Outline the organisation of your court system as it relates to collective or representative actions (class actions). In which courts may class actions be brought?
In England and Wales, there is no direct equivalent to US class actions. However, there are a number of procedures by which collective or representative actions can be brought before the English court.
The main legal and regulatory source for collective actions is the Civil Procedure Rules (CPR), supplemented by practice directions that provide practical details on the operation and interpretation of the CPR.
The court can consolidate claims by multiple claimants by virtue of its discretionary and general case management powers under Part 3 of the CPR. The CPR also allows for multiparty litigation to be brought by issuing a claim in which more than one claimant or defendant is named.
Alternatively, Part 19 of the CPR outlines two specific procedures for collective actions, allowing the court to join multiple claims together by way of group litigation orders (GLOs) if more than one claimant has a cause of action raising common or related issues of fact or law. This is done on an opt-in rather than an opt-out basis. The second route under Part 19 allows a representative to bring or defend an action on behalf of others who have the same interest in the claim by way of representative claims. To qualify, the parties must have a common grievance throughout the proceedings and the relief sought must be beneficial to all. Additional claimants or defendants can be added to a claim that has already been issued, but must first issue an individual claim themselves.
Certain other statutes and rules provide for specific procedures to be used when issuing claims in specialist tribunals, such as the Competition Act 1998 (the Act) and the Consumer Rights Act 2015 (CRA), which specify that certain competition law damages claims are to be brought before the Competition Appeal Tribunal (CAT). The CAT is governed by its own Rules of Procedure (the CAT Rules), and practical guidance is provided in the CAT’s Guide to Proceedings (the CAT Guide). Collective actions in the CAT can either be brought by multiple claimants or by a specified body on behalf of consumers; or through being the subject of a collective proceedings order.
Historically, collective actions in the CAT were allowed only by way of opting in. However, the Act was amended in October 2015 and, among other matters, these amendments allowed for collective actions to be brought in the CAT on an opt-out basis. Therefore, claims can now be brought on behalf of a defined set of claimants (excluding those claimants that formally opt out). An exception to this is those domiciled outside of the UK, who will be included in opt-out proceedings only if they have expressly opted in. There have, to date, been a handful of opt-out claims. The first opt-out application was registered on 25 May 2016 with the CAT as a follow-on action for damages arising from a decision of the Office of Fair Trading on 27 March 2014 (Mobility Scooters: CE/9578-12), and the second was registered with the CAT on 8 September 2016 as a follow-on action for damages arising from a decision of the European Commission of 19 December 2007 (COMP/34.579 MasterCard, COMP/36.518 EuroCommerce and COMP/38.580 Commercial Cards).
The third was registered on 18 May 2018 by a special purpose vehicle, UK Trucks Claim Limited, as a follow-on action for damages arising from a decision of the European Commission on 19 July 2016 against a cartel of truck manufacturers (CASE AT.39824 – Trucks).
The fourth opt-out application was brought in February 2019 by Mr Justin Gutmann against London & South Eastern Railway Limited, First MTR South Western Trains Limited and Stagecoach South Western Trains Limited. This application involves claims against UK rail operators concerning the availability of certain rail fares. Unlike the other applications mentioned, this is not a follow-on action, meaning that the applicants will need to demonstrate that a breach of the underlying competition law has in fact taken place.
Finally, two competing applications were brought against a number of banks on 29 July 2019 by Michael O’Higgins FX Class Representative Limited, a special purpose vehicle, and on 11 December 2019 by Mr Phillip Evans, following two European Commission decisions made on 16 May 2019. The European Commission had found that various major banking groups participated in two cartels in the Spot Foreign Exchange market for the 11 G10 currencies. On 6 March 2020, the CAT refused to decide as a preliminary issue which of these applicants should represent the class and instead ruled that this issue should be heard at the same time as the substantive hearing on whether a collective proceedings order (CPO) should be granted at all in March 2021.Frequency of class actions
How common are class actions in your jurisdiction? What has been the recent attitude of lawmakers and the judiciary to class actions?
GLOs were introduced in 2000 in response to Lord Woolf’s recommendations and objectives in his Final Report on Access to Justice, showing some inclination to overcome some of the shortcomings of the existing methods of multiparty litigation. However, unlike collective actions in the CAT, there are still no mechanisms for large-scale opt-out class actions in general civil litigation claims.
Since 2000, GLOs have been used relatively infrequently, with only 109 GLOs made, of which 34 were made prior to 2003. Furthermore, only three were made in 2018, only one was made in 2019 and only one has been made in 2020 (to date). Therefore, their use does not appear to be increasing.
There is no formal record of how many representative claims have been made, but case law suggests that these have also not been used frequently since 2000.
The introduction of opt-out collective action proceedings before the CAT acknowledges that the prior framework was not fully succeeding and that a new approach was needed in this sector. The first opt-out collective case to be brought under the new regime was brought by Dorothy Gibson, in her capacity as the General Secretary of the National Pensioners Convention, against Pride Mobility Products Limited (Pride) on behalf of purchasers of Pride branded mobility scooters (estimated to comprise 27,000 to 32,000 consumers who had each purchased a new Pride scooter in the UK within the relevant claim period) (Mobility Scooters: CE/9578-12). This action followed on from a 2014 decision from the Office of Fair Trading (now the Competition and Markets Authority) concerning anticompetitive agreements in place between Pride and eight retailers selling Pride’s mobility scooters. Pursuant to these arrangements, the retailers would not advertise certain models of Pride scooters online at prices below the recommended retail price. However, the proceedings were dismissed on 31 March 2017 on the basis that Ms Gibson’s case did not differentiate between the prices of scooters sold by the eight retailers noted in the Office of Fair Trading’s decision (ie, the subject matter of the infringement) and the prices of scooters sold by all other Pride retailers. Consumers of the latter category could not form part of the class. The CAT granted Ms Gibson permission to serve an amended claim form and reformulate the claim by providing further economic evidence, but she later withdrew her claim, as the eligible class would have comprised of under 1,000 members.
The second opt-out claim was brought by Walter Merricks, a former Chief Financial Services Ombudsman, as the proposed class representative, against MasterCard on behalf of approximately 46.2 million UK consumers, following on from the European Commission’s 2007 decision as to MasterCard’s unlawfully high interchange fees. The damages claimed were approximately £14 billion, making it the largest claim ever filed in England and Wales. However, once again, on 21 July 2017, the CAT dismissed Mr Merricks’ application, owing to the challenges of estimating individual losses and because it also deemed an aggregate award of damages to be unsuitable. The CAT did not offer Mr Merricks a chance to amend and reformulate the claim. Permission to appeal the decision was refused by the CAT on 28 September 2017 on the basis that the legislation provides no route of appeal from the refusal to certify the class. The CAT was of the view that this reflected a deliberate policy to confine the right of appeal to decisions on the substantive claims in order to prevent prolonged litigation. The CAT also went on to comment that it would have refused permission in any case as Mr Merrick had not been able to propose a method of distribution of the aggregate award of damages that, even on an approximate basis, would lead to payments on a compensatory (rather than a punitive) basis. However, in a decision handed down on 16 April 2019, the Court of Appeal overturned this and remitted the application to the CAT for rehearing. It held that the CAT had applied the wrong legal test in making its decision and that it was premature for the CAT to refuse the application, given distribution is a matter for the trial judge once an award has been made. Instead of assessing the difficulties in distributing any eventual award, the test that should have been applied was whether the claims had a ‘real prospect of success’. Subsequently, the Supreme Court confirmed on 25 July 2019 that Mastercard had leave to appeal the Court of Appeal's decision and the hearing for this concluded on 14 May 2020. Further clarification regarding the appropriate test to be applied can be expected in due course once the Supreme Court’s decision is handed down.
A number of cases (as listed above) have been filed but adjourned by the CAT until the Supreme Court has handed down a judgment in the Mastercard appeal case.Legal basis
What is the legal basis for class actions? Is it derived from statute or case law?Group litigation orders and representative claims
The basis for representative claims and GLOs is derived from Part 19 of the CPR and its related practice direction, as supplemented by case law.Competition Act 1998
The basis for collective actions is derived from statute, specifically section 47(B) of the Act. The CRA amended the Act to permit opt-out collective proceedings before the CAT, having previously permitted only opt-in collective proceedings.Types of claims
What types of claims may be filed as class actions?Group litigation orders and representative claims
All types of claims can be filed as collective actions. The 109 GLOs that have been made by the courts of England and Wales since 2000 have covered a broad range of claims, including product liability, medical negligence, environmental issues and abuse and mistreatment in schools and children’s homes, and no types of claims have been specifically excluded.Competition Act 1998
The Act permits collective actions to be brought in respect of two types of damages claims. First, it allows for follow-on damages claims (where the infringement and liability of the defendant has already been established by a decision of the relevant regulator or European Commission). Second, it also allows for independent damages claims (where the infringement has yet to be proven).Relief
What relief may be sought in class proceedings?Group litigation orders and representative claims
In theory, there is no limit to the types of relief available for these claims apart from those under English law generally. Therefore, both damages (including restitutionary damages) and declaratory relief can be sought. Punitive and exemplary damages are allowed in principle in respect of certain causes of action, but are exceptionally rare under English law.Competition Act 1998
Section 47A(3) of the Act allows both for money damages and for injunctive relief. Notably, an injunction granted by the CAT now takes effect and is enforceable as if it were granted by the High Court (section 47D(1) of the Act). The actions that have been decided by the CAT to date have concerned claims for compensatory damages, but, theoretically, claims for disgorgement and restitution should also be possible under the Act if it can be proven that compensatory damages are an inadequate remedy. Exemplary damages are not permitted (section 47C(1) of the Act) and the CAT does not have the jurisdiction to grant declaratory relief.Initiating a class action and timing
How is a class action initiated? What is the limitation period for bringing a class action? Can the time limit for bringing a class action be paused? How long do class actions typically take from filing to a final decision?Group litigation orders
The court can grant a GLO on its own initiative or following an application by a claimant or defendant. The practice direction to Part 19 of the CPR provides for certain preliminary steps that should be taken. For example, the solicitor acting for the proposed applicant must consult the Law Society’s Multi-Party Action Information Service to obtain information about other cases giving rise to issues to be covered by the proposed GLO.
The practice direction to Part 19 of the CPR also recommends that the solicitors for the prospective claimants form a solicitors’ group, from which one solicitor is chosen to take the lead in making the application and act on behalf of all of those on the register throughout the duration of the case. The application can be made by one solicitor and the court may direct that the GLO claimants serve group particulars of claim, setting out the various claims of all the claimants on the group register. However, each claimant seeking to have its claim included in the GLO will first need to issue its own claim using its own claim form.
The application for the GLO may be made at any time before or after any relevant claims have been issued, and should be made using the general procedure under Part 23 of the CPR. The application should include (among other things) the number and nature of claims already issued, the number of parties likely to be involved and the common issues of fact or law that are likely to arise in the litigation.
The GLO will specify the common or related issues of fact or law it covers so as to identify the existing and (potentially) future claims to be managed as a group under the order. The individual claims will be listed on the group register. The court normally directs that new claims issued after the GLO is made, which raise any number of the issues under the GLO, should be included on its register of claims. There is no maximum number of claimants that can be added to the register.
The GLO effectively means that all claims currently or subsequently listed on the register for that GLO will be managed collectively by the court. Often, the court will order that one or more of the claims on the register proceed as test claims (to address a specific issue of law or fact), with the outcome to then be applied to the remaining claims.
There are no special limitation periods for bringing a collective action. The Limitation Act 1980 sets out the periods for High Court claims generally, and the periods vary depending on the type of action. For example, there is a limitation period of six years from the date on which the cause of action arises for most breaches of contract and tort claims. Subject to certain exceptions, English law does not permit the running of time to be suspended.Representative claims
Where a party wishes to act as a representative for other people who have the same interest in a claim, it can indicate this in its claim form.
It is not necessary for those represented to be named as parties to the proceedings, nor is it necessary for the person purporting to act as a representative to have the authority of those it represents, provided the ‘same interest’ test is met. Under this test, at all stages of the proceedings: (1) it must be possible to say of any particular person whether or not they qualify for membership of the represented class by virtue of having the same interest; and (2) the parties must have the same interest in the proceedings, they must have a common grievance and the relief sought must be beneficial to all. Notably, membership of the group does not need to remain constant throughout the proceedings.
Subject to certain exceptions, the permission of the court is not required for a claim to be pursued by a representative party (CPR 19.6). However, the court determines whether the would-be claimants or defendants have the ‘same interest’, and can also determine that a particular person cannot act as a representative (either using its discretion or following an application by another party to the claim). A court can also order that existing claims continue under a representative party or that a GLO is adopted instead.
The minimum number of persons required to have the ‘same interest’ is two. There is, in principle, no maximum number of parties that can potentially be represented.
The representative party will undertake the day-to-day management and decisions on the running of the proceedings. Unlike a GLO, it is possible for persons who are represented to take no active part in the litigation where they are not named parties to the claim. A represented person who is not a party to the claim and plays no active role is unlikely to be subject to disclosure obligations or costs risks.
As with GLOs, the Limitation Act 1980 applies when considering limitation periods.
The likely duration of civil cases is highly dependent on the complexity of the case and its value. While exact statistics are unavailable for High Court actions, they might take many years. For example, in October 2016, a number of claimants applied for a GLO against Volkswagen in connection with allegations that Volkswagen had installed software enabling their vehicles to cheat on emissions tests and misrepresented the environmental benefits of its diesel vehicles to buyers. This matter is not expected to be listed before 2021.Competition Act 1998
The party wishing to begin collective proceedings must send a specific claim form to the CAT-appointed registrar. The claim form should include, among other things, a description of the proposed class, an estimate of the number of class members and a concise statement of the relevant facts and law relied upon and the relief sought (CAT Rules, Rule 75).
The CAT will then hold a case management conference to give directions for the conduct of the application for a CPO and ultimately determine the application having heard the parties (CAT Rules, Rules 76 and 77). The CAT will decide whether claims are eligible for collective proceedings, on the basis of whether claims are brought on behalf of an identifiable class, raise common issues and are suitable (CAT Rules, Rule 79(1)). In determining suitability, the CAT will consider (among other matters), the size and nature of the class, whether the claims are suitable for an aggregate award of damages and the availability of alternative means of resolving the dispute. Both the Pride and MasterCard cases failed to proceed beyond this stage. If the CAT considers a CPO appropriate, the CPO will authorise the class representative to act as such. Among other things, the CPO will identify the class and the claims certified for inclusion, and specify whether they are opt-in or opt-out proceedings.
Limitation periods are prescribed under the Act to be six years from the later of: (1) the date on which the infringement of competition law that is the subject of a claim ceases; and (2) the date on which the claimant knows, or could reasonably be expected to know, of such infringement. Under the Act, the limitation period is suspended for: (1) the duration of any investigation by the competition authority (and starts running again from either one year after the decision of the competition authority or one year after the investigation is closed); and (2) any period of time where the parties to the dispute are engaging in a consensual dispute resolution process. Additionally, the limitation period is suspended for individual proceedings that arise on or after 1 October 2015 and that were originally made as part of collective proceedings, such that these claims are not time-barred if the collective proceedings cease or the claims in question do not form part of these proceedings.