant alternative (which they were not in the particular case).
  • The court must do what it can with the evidence available when quantifying damages, and not allow forensic difficulties and shortcomings in the likely availability of data to lead it to a conclusion that claimants with a real prospect of (some) success should be denied a trial by the only practical procedure available to them.

It should be noted that the claimants in the Mastercard litigation already had a finding of breach of statutory duty in their favour which may have assisted their case for collective proceedings.

The various mechanisms for bringing a collective redress/class action in the UK have already been described, but are summarised here.

In England and Wales

  • A representative action can be brought in the court pursuant to CPR 19.6 by one or more claimants on behalf of an undefined set of claimants who are purported to have the “same interest” in a claim. Representative actions have, to date, been pursued in the high court but they can also be brought in the county court.
  • A GLO can be requested pursuant to CPR 19, Section III, where claims give rise to common or related issues of fact or law. GLOs are typically issued and managed in the high court but they can also be brought in the county court.
  • The court can use its case management powers pursuant to CPR 3 to informally manage claims brought by multiple claimants without the use of a formal mechanism. This enables the court to manage the claims flexibly and retain control over the litigation.

Across the UK

Section 47B of the CA98, as amended by Schedule 8, paragraph 5 of the Consumer Rights Act 2015, enables consumers and businesses to bring collective proceedings in the CAT in relation to infringements of UK competition law that raise “the same, similar, or related issues of fact or law” (rules 79(1)(b) and 73(2) CATR). 

Informal Group Action Mechanisms

There is no specific or special procedure governing claims pursuant to informal group action mechanisms. As set out in 1.1 History and Policy Drivers of the Legislative Regime, the courts will use their case management powers under the CPR to manage claims brought by multiple claimants which will give the courts flexibility and control over the litigation. 

Representative Actions

Other than that set out in CPR 19.6 and discussed in previous answers, there are no other specific rules governing the procedure of representative actions.

GLOs

Practice Direction 19B sets out the procedure for applying for a GLO, the operation of the group register and how the GLO will be managed by the court.

Individual claimants are required to issue their own respective claim forms and apply to join the group register. If a party applies to the court seeking approval for a GLO, a claimant must demonstrate that there are “common related issues of fact or law”.

Where appropriate, the court may make a GLO of its own initiative. For example, in Dominic Lis Waniso Lungowe & ors v Vedanta Resources PLC & anor (2020) EWHC 749 (TCC), the court, of its own volition, made a GLO in circumstances where two claimant law firms commenced separate proceedings for two sets of claimants. Both proceedings shared common issues of fact and law and were therefore suitable for a GLO. Accordingly, Mr Justice Fraser held that the defendant should only have to deal with one, single set of proceedings and not two considerably sized ones. 

GLOs benefit from active case management by the court. Upon the granting of a GLO, a case management conference will be fixed at which the court may give directions:

  • varying the GLO issues;
  • providing for one or more claims on the group register to proceed as test claims (commonly referred to as "lead claimants");
  • appointing the solicitor of one or more parties to be the lead solicitor for the claimants or defendants;
  • specifying the details to be included in a statement of case to show that the criteria for entry of the claim on the group register have been met;
  • specifying a date after which no claim may be added to the group register unless the court gives permission; and
  • for the entry of any particular claim which meets one or more of the GLO issues on the group register.

The group register is usually maintained and kept at the court but the court may direct that solicitors for one of the parties take responsibility for it. 

GLOs are automatically allocated to the multi-track, which is the track suited to high-value, complex and multiparty litigation. A managing judge will be appointed to manage the GLO and hear the GLO issues. To support the judge with the administration of a GLO, a master or district judge may also be appointed to deal with procedural matters in accordance with directions given by the judge. A costs judge may also be appointed, particularly if the GLO is subject to costs budgeting. 

Collective Proceedings

Collective proceedings are a form of a procedure and do not establish a new cause of action; each individual claim must be a claim to which Section 47A of the CA98 applies (see 2.1 Collective Redress and Class Action Legislation). 

Collective proceedings are governed by rules 75–93 of the CATR. There are four stages to a collective proceedings action:

  • the making of a CPO;
  • a trial of the common issues;
  • determination of any individual issues; and
  • the distribution of any damages.

Unlike ordinary civil proceedings under Section 47A of the CA98, collective proceedings must be approved by the CAT, with such approval comprising authorisation of the class representative and certification of the claim as eligible for inclusion in collective proceedings. The claim can only proceed if a CPO is issued by the CAT.

Similar to GLOs, collective proceedings (particularly under the opt-out regime) are subject to intensive case management by the CAT so as to ensure that the interests of the CAT are adequately protected.

There is also procedure governing collective settlements, which are described in further detail in 4.12 Settlement and ADR Mechanisms.

Informal Group Action Mechanisms and GLOs

There are no rules or restrictions on standing where multiple claims are managed by way of informal group action mechanisms or a GLO. Claimants are to commence their own individual actions, before they are managed in accordance with these mechanisms. 

In certain GLOs, it may be appropriate for the court to select a sample of the claimant group to act as test claims that will give rise to sufficient common findings to apply to the remaining cohort of claimants. 

Representative Actions

In contrast, a representative action must be brought by, or against, one or more persons who have the “same interest” in a claim, as discussed in 1.1 History and Policy Drivers of the Legislative Regime.

Collective Proceedings

Collective actions brought in the CAT may be brought by a claimant, or a class representative who need not be a class member. The class representative must be certified by the CAT before it is permitted to commence proceedings. In so doing, the CAT will consider whether it is just and reasonable for the class representative to be appointed, having regard to specific criteria, including whether the proposed CAT representative would fairly and adequately act in the interests of the class members and whether it does not have, in relation to the common issues of the class members, a material interest that is in conflict with the interests of the class members.

In determining whether the proposed class representative would act fairly and adequately in the interests of the class members, the CAT will have regard to a number of circumstances, including:

  • whether the proposed class representative is a member of the class, and if so, its suitability to manage the proceedings;
  • if the proposed class representative is not a member of the class, whether it is a pre-existing body and the nature and functions of that body;
  • whether the proposed class representative has prepared a plan for the collective proceedings that satisfactorily includes –
    1. a method for bringing the proceedings on behalf of represented persons and for notifying represented persons of the progress of the proceedings;
    2. a procedure for governance and consultation which takes into account the size and nature of the class; and
    3. any estimate of and details of arrangements as to costs, fees or disbursements which the CAT orders that the proposed class representative will provide.

Informal Group Action Mechanisms

These procedures operate on an "opt-in" basis, meaning that claims are brought on behalf of identified claimants who have authorised the claims to be brought on their behalf. There are no limits on the number of claimants using these mechanisms. Indeed, they have been used to manage claims brought by very large numbers of claimants. 

In Weir v Secretary of State for Transport (No1) (2005) EWHC 812 (Ch), approximately 48,000 shareholders of Railtrack brought an action against Stephen John Byers, the then Secretary of State for Transport in relation to his decision to force Railtrack into administration. A group of claimants formed an "action committee" which brought a single action in which the 48,000 shareholders were all parties to the proceedings. 

GLOs

Parties whose claim gives rise to the GLO issues must issue a claim and be entered onto the group register to be part of the GLO. There is no limit on the number of eligible claimants that may join the group, however, the court may give directions that specify a cut-off date after which no claim may be added to the group register unless the court gives permission (CPR 19.13).

Representative Actions

There is no limit to the number of eligible claimants that may join a representative action. 

Representative actions are based on an opt-out regime. An opt-out action is one that is brought on behalf of those who fall within the class, unless they express their wish not to be represented. 

There is no requirement for the represented class to be joined as parties to the action, or to be identified individually. Any judgment or order made by the court is binding on all persons represented in the claim but may only be enforced by or against a person who is not a party to the claim with the permission of the court. 

Collective Proceedings in the CAT

Collective proceedings can be brought on either an opt-in or opt-out basis. Historically, collective actions brought in the CAT were only conducted on an opt-in basis. However, this changed following the introduction of the CRA in October 2015 which provides for an opt-out regime. A CPO will state whether the collective proceedings are opt in or opt out and specify the time and manner by which, in the case of opt-in collective proceedings, a class member may opt in and, in the case of opt-out collective proceedings, a class member who is domiciled in the UK on the domicile date may opt out.

Parties can be added to an issued claim form although the court’s permission is required if the claim form has not been served (CPR 19.4(1)). 

See 4.4 Class Members, Size and Mechanism (Opt In/Out) which notes that there is no limit on the number of eligible claimants that may join a GLO or representative action.

For collective proceedings, an application can be made to the CAT for permission to add a party to the proceedings (Rule 38 CATR). An application for permission must be served on all the parties and may be made by an existing party or a person who wishes to become a party. Before the expiry of the relevant limitation period, the CAT may order a person to be added as a new party if adding that party can aid the CAT to resolve the matters in dispute or if there is an issue involving the new party and an existing party that is related to the matters in dispute.

The court’s case management powers under CPR 3 are described in the responses above and apply generally to the informal group action mechanisms, GLOs and representative action procedures.   

GLOs are subject to more stringent case management by the court. In addition to the case management powers provided by CPR 3, the court is empowered to give directions, including varying the GLO issues, providing for one or more claims on the group register to proceed as test claims and appointing the solicitor of one or more parties to be the lead solicitor for the claimants or defendants (CPR 19.13). Where the court has given directions for a claim or claims on the group register to proceed as a test claim to address a specific issue or fact or law, the outcome will be applied to the cohort of remaining claims. Should a test claim be resolved, the court may order that another claim on the group register be substituted as the test claim. 

As with GLOs, collective proceedings are subject to extensive case management. The CAT has broad case management powers and may, at any time, give directions for case management, order similar claims to be heard together, and add or substitute parties. It also has the power to strike out claims.   

The length and timetable for group actions and collective proceedings brought in the court or the CAT is subject to various factors including the number of parties, the complexity of the issues, the volume of factual and expert evidence and the collective value of the claims. 

Although representative actions are few and far between, recent actions have lasted several years. In Jalla & Others v Shell, the Court of Appeal’s judgment was handed down in September 2021, nearly four years after the commencement of proceedings. 

GLOs have also been known to span several years. For example, the DePuy Pinnacle Metal on Metal Hip Group Litigation Order was granted on 31 July 2014 but the trial did not commence until October 2017. The trial was listed for the entire Michaelmas term (four months), with judgment handed down in May 2018.

Collective proceedings are less drawn out as the procedure is more streamlined in accordance with the CATR. Where appropriate, certain collective proceedings may be appropriate for the CAT’s fast-track procedure. Rule 58 of the CATR empowers the CAT to make an order, either on application by a party or on its own initiative, that the proceedings be subject to the fast-track procedure. In determining whether the fast-track procedure is suitable, the CAT will take into account all relevant circumstances, including:

  • whether one or more of the parties is an individual or a micro, small or medium-sized enterprise;
  • whether the time estimate for the main substantive hearing is three days or less;
  • the complexity and novelty of the issues involved;
  • whether any additional claims have been or will be made in accordance with rule 39;
  • the number of witnesses involved (including expert witnesses, if any);
  • the scale and nature of the documentary evidence involved;
  • whether any disclosure is required and, if so, the likely extent of such disclosure; and
  • the nature of the remedy being sought and, in respect of any claim for damages, the amount of any damages claimed.

Acceleration of Claims

While the courts in England and Wales operate quickly in comparison with many other jurisdictions, litigation can span several years. In accordance with the overriding objective, the court has a duty to actively manage cases to ensure that they are dealt with expeditiously and fairly. However, in circumstances of real urgency, the court can order an expedited trial. When considering an application for an expedited trial, the court will have regard to:

  • whether there is good reason to expedite a trial;
  • the administration of justice;
  • whether there will be unfair prejudice to the other parties; and
  • any other relevant circumstances, such as whether the applicant acted quickly when conducting its claim.

The CAT provides for a fast-track procedure as described above.

Summary Disposal

The court can use its case management powers to strike out a case (CPR 3.4); order default judgment, ie, judgment without a trial (CPR 12.1); order summary judgment, ie, decide a claim or a particular issue without a trial (CPR 24); or order a trial of a preliminary issue or issues (CPR 3.1). The CAT has similar powers pursuant to rules 41–43 of the CATR.

Costs

Informal group action mechanisms, GLOs and representative actions

CPR 44 sets out the rules governing costs in England and Wales. The court has discretion to award a party costs, the amount of those costs and when they are to be paid (CPR 44.2). Costs may be awarded on a "standard basis", ie, costs are recoverable only in so far as they are reasonably incurred and proportionate to the issues, or on an indemnity basis, ie, they are presumed to be reasonably incurred and proportionate. 

The general rule is that the losing party pays the costs of the successful party, in addition to bearing their own costs. Given the significant costs typically generated by group actions, this general rule has been a factor in deterring unmeritorious group actions being pursued through the courts. 

Parties to group actions brought in the High Court after 1 April 2013 may be required to submit a costs budget. In the context of a complex group action, these can be subject to intense scrutiny by the court. In Maurice Hutson & Ors v Tata Steel UK Ltd (2020) EWHC 771 (QB) which involved a GLO of more than 300 claimants, the High Court rejected an application by the claimants to retrospectively revise a previously approved costs budget and reduced a future budget by more than half. 

In addition to the general rules on costs, there are specific rules for GLOs set out in CPR 46.6. GLOs will generate individual costs, being the costs incurred in relation to an individual claim on the group register, and common costs, which comprise:

  • costs incurred in relation to the GLO issues;
  • individual costs incurred in a claim while it is proceeding as a test claim; and
  • costs incurred by the lead legal representative in administering the group litigation. 

Generally, group litigants on the register are severally liable in respect of an order for common costs, with each litigant bearing an equal proportion of the common costs, unless the court orders otherwise. 

In addition to their share of the common costs, group litigants are also liable for the costs of their own individual, respective claims.

CAT

Like the court, the CAT has discretion as to costs and at any stage of the proceedings may make an order it considers fit in relation to payment of costs for the whole or part of the proceedings. In making such an order, and to determine the amount of costs, the CAT may take into account:

  • the conduct of all the parties in relation to the proceedings;
  • any schedule of incurred or estimated costs filed by the parties;
  • whether a party has succeeded on part of its case, even if that party has not been wholly successful;
  • any admissible offer to settle made by a party which is drawn to the CAT’s attention and which is not a "Rule 45 Offer", to which cost consequences apply;
  • whether costs were proportionately and reasonably incurred; and
  • whether costs are proportionate and reasonable in amount.

Third-party litigation funders who have provided funding to losing claimants may be liable to pay significant litigation costs. In Sharp and others v Blank and others (2020) EWHC 1870 (Ch), the court ruled that the funder was jointly and severally liable for the defendants’ costs in shareholder litigation subject to a GLO and ordered it to pay GBP17 million. 

Funding

There are various methods of funding available to claimants in England and Wales.

  • Conditional fee agreements (CFAs) or a collective conditional fee agreement (CCFA): a party’s solicitor’s fees are payable only in circumstances agreed with the client, ie, the fee payable by the client is conditional upon agreed outcomes of the claim. If a claimant succeeds, the CFA may provide for a success fee in addition to base costs. A CFA or CCFA is usually coupled with "after the event" (ATE) insurance to cover any potential costs liability.
  • "Before the event" (BTE) insurance: claims are funded through a legal expenses insurance policy purchased before an accident occurs. Many people have BTE insurance as part of their home or motor insurance policies. These policies are often used in personal injury claims.
  • Damages Based Agreement (DBA): the representative lawyer is not paid if the claimant(s) loses their claim but may take a percentage of the damages recovered, if successful. DBAs are usually backed by a DBA or ATE insurance policy.
  • Government-funded legal aid: although following the cost reforms which came into effect on 1 April 2013, this now has limited use in civil claims and is usually means tested. 

Third-party litigation funding

While these funding methods continue to be available to claimants bringing group actions, the emergence of third-party litigation funding (TPLF) over recent years and, in particular, the proliferation of US funders in England and Wales, has resulted in an increase in group actions being funded on this basis.

In the Volkswagen emissions litigation (Crossley & Ors v Volkswagen Atkiengesellschaft & Ors (2019) EWHC 783 (QB)), discussed below, lawyers representing over approximately 91,000 claimants obtained funding via Therium Capital Management, a global provider of litigation finance and arbitration funding. Similarly, Mr Merricks in the Mastercard litigation is also supported by litigation funders.

The increased availability of such funding, coupled with what appears to be a cultural shift by claimants in favouring it over traditional methods, can be said, among other factors (such as the increasing presence of US law firms with class action expertise) to have facilitated the proliferation of group actions brought in England and Wales in recent years. 

TPLF is self-regulated by the Association of Litigation Funders. Nevertheless, TPLF arrangements will be subject to close scrutiny by the court. In the Mastercard litigation, the CAT was keen to ensure that the proceedings were to be conducted in the best interests of the class members, which should prevail over the interests of the funder, while at the same time recognising that the funder is entitled to protect its legitimate commercial interests. The CAT independently scrutinised the funding agreement, particularly in relation to provisions that permitted the funder to terminate the agreement where it considered that the proceedings were no longer commercially viable. The CAT was concerned that this put Mr Merricks at risk of his funding arrangements being terminated during the course of the proceedings and ruled that the terms of the funding agreement should include a requirement that the funders' views had to be based on independent legal and expert advice. 

Furthermore, the CAT considered the ability of the proposed class representative to pay any adverse costs order made against it and ruled that Mr Merricks should be authorised as the class representative, providing that his litigation funders provided a suitable undertaking to Mastercard that they would discharge a liability for costs ordered against Mr Merricks. 

Disclosure

The disclosure of documents forms part of all civil claims brought in England and Wales and is governed by the rules of civil procedure. Although there are no specific or special rules governing disclosure in group or collective actions, the ordinary disclosure rules provide the court and CAT with the necessary flexibility to determine how disclosure is to be managed in group and collective actions, which are often complex in nature and involve multiple parties. 

Pre-action disclosure

The court and CAT have power to order pre-action disclosure where the applicant can demonstrate that they and the respondent are likely to be a party to subsequent proceedings and that disclosure sought extends to the documents, or classes of documents, that would have been provided by the respondent by way of standard disclosure, had the proceedings started. Standard disclosure requires a party to disclose the documents on which it relies and the documents which adversely affect its own case or another party’s case, or support another party’s case.

The applicant must also demonstrate that the provision of pre-action disclosure will:

  • dispose fairly of the anticipated proceedings;
  • assist the dispute to be resolved without proceedings; or
  • save costs.

Disclosure during proceedings

For informal group action mechanisms, GLOs and representative actions brought in court, once proceedings are issued, the court may make an order for either standard or specific disclosure.  A party’s duty of disclosure is limited to documents which are or have been in their control. When giving standard disclosure, a party is required to conduct a reasonable search for documents, with the "reasonableness" of the search determined by the number of documents involved, the nature and complexity of the proceedings, the ease and expense of retrieval of any particular document, and the significance of any document located. 

For collective proceedings brought in the CAT, the CAT will decide at a first case management conference whether and when a disclosure report and Electronic Documents Questionnaire should be filed. At a subsequent case management conference, the CAT shall decide what orders to make for disclosure, having regard to the need to limit disclosure to that which is necessary to deal with the case justly. At any point, the CAT may give directions as to how disclosure should be given, including the nature of the searches to be undertaken, whether lists of documents are required, the format in which the documents are to be disclosed and whether disclosure is to take place in stages. 

Although the rules governing disclosure in the court and CAT are similar, their application varies between the different regimes. For example, since the represented class in a representative action is not party to the proceedings, the members of the class are regarded as third parties for the purposes of disclosure. Accordingly, the represented class is not subject to the usual standards of disclosure and will be subject to the specific requirements governing disclosure by third parties (CPR 31.17).

The CAT has power to order disclosure to be given by any party to the proceedings, the class representative and any represented person to any other represented person (including a person within a different sub-class), the class representative or the defendant, on any terms it deems fit. 

Privilege

There are no special or specific rules governing privilege in group or collective action proceedings so the standard rules governing privilege apply. 

Parties can withhold documents from inspection on grounds of legal professional privilege. This comprises:

  • legal advice privilege, which applies to confidential communications between a client and their lawyer where such communications came into existence for the purpose of giving or receiving legal advice; and
  • litigation privilege, which applies to confidential communications or documents created by a client and/or their lawyer in reasonable contemplation of litigation.

Parties may disclose a privileged document to a co-party or a third party on grounds of "common interest privilege" where the co-party or third party has a common interest in the claim.

Parties can also withhold "without prejudice" communications which were produced as part of a genuine attempt to resolve issues in dispute.

The types of remedies and relief available will depend on the type of action brought as well as the basis of the claim. 

Broadly, the following remedies are available to claimants in all aforementioned group action regimes brought in England and Wales, save as noted below.

  • For tortious claims, the law aims to restore a claimant to the position they would have been in had the tort not occurred. Compensatory damages may be awarded by the court. Punitive damages are permitted but are rarely awarded and are usually restricted to cases of deliberate torts, such as where a defendant has calculated that the financial gain from the wrongdoing is likely to exceed any damages payable to a claimant. In actions involving multiple defendants, liability for the same damage can be joint and several. 
  • For contractual claims, the law aims to restore a claimant to the position they would have been in had the contract been properly performed. The remedies available will depend on the contractual term breached. A claimant may be compensated for financial losses arising from the breach. A claimant may also seek an order for specific performance of the contractual terms to be carried out by the defendant.
  • Interim relief, including specific disclosure, interim payments and injunctions. These remedies are at the discretion of the court, which will have regard to the overriding objective of dealing with cases justly and at a proportionate cost.
  • Declaratory relief, which the court may grant as a sole remedy or in conjunction with another remedy such as damages. 

Remedies – Application to Group Action Regimes

Representative actions

In Lloyd v Google (2021), the UKSC held that the potential for claiming damages in a representative action is limited by the nature of the remedy of damages at common law; ie, to put the individual claimant in the same position as if the wrong had not occurred. As this requires an individual assessment of loss and damage that raises no common issue and cannot be carried out without the participation in the proceedings of the individuals concerned, the representative action procedure is not the correct mechanism for bringing such claims. 

GLOs

Although a GLO may have addressed common issues of fact or law relating to the losses claimed by the claimants, damages are calculated on an individual basis for each claimant. Damages are not awarded on a combined basis, nor are they aggregated.

CAT

Damages can be awarded on an aggregate basis, either by way of a lump sum or by reference to a formula to determine the sum due to each claimant, without requiring individual claimants to prove their losses. Punitive damages may not be awarded in collective proceedings. The CAT does not have jurisdiction to grant declaratory relief.

There is no cap on the level of damages awarded by the court in any of the above group action mechanisms.

ADR

As for all civil cases, ADR is available for all types of group actions. Forms of ADR may include mediation or informal without-prejudice round table meetings between class representatives and the defendants.

During the course of proceedings, parties are encouraged to consider the possibility of ADR and settlement. The overriding objective (CPR 1) provides that the court must actively manage cases by encouraging parties to use an ADR procedure if the court considers this appropriate and facilitating the use of such procedure. 

The CPR Practice Direction on Pre-action Conduct and Protocols also states that before commencing proceedings, the court will expect the parties to have exchanged sufficient information to understand each other’s position, to try to settle the issues without proceedings, consider a form of ADR to assist with settlement and reduce the costs of resolving the dispute. Litigation should be a last resort.

Where appropriate, the court may order that the parties take steps to engage in ADR. A party may risk adverse costs consequences for unreasonably refusing to engage in ADR. 

While the CATR do not expressly provide that the class representative or class members engage in pre-action ADR, they state that the CAT may encourage and facilitate the use of an ADR procedure if it considers it appropriate to do so. Furthermore, the CATR provide that:

  • when determining whether claims are suitable to be brought in collective proceedings as part of the certification process, the CAT will take into account the availability of ADR and any other means of resolving the dispute, including the availability of redress through voluntary schemes;
  • on the commencement of proceedings, the collective proceedings claim form requires the parties to state whether they have used an ADR procedure (rule 75(1)(g)); and 
  • at a case management conference, the CAT may give directions as to a stay of proceedings while the parties attempt to compromise the proceedings by ADR or other means.

Settlement

Settlement of claims subject to a GLO and representative actions is no different to settlement in ordinary, individual civil claims brought in the court. Generally, the CPR contains no express provisions or guidance in relation to the management of settlements or settlement agreements.

To the contrary, the CA98 contains express provisions governing settlement in both opt-in and opt-out collective proceedings brought in the CAT.

  • In opt-in collective proceedings, if the class representative is a member of the class and settles, in whole or part, its personal claim included within the collective proceedings, it is required to promptly give notice of the fact of settlement to all represented persons and the CAT. The CAT is not required to approve the settlement.
  • For opt-out claims, the rules are more stringent in that collective settlements may only be settled by a collective settlement approval order issued by the CAT. The CAT will only make such an order if it considers the terms to be"just and reasonable" (CATR 94(8)) by having regard to all relevant circumstances, including the amount and terms of the settlement, the number or estimated number of persons likely to be entitled to a share of the settlement and the opinion of any independent expert and any legal representative of the applicants. 
  • The approved settlement will bind all represented persons, except persons who have opted out by a time specified in the collective settlement approval order, and persons who are not domiciled in the UK at a specified time and have not opted in to the collective settlement by the time specified in the collective settlement approval order.

A judgment issued by the court in an informally managed group action will be binding on all named parties to the proceedings.

A judgment issued by the court in respect of a GLO issue will be binding on all other claims on the group register, unless otherwise ordered by the court. A claimant who was entered on the group register post judgment may apply to the court for an order that the judgment is not binding on him or her. The court may also give directions as to the extent to which a judgment or order is binding on parties to any claim that is subsequently added to the group register.  Parties have the power under CPR 19.12(3) to appeal any judgment or order if they consider that they are adversely affected by it.

Similarly, unless the court directs otherwise, any judgment given in a representative action is binding on all persons represented in the claim, but it may only be enforced by or against a person who is not a party to the claim with the permission of the court (CPR 19.6(4)). 

A judgment made by the CAT in collective proceedings may specify the sub-class of represented persons or individual represented persons to whom it does not apply. The class represented is required to give notice of any judgment to all represented persons in a manner approved by the CAT. 

There are no significant policy developments or initiatives at present, other than those noted in 5.3 Impact of Brexit and those anticipated in 5.2 Legislative Reform.

On 20 July 2021, the Department of Business, Energy and Industrial Strategy (BEIS) published a consultation, “Reforming competition and consumer policy”, to assess whether, and to what extent, the existing consumer rights regime is fit for purpose with a view to boosting competition and enhancing consumer rights in a post-pandemic and post-Brexit world. 

The consultation intends to explore whether there is a case for strengthening the UK’s collective redress regime, to make it easier to gather multiple individual claims together into a single action that can support the cost of litigation, with a view to making direct access to remedies for infringements of consumer law more accessible to consumers in general. The consultation indicates that any such reforms would not burden individual consumers with the costs of collective redress that may currently arise from private representative proceedings. 

As a result of Brexit, the UK will not be required to implement the Directive of the European Parliament and of the Council on representative actions for the protection of the collective interests of consumers (2020/1828) (the "Directive") into UK national law. 

Nevertheless, it is clear that the UK is following in the same direction of travel as the EU, as there has been a marked increase in group actions in recent years, as well as a drive towards widening the scope of opt-out actions in the UK.

The depth and scale of disruption caused by the COVID-19 pandemic across all business sectors globally has undoubtedly given rise to an environment conducive to class actions, particularly in the UK where large-scale opt-out US style class actions are becoming more widely available. This is further fuelled by US law firms, in tandem with sophisticated third-party litigation funders, establishing themselves in the UK harvesting support for group actions.

Although we are yet to see any sudden proliferation of group actions arising from the pandemic, it is quite possible that potential class action representatives were awaiting the CAT’s decision in the Mastercard litigation to ascertain if they were prepared to certify the first application for a CPO on an opt-out basis. In a similar vein, many will have also kept watch on the UKSC’s ruling in Lloyd v Google (2021), which has effectively prevented the floodgates opening to substantial claims brought pursuant to the representative action procedure on an opt-out basis. 

With many businesses forced to operate remotely and online for a significant period of time, as well as restrictions on the supply of goods, there has been significantly increased use and reliance upon data-driven technologies. This has the potential to give rise to large-scale cyber and data breach actions.  In this regard, although the UKSC’s ruling in Lloyd v Google (2021) has significantly abated this risk, the UKSC made clear that its decision was made with consideration to the DPA 1998 only, leaving it open for claimants to attempt to bring future, similar data privacy claims arising from breaches of the GDPR pursuant to the representative action procedure.

In addition, having particular regard to the recent ending of the furlough scheme, the current supply chain crisis and the instability of the financial markets, group actions may also be expected to arise in other areas including employment, competition, securities and supply chains.

Kennedys

25 Fenchurch Avenue
London
EC3M 5AD
United Kingdom

+44 20 7667 9667

+44 20 7667 9777

Sarah-Jane.Dobson@kennedyslaw.com www.kennedyslaw.com
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Kennedys is a global law firm with particular expertise in litigation and dispute resolution, especially in defending insurance and liability claims. It has 67 offices, associations and co-operations across the UK and Europe, the Americas, Asia Pacific and the Middle East. The firm has a market-leading team handling product safety and regulation, large-scale product liability, recall and "mass tort" litigation and international claims. The core team is comprised of nine partners in London supported by more than 40 associates, as well as many partners and colleagues across Kennedys' international offices. A number of the firm's lawyers have qualified in law following careers in relevant industries (such as engineering, construction and medicine), which deepens the firm's expertise for clients’ benefit. Kennedys acts for parties across various industries and has gained valuable experience in high-profile and complex matters involving a wide range of products, including automotive, chemical and pharmaceutical goods, medical devices, healthcare products and consumer goods.

Distinctive UK Collective Redress Schemes

As outlined in the EU chapter of this guide, as part of a sweeping reform in the area, the EU Directive (2020/1828) on representative actions for the protection of the collective interests of consumers (the "EU Collective Redress Directive") establishes an EU-wide mechanism for collective redress which has never before been in place. The Directive was published in the Official Journal on 4 December 2020.

This EU regime was not implemented by the UK prior to its departure from the EU, and will not be transposed into UK national law. The UK’s system is therefore unique among its neighbouring European countries.

The below-mentioned historical mechanisms for collective redress in the UK will continue to be the mainstay mechanism in the UK for the time being, in contrast to the EU regime currently being implemented into local laws by member states.

In the UK, there are several avenues for pursuing multiparty litigation, including the three main formal mechanisms as follows.

  • Group Litigation Orders (GLOs), under CPR Part 19 Section III, which provide for several claims where more than one claimant has a cause of action raising common or related issues of fact or law that can be grouped together and managed using specific procedural rules. This operates as an "opt-in" mechanism.
  • Representative actions, under CPR Part 19.6 Section II, in which the court may direct that, where more than one person has the same interest in a claim, that claim may be begun or continued by one or more of those persons as representatives of any other person who has that interest. These types of actions are effectively "opt out" as representative claimants can bring proceedings on behalf of all those who have the “same interest”. Additional claimants do not even need to be identified but will be bound by any judgment unless they opt out.
  • Collective actions brought in the Competition Appeal Tribunal (CAT) which can be the subject of a Collective Proceedings Order (CPO), and can proceed on either an opt-in or opt-out basis. The basis on which the action proceeds is specified by the CAT on certification of the CPO. Availability of this mechanism is limited to persons domiciled within the UK.

There are several distinctive features of UK collective redress mechanisms.

  • The opt-out representative mechanisms in the UK are currently more difficult to engage than those under the EU regime. However, the UK continues to follow in the same direction of travel as the EU, reflected in a significant increase in group litigation in recent years and the continual drive towards implementing opt-out collective action regimes. These opt-out regimes are the closest mechanism available in England and Wales to a US-style class action regime, where claimants who fall within the scope of the class are automatically assumed to be part of the class unless they actively elect to opt out.
  • While the UK’s legislative framework for collective redress is relatively well developed as a whole, recent developments in opt-out redress in the UK can be contrasted with the historic caution shown, which has for some years been characterised by a misconception of collective redress as a breeding ground for "litigation culture".
  • There are some discernible trends emerging within this continually evolving legal landscape. The UK courts are becoming an attractive jurisdiction for large group actions, particularly in the context of competition law and data breaches. There has also been a notable surge in recent years in the pursuit of group claims by both overseas claimants and US law firms setting up shop within the UK, supported by third-party litigation funders.
  • Should the EU Collective Redress Directive be seen to be a success and, particularly if the UK Supreme Court restricts the use of the more general representative action as proposed in Lloyd v Google (2019) UKSC 2019/0213, this could add a lot of pressure for a similar system to be used in the UK, especially as the UK has seen many funders and US law firms setting up in recent years to take advantage of the UK’s group action systems, as noted above.

All those in relevant industries who may find themselves at risk of collective group action, including manufacturers, hospitality management organisations and airlines, should be aware of these trends for future-proofing their businesses, particularly in terms of minimisation of legal risks where possible. Consumers and those in the wider general public who may seek to utilise the growing opportunities offered by the various legislative frameworks should be aware of their rights under these mechanisms.

Data Breaches

Representative actions under Part 19.6 of the English Civil Procedure Rules (CPR) are proving to be an increasingly popular route by which claims may be brought on an opt-out basis for damages stemming from breaches of data protection law.

The case of Lloyd v Google (2019), a data breach claim, is credited with breathing life back into a mechanism that has long existed but seldom been utilised. Mr Lloyd brought the action in relation to Google’s “Safari Workaround” used in 2011 and 2012, which he alleged allowed tracking and collection of information from phone users’ browser-generated information without their knowledge or consent. In bringing the action, Mr Lloyd is not alleging he or any claimant suffered any financial loss or distress which is a key issue in this claim. At first instance, the court declined to permit the representative action to proceed on the basis that the members of the class did not have the “same interest”, because they were likely to have suffered different types of damage, if any, depending on their individual circumstances. In addition, the court felt that there would be significant issues in verifying whether any given individual fell within the class.

Following Mr Lloyd’s appeal, the Court of Appeal (CA) permitted the use of the opt-out representative action procedure, reversing the lower court’s decision that the action had not met the requirements of a representative action and granting Mr Lloyd permission to serve a representative action on Google in the US on behalf of approximately 4.4 million iPhone users.

Google’s appeal of the CA’s decision was heard by the UK Supreme Court (UKSC) at the end of April 2021 in which the court was asked to determine three key issues, the latter two being relevant to collective redress mechanisms more generally:

  • whether damages are recoverable for loss of control of data under Section 13 of the Data Protection Act 1998 (DPA98), even if there is no pecuniary loss or distress;
  • if the four million individuals share the “same interest”, a requirement for a representative action to proceed in England and Wales; and
  • in the event the “same interest” test is satisfied, should the court exercise its discretion and disallow the representative action proceeding in any event.

The outcome of the UKSC hearing is awaited. However, should the UKSC uphold the Court of Appeal’s decision, this will be a major step towards US-style opt-out class actions, lowering the threshold for the type of damage that can be claimed, ie, loss of control of personal data without having to evidence financial loss or distress, and will potentially open the floodgates for data breach class actions. While this judgment is under appeal, several other similar opt-out representative actions await hearing, including Bryant v Marriott and others (QB-2020-002882), filed against Marriott International Incorporated in August 2020 following a cyber-attack on the Marriott-owned Starwood Hotel group, which led to the exposure of the personal data of 300 million guests.

Competition

In August 2021, after initially refusing to grant a CPO to allow a collective action to proceed, the CAT re-considered Mr Merricks’ application and approved certification of the class in the Merricks v Mastercard (2021) CAT 28 competition action, allowing the claim to proceed as a collective proceeding. The case concerns the claim that Mastercard contravened competition law for almost 16 years by charging excessive "interchange fees" – fees paid by businesses when transactions are made using a Mastercard – which ultimately, it is alleged, resulted in higher prices being charged to consumers. The claim was brought on behalf of all UK shoppers – unless they choose to opt out – and will affect anyone who was living in the UK and of working age between 1992 and 2008, even if they did not have a Mastercard. The claim is worth approximately GBP14 billion. Arguably, the CAT certification has potentially opened the floodgates for similar large-scale competition actions and has set a precedent for what is potentially the largest damages award in legal history.

Although the collective proceedings regime is currently only available for private competition claims, in light of the EU Collective Redress Directive and the outcome in certification of the Merricks case, CPO legislators in England and Wales may be forced to consider widening the scope of the collective proceedings regime to allow other types of claims to be pursued by this, or a similar mechanism, to ensure the framework in England and Wales continues to travel in the same direction as the EU.

Group Litigation Orders

To date, 109 GLOs have been ordered, in cases ranging from tax litigation to medical negligence to child abuse. Historically, the mechanism has received some criticism, however it continues to provide the main procedure for determining a large number of disputes concurrently. While it is likely that GLOs will continue to provide the main process by which large numbers of affected claimants conduct court proceedings in the UK for the foreseeable future, those seeking to make use of this mechanism should be aware of the pitfalls of making an application for a GLO prematurely. As seen in the case of Waterfield v Dentality Ltd (Dentality @Hoddeston) (2020) 8 WLUK 90, courts remain quick to dismiss applications for GLOs that they deem to be “inadequate and premature”, particularly in circumstances where actionable loss has not been satisfactorily proven and it is not clear if the claimants seriously intend to proceed to litigation.

"Dieselgate" and Claims against Original Equipment Manufacturers (OEMs)

The so-called "dieselgate" litigation has captured the attention of many claimants and claimant law firms across Europe over the past several years and continues to gain momentum. Claims have been and continue to be brought against various OEMs.

The principal issue against OEMs centres around allegations of installation of so-called "defeat devices", allegedly installed to assist vehicles defeat emissions tests. For example, the "defeat device" allegedly inserted in vehicles manufactured by the Volkswagen (VW) group was a programme in the engine software that allowed vehicles to perceive if they were being driven under test conditions by measuring conditions associated with a driving test, such as distance, speed and even the position of the wheel, and utilise anti-pollution measures accordingly. Similarly, software in Mercedes-Benz engines is alleged to have activated a special temperature control, referred to as a "thermal window", allowing the coolant circuit to be kept artificially cooler and delaying the warm-up of the engine oil. This resulted in nitrogen oxide (NOx) levels remaining below the legal limit for emissions testing but in normal driving conditions the software would deactivate, allegedly allowing emissions levels to surpass legal limits.

In England, the first dieselgate claims were brought against the Volkswagen (VW) group (owner of Audi, Seat, Škoda and VW brands) on behalf of over 90,000 affected car owners, including individuals and businesses, for vehicles with EA189 engines, allegedly fitted with unlawful "defeat devices" that cheated EU emissions tests. In May 2018, the High Court granted a GLO on this matter with the trial of the GLO issues scheduled for January 2023 to address the defining issues, including:

  • whether the defendants knowingly or recklessly made false representations in relation to vehicles manufactured with EA189 engines affected by the NOx issue (“affected vehicles”), with the intention of deceiving claimants, on which those claimants relied and were caused to suffer loss; and
  • whether there was any breach of the implied term of satisfactory quality in contracts relating to affected vehicles.

In July 2021, another dieselgate claim was issued in the High Court against the VW group. This claim potentially covers a much bigger group of affected cars, including some Porsche vehicles. Several sets of proceedings have also been issued against Mercedes-Benz in response to the recall order issued by the German road vehicle authority, the KBA, in June 2018. In addition, claims have now been issued against Fiat Chrysler, Nissan, Renault, Ford, PSA (Peugeot Citroën), Vauxhall and Jaguar Land Rover.

Claimant law firms have also been asking consumers of other brands including BMW, MINI, Volvo, Kia and Hyundai to register their interest in potential claims for similar emissions concerns and it is therefore anticipated that further applications for GLOs will follow in due course.

While the UK has played host to this recent surge in momentum, the emissions litigation is also part of a wider trend with various claims against OEMs having been made across Europe.

Overseas Claimants

Over recent years, there has been an increase in foreign claimants pursuing group litigation in the UK.

As discussed further here, this is in part attributable to the increase in availability of third-party litigation funding allowing more claimants to pursue group litigation where they would otherwise face financial difficulty in doing so within their own jurisdiction. It is also arguable that the overseas claimants may be attracted to the increasingly sophisticated regime in the UK that allows claimants more opportunities to seek collective redress than those offered within other jurisdictions.

Of note is the UKSC decision in Okpabi and others v Royal Dutch Shell Plc and another UKSC 2018/0068 in which a group of Nigerian claimants brought an action in respect of environmental damage as a result of oil leaks from pipelines and associated infrastructure operated in and around the Niger Delta by Shell Petroleum Company of Nigeria Limited (“SPDC”). The UKSC addressed whether the claimants had an arguable case that Royal Dutch Shell owed them a common law duty of care in order to ground jurisdiction against the foreign subsidiary, SPDC, as a necessary and proper party to the proceedings. The UKSC allowed the appeal, clearing the way for the claim to proceed to a full trial in England and Wales. A similar issue was addressed by the UKSC in Lungowe v Vedanta Resources plc (2019) UKSC 20.

It remains to be seen if this trend for overseas claimants to bring an action in the UK will be hindered or facilitated by Brexit as the UK now sits outside the EU single market, and the EU-wide collective redress regime is soon to be implemented by member states in their local laws.

US Law Firms

There has been a notable uptick in US law firms experienced in class action procedures setting up shop in the UK. These UK-based US firms have been and continue to be involved in several high-profile claims including:

  • the now-settled British Airways data breach action; and
  • the ongoing easyJet data breach action.

Third-Party Litigation Funding

Previous restrictions on litigation funding have meant that, in the past, there have been few high-profile product liability actions in the UK, as claimants have historically relied on conditional fee agreements and after-the-event insurance as a means of pursuing any claim.

With the backing of newly established US law firms, and in correlation with the growing appetite for collective redress, the UK has also seen a proliferation of third-party litigation funders in recent years. England and Wales is the first and only jurisdiction globally to have a code of conduct for litigation funding, authored and enforced by the Association of Litigation Funders (ALF). With this comes a rich diversity of funding companies, notably based in London, offering funding services to a variety of collective actions.

The increase in utilisation of third-party funding has seen the cost of capital become less expensive for litigation funders as more funders use insurance protection, issue corporate bonds and deploy debt structures to raise money on better terms. While litigation funding is arguably not yet a mainstream source of finance, the volume of transactions and expansion of opportunities have facilitated the development of a multibillion-pound global market and consequently, the fees required of litigants themselves have dropped. The availability of such litigation funding and lower associated costs may encourage claimants to pursue litigation in England and Wales as opposed to other jurisdictions where the cash flow barrier is significantly higher and therefore obstructive.

Kennedys

25 Fenchurch Avenue
London
EC3M 5AD
United Kingdom

+44 20 7667 9667

+44 20 7667 9777

Sarah-Jane.Dobson@kennedyslaw.com www.kennedyslaw.com
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Law and Practice

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Kennedys is a global law firm with particular expertise in litigation and dispute resolution, especially in defending insurance and liability claims. It has 67 offices, associations and co-operations across the UK and Europe, the Americas, Asia Pacific and the Middle East. The firm has a market-leading team handling product safety and regulation, large-scale product liability, recall and "mass tort" litigation and international claims. The core team is comprised of nine partners in London supported by more than 40 associates, as well as many partners and colleagues across Kennedys' international offices. A number of the firm's lawyers have qualified in law following careers in relevant industries (such as engineering, construction and medicine), which deepens the firm's expertise for clients’ benefit. Kennedys acts for parties across various industries and has gained valuable experience in high-profile and complex matters involving a wide range of products, including automotive, chemical and pharmaceutical goods, medical devices, healthcare products and consumer goods.

Trends and Development

Authors



Kennedys is a global law firm with particular expertise in litigation and dispute resolution, especially in defending insurance and liability claims. It has 67 offices, associations and co-operations across the UK and Europe, the Americas, Asia Pacific and the Middle East. The firm has a market-leading team handling product safety and regulation, large-scale product liability, recall and "mass tort" litigation and international claims. The core team is comprised of nine partners in London supported by more than 40 associates, as well as many partners and colleagues across Kennedys' international offices. A number of the firm's lawyers have qualified in law following careers in relevant industries (such as engineering, construction and medicine), which deepens the firm's expertise for clients’ benefit. Kennedys acts for parties across various industries and has gained valuable experience in high-profile and complex matters involving a wide range of products, including automotive, chemical and pharmaceutical goods, medical devices, healthcare products and consumer goods.

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