Group actions in the time of COVID-19; reducing the risk

Group actions in the time of COVID-19; reducing the risk

How are the Courts approaching potential delay of proceedings amidst the coronavirus pandemic?

Group actions (brought by groups of either individuals or companies) have been possible under the English legal system for some time and have their attractions. Whilst one individual or business might not be motivated to pursue a claim alone, a group can pool resources including money, motivation and experience. This provides a realistic and less daunting way forward to pursue a damages claim.

The outbreak of the pandemic is likely to lead to an increase in group actions - significant decisions affecting large groups of people are having to be made by businesses under pressure, increasing the scope for those decisions to be wrong.

What types of group actions are we likely to see?

Personal injury claims might seem to be an obvious one but there will be significant difficulty in showing that a particular action caused someone to become infected with COVID-19 and this is likely to be a limiting factor.

Instead there are likely to be group claims:

  • By employees against their employers for unpaid wages, unfair dismissal, discrimination claims and redundancy payments, as businesses under pressure fail to comply with statutory requirements.
  • By consumer rights groups. In anticipation of this the Competition and Markets Authority (CMA) has established a COVID-19 Taskforce to monitor problems faced by consumers. So far, the Taskforce has highlighted issues regarding cancellations and refunds, particularly around weddings and private events, holiday accommodation, and nurseries and childcare providers. A group action has already started over the refusal by airlines to give refunds for cancelled flights.
  • By franchisees who wish to challenge what may be perceived as inadequate fulfilment of franchisor obligations.
  • For discrimination under the Equality Act; a group action has already been started by disabled people against UK supermarkets for failing to make reasonable adjustments needed for them to be able to shop safely during the pandemic.
  • For GDPR breaches, with the ubiquitous rapidly-arranged-homeworking exposing a greater vulnerability to data breaches. Similarly there is already talk of challenging the NHS test-and-trace scheme on privacy grounds.
  • In securities litigation, where share-issuing companies and their directors make untrue or misleading statements or omissions and the shareholders suffer a loss as a result. Shareholders of companies could also bring group action claims against business managers for making poor decisions exacerbating business losses.

What can businesses do now to reduce the chances of a group claim?

Practical considerations for businesses who are concerned about their exposure to group claims are as follows:

  • As the effects of the pandemic still unfold, businesses are being forced to make significant and difficult decisions under pressure. They should try to ensure that wherever a decision they take may adversely affect groups of people, they carefully consider what legal rights those people have and take advice where necessary.
  • It is a good time for businesses to make sure that their policies and procedures are up to date and stress test systems that may come under increased pressure as a result of changes in working practices as a result of the current circumstances.
  • Where a problem is brewing it is imperative that businesses get to grips with it and address it as early as possible.
  • PR strategy is also extremely important; managing problems as they arise quickly, positively and proactively will make a huge difference, particularly with the prevalence of social media and information at everyone’s fingertips.

The COVID-19 pandemic coupled with the increasing awareness of the potential for group claims and the greater ease of reaching potential co-claimants through social media, will likely push the numbers of group actions up significantly. However with careful strategy and planning it is possible to manage such issues before they become significant problems.

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