A practical introduction for corporates
Collective and group redress is becoming increasingly prevalent in England in Wales. The claims are often large scale and there is infrastructure in place in the form of claimant law firms and available funding to pursue such claims. Large corporates and insurers are obvious targets and would be well advised to become familiar with the risk.
Types of group litigation
There are four ways to bring a group claim in England and Wales:
- Collective proceedings in the Competition Appeals Tribunal
- Multiple joint claimants suing the same defendant using the same claim form/consolidated claims
- Group Litigation Orders
- Representative proceedings
We set out each in turn below.
Collective proceedings orders (CPO)
The most recent addition to group litigation in this jurisdiction is the CPO, which is obtained through the Competition Appeals Tribunal (CAT). CPOs are available only for competition claims, and whilst historically it was possible only to bring “follow on” claims through this method (that is where there has already been a judicial finding of competition law breach), private claims can now be brought by way of a CPO through the CAT.
Features of the Collective Proceedings Order include:
- They can be brought either by a claimant within the claimant class or by an authorised representative, though the latter must be approved by the court.
- They can be brought on either an “opt out” or an “opt in” basis. A claim brought on an “opt out” basis is one in which any person fitting the requirements of the class will be automatically included as a claimant unless they opt-out. In contrast, where a claim is brought on an “opt in” basis, prospective class members must actively seek to be included.
- Damages can be awarded on an aggregate basis (in other words, it is not necessary for the court to examine each individual claimant’s entitlement to damages).
Perhaps the most famous example of a case proceeding by way of CPO is that brought by Walter Merricks against Mastercard. This was in fact the first CPO ever made in this jurisdiction. Mr Merricks as class representative alleges breach of competition law. The claim value is put at approximately £14bn, with a class size of 45 million people. The court was told that the claim value per claimant was approximately £155.80, excluding interest. Other examples of CPOs include that of Le Patourel v BT Group PLC and other (with a class size of some 2 million and a quantum of approximately £469m) and Gutmann v First MTR South West Trains Limited and another (with a class size of up to 15 million and quantum of approximately £93m).
The CPO is a dangerous procedure for large corporates, because it provides a means for consumers with meritorious but entirely uneconomical claims to bring proceedings in such numbers that the potential damages, interest and costs bill could cripple many companies. Mastercard is now facing a very substantial piece of litigation that will be costly and time-consuming to defend. It is unlikely that any consumer would bring a claim of this sort for £155.80 plus interest on their own, but now the opportunity is there to bring such claims as part of a class.
Multiple claimants using a single claim form/consolidated proceedings
These are the longest-standing means by which multiple claimants can bring a claim. They are so common that they are a known entity for most major corporates and we therefore touch on them only briefly.
Whilst any number of claimants can in principle be joined as parties to a claim, this is subject to the court being able to manage the proceedings and so is not suitable where there are a large number of parties. Where a particularly large number of claimants exist, it will be necessary for special case management which is where Group Litigation Orders come in (see below).
In addition claims brought by way of different claim forms can be consolidated by the court under its general case management powers on application by the parties.
Group litigation orders
These are available through part 19 of the CPR, which defines a Group Litigation Order (GLO) as:
“an order made under CPR 19.11 to provide for the case management of claims which give rise to common or related issues of fact or law”
Whether a GLO is made is a matter of judicial discretion, but the discretion can be exercised when there are or are likely to be a number of claims giving rise to the GLO issues and those claims give rise to common or related issues of fact or law. There is no minimum number of claimants necessary for a GLO, but in practice it must be enough for the GLO to be worthwhile.
GLOs can proceed on an “opt in” basis only and are subject to a cut-off date after which a claimant cannot opt-in.
Examples of claims that proceeded by way of GLO are Bates and others v Post Office Limited and the NOx emissions litigation. The claimants in the former case were subpostmasters who had been victims of the Horizon accounting computer system used by the Post Office, which had incorrectly identified innocent subpostmasters as dishonest. Approximately 600 subpostmasters brought claims which were case managed by way of GLO. The case settled for just under £58 million in 2019 with a large proportion of the settlement sum going to the litigation funders to cover legal and funding costs. The NOx group litigation was brought by approximately 90,000 owners and lessees of General Motors cars. The litigation settled for £193m.
Only those individuals or entities who suffered damage can bring a claim by way of a GLO. It is not possible for a representative to bring a claim on behalf of others. This can be done, however, through the representative action procedure, where a claim is brought by one or more defendants by a representative of others who have the same interest in the claim. Like CPOs, the procedure has the advantage of allowing claims on an “opt out” rather than an “opt in basis”, but unlike CPOs it is not limited to competition claims. It was using this procedure that Richard Lloyd attempted to obtain damages for breach of data protection laws by Google in tracking usage of Apple iPhone users.
The Supreme Court ultimately decided Mr Lloyd could not do so. It is necessary for prospective claimants in representative proceedings to have the same interest in the claim. However, in the Lloyd case, the claimants had not all suffered the same loss. Despite Mr Lloyd’s failure in the Supreme Court, in principle it is possible that significant claim that is not a competition claim could be brought through this procedure where all claimants have suffered the same loss.
The types of claims in which group actions are currently being used include:
- Competition claims
- Data breach claims
- Shareholder claims
- Consumer/product liability claims
- ESG claims
However, the list is not exhaustive by any means and the procedures can be used for other types of claim.
Corporates would be well advised to factor in the emerging threat of group and collective redress into their risk models and to take steps to prepare for them.