New class actions mini-series reveals burning issues and hot topics

Tim:

Welcome to this first episode of our litigation trending Spotlight on Class Actions podcast miniseries. My name is Tim West and I'm a partner in Ashurst London Dispute Resolution practice.

Jon:

And I'm Jon Gale. I'm also a partner in Ashurst London Dispute Resolution practice.

Anna:

And I'm Anna Morphy. I'm a partner in Ashurst Competition Litigation Team. And Jon, Tim and I all specialise in defending class and group actions. And in this podcast series we will be talking all about class and group actions and getting into some of the interesting issues in this growing area of dispute resolution.

Jon:

In this episode, we want to give a bit of a teaser and also to frame the discussions that we're going to be having by exploring what class actions are, why they matter, and why they're such a hot topic in the UK at the moment. What we're covering might be some of the very basics, so seasoned litigators will be on familiar territory in this first episode, but we thought it was important to start with the basics before getting into the detail on some of the more interesting topics that we'll be covering in future episodes. So Tim, in terms of the basics, should we start by explaining what we mean by a class action or group action in a UK context, just so that we are clear about the terminology and the technical difference between class and group actions?

Tim:

Yeah, absolutely. Stepping back a bit, in one sense, class and group actions are really all about court procedures and a court's rules for managing litigation that affect multiple parties. And that's a relevant framing, I think, to both how to think about class actions in the UK and the terminology involved. I think most people are probably familiar with US style class actions and will be aware that class actions are a really significant part of the legal landscape in the US. But in the UK context, there are a variety of different ways in which claims affecting multiple claimants can be brought. Most significantly, there's the opt-out collective actions regime in the Competition Appeal Tribunal, which I'll let Anna say a few words on. Outside of the CAT, the position in the high court is, generally speaking, opt-in with the exception of the so-called representative action procedure.

In the high court, it's as the name suggests, i.e., the default is that amongst all the various procedures that the claimants have to actually choose to sign up or opt in with a particular law firm as part of the claim. And what that means is that there's a book building process where the law firm or the funder, perhaps standing behind the claimant law firm, has to take the time and money to build up the group or class. And I think that that tends to result in smaller class sizes as a result. Anna, do you want to just give a very brief primer to the regime in the CAT that I mentioned?

Anna:

Yeah, sure. So class actions or collective proceedings, as you mentioned, I know, were introduced in the Competition Appeal Tribunal or the CAT back in 2015. And as you've mentioned, Tim, they're unique in that they allowed for opt-out claims to be brought for the first time, by which I mean a proposed class representative can file a claim on behalf of a class of individuals or businesses, and that could be millions or even tens of millions of them. And unless they actually choose to opt out, they're automatically included in the class and then they'll be bound by the result of the claim. And these claims in the CAT, they're only available in respect to competition claims, so they're limited in their scope, and they have two stages to them.

The first is the certification stage, and that's where the CAT has to give the green light for the claim to proceed. And then the second stage is, if these claims are certified, the claim then progresses in the usual way with disclosure and witnesses and experts and so on.

And not very much happened for the first five years of this regime because one of the earlier cases, Merricks against MasterCard, gave rise to a question as to how high or low that bar should be set for the claims to be certified. And that gave rise to a Supreme Court judgement at the end of 2020, which determined that the bar is actually set quite low to bring these claims or for them to be certified. And so, since then, we've seen more and more claims being filed and we're now up to about 40 of these claims in the CAT. And several have, by now, passed the certification stage, so the first stage, and they're now proceeding towards trial. And the first trials are being listed for early in 2024, and they raise a large number of novel issues, substantive competition issues, but also a lot of issues around procedure and how these claims should be managed as well as things like funding. So there's a lot going on in that space.

Tim:

Jon, in terms of why we're talking about class actions and why class actions are more of a hot topic now than they were, say, five years ago, do you want to briefly explain that and what it is you think makes them different to a traditional piece of commercial litigation?

Jon:

Yeah, sure. I think there's a variety of reasons why we've seen a growth in class actions in recent times. I think Anna's touched on one pretty obvious one, which is legal reform and the collective proceedings regime in the CAT. Tim, you've touched briefly on another, and we'll be getting into that in one of the podcast episodes, which is the very significant growth in third party litigation funding. I'd probably highlight two other factors. One is the growth in claimant law firms, and we see them working really hand in hand with the funders, both to identify potential class actions and to go out there and build them up, book building and advertising the class actions.

Finally, I suppose there has been an increasing level of scrutiny of large corporates and financial institutions by consumers, by regulators, by investors, and indeed by activists. I think that's happened in a number of sectors, particularly in the ESG space where we've seen a growth in class actions, and that's going to be the subject of a separate podcast, which I know you are going to be speaking on, Tim, together with one of our other colleagues. But I think all those factors together has given rise to an increase in class actions.

In terms of how they differ from traditional litigation, I think the procedures are different. I think that they raise a real headache for defendants who are subject to class actions because, partly, because of the potential opt-out exposure that arises in some class actions, which Anna has spoken about. But also I think a really significant problem with class actions is that they often give rise to significant PR implications. And that, again, is something that we will be delving into in more detail in one of our class actions. It's also not unusual for class actions to occur in more than one jurisdiction, by which I mean an issue which gives rise to a claim in one jurisdiction can result in another funder or law firm picking it up and running it as a class action in another jurisdiction, which is not necessarily uncommon in commercial litigation, but is definitely much more unusual.

Tim:

Yeah, absolutely. I'd say, in particular, the reputational threats that can be posed by class actions is a very interesting topic and really makes these types of disputes stand out. And a plug for one of our episodes in this series with Simon Pugh from Portland, who had some really interesting perspectives on the ways in which PR and crisis management plays a really fundamental role in dealing with these sorts of disputes for defendants, particularly given that they are by and large, by the nature of the disputes, dealing with their customer base, with whom there's obviously an ongoing relationship. So there's all the more reason that companies need to tread carefully.

And you've touched on our episode that we've recorded with colleagues in Germany as well, looking at the scope for ESG and greenwashing type claims. And also we, in this series, we'll be looking at trends from Australia where there is a mature class actions regime, and we tend to see a lot of class actions that are being filed and commenced here. They have their starting point and origin in the Australian market, so it's always a good place to start in terms of horizon scanning.

Jon:

Indeed it is. Thanks, Tim. And if you think that sounds like it will be of interest to you, please be sure to check out the remainder of the episodes in our miniseries on class actions to ensure you don't miss out on any future episodes, do subscribe now on Apple Podcast, Spotify, or your favourite podcast platform. While you're there. Please feel free to keep the conversation going and leave us a rating or a review. And until then, thanks for listening.