Since the dawn of the constitutional era, there has been talk of the class action. Most of us understand ‘class action’ as cases brought on behalf of large groups of people who have suffered harm and are seeking monetary compensation, something similar to the cases depicted in Hollywood blockbusters such as Erin Brockovich or A Civil Action. In South Africa, cases like these were impossible until recently, in view of the fact that our law has approached the concept of standing to sue, or locus standi as those determined to use Latin phrases would say.. If A suffers harm A should sue, not B and certainly not B on behalf of others who have been harmed. The very notion of an action by one or a group of persons representing a host of others has been anathema to South African courts steeped in this tradition. And there were, of course, very good reasons for this approach in the past when representative proceedings seemed to be nothing more than a busybody’s charter. But the world has changed and nowadays most of us recognize that individuals often have very little recourse against corporate behemoths particularly where there are a multitude of small claims each of which would probably not warrant the cost of litigation but may add up, in total, to something really substantial.
The fact is that individual litigants and lawyers are not going to invest the time, effort and money necessary to prosecute small claims when the recoverable compensation is not substantial. Consequently, in the United States and Canada, for example, the class action has been central to efforts to promote meaningful consumer protection. Newberg on Class Actions, Third Edition, West Group, Newberg et al probably the leading treatise on the class action, explains at 21.30 that “The desirability of providing recourse for the injured consumer who would otherwise be financially incapable of bringing suit and the deterrent value of class litigation clearly render the class action a viable and important mechanism in challenging fraud on the public.” In South Africa, the Constitution of the Republic of South African, 1996 changed our legal framework fundamentally and forever. The Constitution and in particular the Bill of Rights ensures that law, and a particular sort of law which embraces fundamental human rights, is a foundational principle of our democracy. Section 38 of the Constitution now expressly provides that where there has been a violation of a fundamental right set out in the Bill of Rights, persons acting as members or in the interests of a group of class of persons can bring legal proceedings and seek a remedy. This is the language of the class action but initially much academic and other debate focussed on whether standing was only extended when it came to infringements of fundamental rights. Many lawyers felt that consumer claims would not fit into this category except in exceptional circumstances and so, save in respect of Bill of Right litigation, the narrow approach to standing remained. So, no Erin Brokovich?
In Ngxuza v Permanent Secretary, Department of Welfare, Eastern Cape 2001 (4) SA 1184 (SCA) the Supreme Court of Appeal endorsed class action proceedings and used language and an approach very recognisable to class action lawyers in jurisdictions such as the United States and Canada. Here a large group of disadvantaged claimants, who did not have access to legal services themselves, each had a relatively small money claim against the state. The Supreme Court of Appeal, per Cameron JA was at pains to record the need for a class action process in proceedings such as these and to endorse these proceedings as a class action. The action was against a department of state and engaged with questions of administrative justice and access to social security and was clearly Bill of Rights litigation which did not finally answer the question whether consumer class actions would be maintained against private entities in other circumstances. For class actions to become more common the need for a greater degree of certainty about prospects of success remained. Absent clear guideline lawyers (other than focussed public interest practitioners such as the Legal Resources Centre who brought the Ngxuza case in admirable circumstances) would not seek out and bring class action proceedings other than in exceptional circumstances. Not everyone is an Erin Brokovich, of course.
In jurisdictions such as Canada and the United States the class action is regulated by specific rules. Federal Rule 23 in the United States records certain prerequisites to a class action, the circumstances in which a class action will be maintained or approved as appropriate by a court, and how orders in the conduct of the actions will be dealt with. Lawyers in these jurisdictions can follow relatively well trodden paths in formulating claims and bringing them to court. Preparing a class action is a difficult and time consuming process and without such guidelines it is very risky to embark upon something which may fail for purely technical reasons, however well prepared and conducted the case may be. These theoretical and practical difficulties, and the risks they bring, have in all probability been the cause of the relative absence of consumer class actions and of focussed class action law firms in South Africa. This is about to change.
While there may not yet be the clarity of Federal Rule 23, we are getting there. The Consumer Protection Act 68 of 2008 fundamentally changes our law of contract in diverse ways and also makes specific provision for wide standing and class actions in particular when it comes to the realisation of consumer rights. Section 4(1) provides that:
“Any of the following persons may, in a manner provided for in this Act, approach a court, a tribunal or the commission alleging that a consumer‟s rights in terms of this Act have been infringed, impaired or threatened or that prohibited conduct has occurred or is occurring:
- a person acting on his or her own behalf;
- an authorised person acting on behalf of another person who cannot act in his or her own name;
- a person acting as a member of, or in the interests of, a group or class of affected persons;
- a person acting in the public interest, with leave of the tribunal or court as the case may be; and
- an association acting in the interests of its members.”
Section 4(1) (c) is the sort of formulation required to justify a class action. In Canada and the United States, a class action can generally be instituted but application must then be made to the relevant court for confirmation that the matter can proceed on this basis. This is generally known as a maintenance or certification application. Section 4 (1) (c) seems to remove this requirement when read with 4 (1) (d) which is interesting. In these applications, the court considers questions which include whether the class is so numerous that joinder of all members is impracticable, whether there are questions of law or fact common to the class, whether the claims or defences of the representative parties are typical of the defences of the claims or defences of the class, and whether the representative parties will fairly and adequately protect the interests of the class. These questions will have to be considered at some stage in the proceedings if the class action process is to be kept within limits and whether this happens as part of a formal application or otherwise may not be important for present purposes.
It seems consequently clear that we can expect an upsurge in class consumer complaints particularly when there is clear legislative endorsement, there are judicial decisions such as Ngxuza case to refer to, and there are any number of international works available which detail processes including draft pleadings which can be adapted to local conditions and refer to authorities which have consider all manner of issues likely to arise in South African Courts. It is now also possible for South African lawyers to conclude contingency fee arrangements and there is consequently ample scope for significant reward for class action lawyers and firms. There is little doubt that the class action is coming, and soon. Is this a good or a bad thing?
In 1973, a highly respected jurist, Judge Jack B Weinstein, stated:
„It seems to me that this matter touches on the credibility of our judicial system. Either we are committed to make reasonable efforts to provide a forum for the adjudication of disputes involving all our citizens – including those deprived on human rights, consumers who over pay for products because of anti-trust violations, and investors who are victimised by misleading information – or we are not. There are those who will not ignore the irony of courts ready to imprison a man who steals some goods in interstate commerce, while unwilling to grant a civil remedy against a corporation, which has benefitted to the extent of many millions of dollars from collusive, illegal pricing of goods.‟”
National Consumer Law Centre, Consumer Class Actions (7th Ed. 2010) at page 3.
Kept within appropriate limits, there is little doubt that class action proceedings can contribute to the development of South Africa. Whatever one’s view here, the class action is coming and it is necessary for businesses and consumer groups to understand what this means for them.