Collective Actions - How Group Litigation Obtains Justice For Victims Of Negligence, Breach Of Contract And Fraud

Collective actions: where a number of individuals with similar claims arising from similar circumstances (and usually against the same Defendant(s), come together to proceed with a legal action as a single group. Such legal actions are becoming more popular in England & Wales. Where a situation involves a number of individuals often the victims cannot consider bringing a claim individually due to the high costs involved in pursuing legal action. However, one of the major advantages of collective actions is that the strength in numbers allows the combining of resources and also demonstrates, particularly in the case of fraud, that the defendant's actions were repeated many times removing the defence of one-off error or misunderstanding.

Unlike the US, England and Wales does not have a system of class action, a term used in the US, instead there are various procedural processes, defined in the Civil Procedure Rules which allow, in clearly defined circumstances, provided certain conditions are met, group litigation.

Collective action claims are more frequently seen in matters relating to product liability, data privacy breaches and competition law. Generally, the procedure requires claimants to proactively "opt-in" to join the claim. However, in competition law cases in certain procedures there is an option that permits a claim where the participants must opt-out if they do not wish to be involved.

One of the primary advantages of group litigation is that resources are combined, spreading the legal costs in a collective action enabling claimants to pursue legal action whereas individually many might not have the financial means to do so. This type of legal action has been shown to good effect with regard to the high profile case Alan Bates an,d others –v- the Post Office Limited where judgment was handed down when 555 claimants agreed to accept £57.77 million, considerably more than the Post Office had expected. GLOs have also been employed in a number of claims against car manufacturers, such as Nissan, Peugot and Toyata - in relation to nitrogen oxide emissions, as well as the relaunch of the civil action in respect of the victims of contaminated blood products with approximately 500 victims adding their names to the lawsuit.

Below are the various ways that such legal action can be brought.

An Overview

The popularity of collective actions is rising, they relate to particular types of claim, for example financial services, competition law, environmental issues, data privacy, personal injury and product liability as well as shareholder issues. There are various options for claimants which are outlined below:

Opt-in as opposed to Opt-out

The vast majority of collective actions are constructed on the "opt-in" basis. This means that a potential claimant must take steps to actively join the proceedings. The "opt-out" option used in some competition law cases enables one party to bring a claim relating to complete class, which if successful, is binding on all claimants, without the express approval or even knowledge of the individual parties involved. Should the claim be taken forward, members of that class that have been automatically included who do not wish to participate must "opt-out", that is they must take steps to remove themselves from the action.

A Collective Proceedings Order ("CPO") application is made to access this procedure in the Competition Appeal Tribunal ("CAT") and a decision is made at the certification hearing as to whether the CPO will proceed once the CAT is satisfied that the CPO claim is justified, eligible and the acting representative is authorised so to do. Should a breach already have been identified by either the Competition and Markets Authority or the European Commission, before 31 December 2020, in the case of the latter, the decision can be assumed to be binding evidence of liability in a "follow-on" claim for damages.

The provision for "opt-out" has only relatively recently been introduced in 2015 for infringement of competition law by the Consumer Rights Act 2015. The other application for opt-out provisions is in representative actions, discussed below.

Joint Claims by numerous Claimants

The Civil Procedure Rules ("CPR") permits multiple claimants to bring a claim together under one claim form against one or more than one defendant provided the claim can be "...conveniently disposed of in the same proceedings..." (CPR19.1 and 7.3)

A recent case has confirmed the flexibility of the Court's discretion in these cases. In Morris v Williams & Co Solicitors (A Firm) [2024] EWCA Civ 376, the Court of Appeal refused a claim to strike out joint proceedings. The Court rejected a number of arguments put forward by the Defendants that called for the rules to be interpreted restrictively. The tests promulgated in Abbot v Ministry of Defence [2023] EWHC 1475 (KB) were not to restrict the ability to bring multiple claims in a single claim form, Sir Geoffrey Vos (MR) stated:

"It seems to me that 19.1 and 7.3 must be construed as meaning what they say: any number of claimants or defendants may be joined as parties to proceedings, and claimants may use a single claim form to start all claims which can be conveniently disposed of in the same proceedings. There is no exclusionary rule of real progress, real significance or otherwise. The court will determine what is convenient according to the facts of every case."

Circumstances that would fall within the convenience rule would include cases where there are common issues of law or fact in all the claims and where the claims are in respect of, or arise out of, the same transaction or series of transactions. It would cover cases where common issues would bind all or most of the claimants, but this is not a requirement of the CPR.

The claimants can be represented by one legal team. New claimants can be added with the court's permission to enable all the parties to the dispute to be dealt with at the same time. Unfortunately, in many cases not all the potential claimants may be known to either the existing claimants or the legal team.

Representative Actions

The CPR additionally provides for different claimants in a "same interest matter" to begin or continue by one (or more than one) claimant on behalf of the other claimants who share the same interest. Any judgment or order in a representative action will be prima facie binding on all the claimants that are represented, regardless of whether they are party to the proceedings. An order can only be enforced by or against someone who is not party to the proceedings with the express permission of the court.

Managing similar Claims together

The court can exercise its case management powers ("CPR3") in order to consolidate or amalgamate proceedings brought by separate claimants, or alternatively manage them by the use of a test case to establish the legal and factual issues that are common to all claims. This provides the court with the means to design the most suitable procedure applicable to the particular case. This type of action is more suitable to cases where there are a few or only one claimant law firm, or the common claims of fact or law are not sufficiently material to justify a Group Litigation Order.

It should be noted that the outcome of test cases may not automatically resolve other cases but it is to be expected they will, to some degree, influence the outcome. A concern is the potential shared costs exposure; however, the court may be prepared to apportion the liability of the costs between the claimants.

It is possible that there could be a contractual agreement between the claimants and defendants outlining the extent that the judgement will be binding on those with a similar claim. In the event of such a mechanism being employed, the claimants may also enter into a joint funding agreement in order to control and govern the cost-sharing and decision- making.

Lloyd v Google LLC [2021] UKSC 50 is considered the leading authority in this area of the law, as the history of the jurisdiction was set out by Lord Leggatt JSC. The jurisdiction has its origins in claims based on rights conferred on a class of people, such as members of a company, with for example proprietary rights or statutory rights. If a common question arises which affects a large number of people, it is convenient that it is capable of being decided definitively once and for all, without joining individually all the interested parties, but in a way that is prima facie binding on all of them.

There must be a common issue such that the representative can be relied upon to conduct the litigation that will protect and promote the interests of all the members. Therefore, there must not be a potential conflict between the interests of the members, although it is acceptable for them to have divergent interests, depending on their particular circumstances. It does not matter that the decision may only be relevant to some of the members.

There could be cases where a bifurcated approach is adopted whereby certain issues of law or fact are decided by a representative claim and the rest by individual determination, whether they relate to liability or damages. The first example of this bifurcated approach since Lord Leggatt's analysis in Lloyd v Google was Barclays Bank UK Plc v Terry [2023] EWHC 2726 (Ch). The case concerned the mistaken discharge of mortgages over properties where the loans had not yet been fully repaid. The Court allowed the bank to use the representative procedure under CPR 19.8 to proceed against two named Defendants. At a Summary Judgment hearing the Court held that in granting Summary Judgment, although the mistaken discharge of the mortgages could be set aside in those two cases, each case would have to be looked at individually. Although there was a mistake of fact and law which had resulted in the action by the bank, so that the Court's jurisdiction to revoke the mistaken transaction was engaged, the question of whether it was unconscionable for the customer to retain the benefit of it had to be assessed in each case to look at the circumstances of the mistake and its consequences for the customer.

In Commission Recovery Ltd v Marks & Clerk LLP, which concerned the potentially secret payment of commission, the Court accepted the decision of the Judge at first instance to allow the representative action on an opt out basis. The Court accepted that the issue could be looked at again if the circumstances changed.

Commission Recovery Ltd ("CRL") characterised the issue to be resolved in a way that would apply to a large number of the potential claimants and would not create a conflict of interest. The Court agreed that the core proposition was an issue that arose across the class and it did not matter that even if CRL was successful in obtaining the declaration, that it would not resolve all issues in the case, even on liability.

The Court allowed the representative claim to be made where an issue could be formulated that it would be useful to decide for a class of potential claimants, without the need to actually join them. The issue was paired down to ensure that it was general enough to apply to many cases, probably thousands, and would go some way to deciding the issues to be resolved in those cases if ever brought, albeit that some cases might need further individual litigation or assessment.

Managing similar Claims together

The court can exercise its case management powers ("CPR3") in order to consolidate or amalgamate proceedings brought by separate claimants, or alternatively manage them by the use of a test case to establish the legal and factual issues that are common to all claims. This provides the court with the means to design the most suitable procedure applicable to the particular case. This type of action is more suitable to cases where there are a few or only one claimant law firm, or the common claims of fact or law are not sufficiently material to justify a Group Litigation Order.

It should be noted that the outcome of test cases may not automatically resolve other cases but it is to be expected they will, to some degree, influence the outcome. A concern is the potential joint and several costs exposure; however, the court may be prepared to apportion the liability of the costs between the claimants.

It is possible that there could be a contractual agreement between the claimants and defendants outlining the extent that the judgement will be binding on those with a similar claim. In the event of such a mechanism being employed, the claimants may also enter into a joint funding agreement in order to control and govern the cost-sharing and decision-making.

Group Litigation Orders

Group Litigation Orders ("GLO") were introduced in 2000 and the court has the power to make such an order to deliver case management of "...claims which give rise to common or related issues of fact or law...". The test is less challenging than for commencing a representative action as the interests of the individuals do not have to be the "same".

GLOs are for cases where multiple firms and actions are involved in order to create a leading party/parties and a firm to run the case and argue the common issues against the defendant, which will then bind all the parties. The application is made to the Court under CPR 19, or the Court can make the order of its own volition.

Under a GLO, a special Management Court is appointed within the relevant Division to manage the litigation and litigants can be required to transfer their litigation to the Group litigation and join the register. The GLO is therefore a management tool operated by the Courts and only enabled with their consent.

Should a GLO be made a group register must be created where all the details of the claims must be entered, specifying the issues. The GLO may direct that any claims giving rise to these issues must be entered, thereby effectively preventing any claims proceeding outside the initial group on pain of an abuse of process Judgment and an adverse costs award. The court can specify the details required in a statement of case to demonstrate that the criteria for entry has been met. Also, the Court can direct that one or two claimants proceed as a test case with lead solicitors who will effectively manage the register, as well as publicising the claim with a cut-off date to join the group register. The limitation periods still apply and are not affected by the cut-off date.

In the event of a test case approach, the Judgment of the Court in general binds all parties to the group register, unless the Court orders otherwise. The individual claimants have the right to appeal the issues decided by the Judgment. One of the advantages of a GLO is that it limits the potential for multiple proceedings resulting in different outcomes. A further advantage is that the group can be made to fund the Claimants costs including any adverse costs order usually on a proportionate basis. A GLO is useful where the number of Claimants involved is large and a number of law firms are involved.

Collective Redress Schemes

In addition to the above procedures businesses may decide or may be required by regulators or statute to establish collective redress schemes. Similarly, the Government may institute such schemes. The recent Post Office and infected blood schemes are examples of these in the public domain

Conclusion

There are a variety of alternative tools available to potential litigants and the Courts to enable the successful pursuit of collective actions against potential Defendants, including fraudsters. The advantages of collective action can include the efficient steamlining of proceeding, reducing duplication of effort and the Court resources, as well as avoiding, as far as possible,contradictory results and reducing the costs of litigation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.