Collective redress in England and Wales: co-claimant collaboration as a tool for success

​​​​​​​Lianne Craig

Hausfeld & Co, London

lcraig@hausfeld.com

Rachael Baillie

Hausfeld & Co, London

rbaillie@hausfeld.com

Jamie Nicolaides

Hausfeld & Co, London

jnicolaides@hausfeld.com

Andrea Martín Alacid

Hausfeld & Co, London

amartinalacid@hausfeld.com

Introduction

There have been welcome developments to the availability of collective redress in England and Wales, including the introduction of a new collective action regime for claims in competition law[1] and the use of the representative action procedure in the High Court to bring opt-out proceedings on behalf of claimants who have the same interest (primarily in the context of data breach claims,[2] the Court of Appeal having recently refused a representative action involving environmental damage).[3] These developments complement the existing Group Litigation Order (GLO) procedure, a mechanism that allows claimants who are bringing similar actions to group their proceedings together.

Although two high profile collective actions have now been certified, Merricks v Mastercard Inc[4] and Patourel v BT Group Plc,[5] given the nascent status of these collective and representative action regimes and, consequently, the limited guidance as to how the courts will deal with competing or overlapping claims, one feature that could impact the success of the regime is the willingness of co-claimants to collaborate in appropriate instances. Indeed, practice and procedure in terms of when, how and why co-claimants might collaborate is still in development in England and Wales when compared to, for example, with the established features of ‘co-counsel’ relationships in the United States where the class action regime is well established.

Collaboration as a force for good

Claimant collaboration has previously featured in a number of high-profile GLO claims. The cases demonstrate that, despite claimant groups being represented by separate law firms, the benefits of shared expert evidence and complementary litigation strategies can create efficiencies for the claimant groups and the court system.

For example, in VW NOx Emissions Group Litigation, various claims were brought via a GLO against Volkswagen for allegedly including a software function that could cheat emissions tests in the engines of certain vehicles. The GLO structure is based on the principle that there should be one lead firm for efficiency reasons, though this is not always practicable in claims where there are multiple claimant law firms. In the VW NOx Emissions Group Litigation several law firms acting for groups of claimants collaborated with each other, establishing a Steering Committee to efficiently bring the claim on a united front. Initial disharmony between two law firms did cause some delay, with a dispute about the terms of an initial collaboration reaching the Supreme Court and leading to an adverse costs award for filing a GLO application prematurely.[6] However, once the claimants began collaborate on the substantive issues in the case, their co-operation proved successful. At the preliminary issues trial in December 2019 to determine Volkswagen’s liability, in which the claimant groups instructed the same experts to give evidence, Mr Justice Waksman determined the issues in favour of the claimants.[7]

This approach, of having multiple lead firms collaborate, is likely to be used in similar claims. For example, at present, there are several claimant law firms representing many thousands of claimants in similar claims against Daimler and Mercedes-Benz. The claims are, and will continue to be, filed in the High Court. It is anticipated that the considerations regarding collaboration in VW NOx Emissions Group Litigation are likely to arise in further emissions claims that involve a number of large groups of claimants.

Additionally, there are several claims being advanced in the Competition Appeal Tribunal (CAT) against participants in what is known as the ‘Trucks cartel’, a group of truck manufacturers sanctioned by the European Commission (the ‘Commission’) for coordinating on the price of trucks and colluding to delay the introduction of low-emission technologies. Claims by the Veolia group,[8] Suez group[9] and a further group of corporate claimants (Wolseley group[10] and others) are being case-managed together; in addition, claims have been brought by Royal Mail[11] and BT Group[12] (case-managed together and listed for a trial in 2022), and Dawsongroup[13] and Ryder[14] (case-managed together and listed for a trial later in 2022). The claimant groups’ successful collaboration led to victory (both at first instance and in the appeal brought by the defendants) in relation to the preliminary issue of whether the defendants could argue that certain recitals of the Commission’s settlement decision finding the cartel were not binding on them as a matter of European Union and United Kingdom law. At the first instance hearing, the three sets of claimant legal teams adopted a consistent position on the law and shared the workload, with each group advocating on one of the points in issue. This allowed for focused submissions and removed any duplication of work amongst the claimants, creating both time and cost efficiencies.

By contrast, given the disparities in claim value in the RBS (Rights Issue) Litigation,[15] a more nuanced approach was taken to collaboration. Claims were brought, via a GLO, by multiple institutional investors and thousands of retail investors who were shareholders of RBS, against RBS and its former directors relating to RBS’s £12bn rights issue in April 2008, alleging that they had been misled as to the state of RBS’s financial health at the time of the rights issue. Of the five claimant groups, three became the ‘lead’ groups (each retaining their own team of solicitors and counsel) while two smaller groups with lower claim values elected to follow the lead groups. The follower groups did not participate in the day-to-day conduct of the GLO, although they did contribute to legal costs apportioned on a pro rata basis.

It is worth noting, however, that the claimants’ collaboration was not without its challenges. For example, during the litigation, a dispute arose with respect to one of the firm’s fees. Additionally, the groups settled their claims at different times in the litigation, which meant that the groups who settled later faced the significant pressure of being potentially liable for all the defendants’ legal costs if they proceeded to trial and were unsuccessful. Courts are likely to expect prospective lead groups to engage at the permission stage with issues such as what happens if one lead group exits the litigation, which will highlight the strengths, weaknesses and risks of potential collaboration.

Claimants in conflict

While the Trucks claimant groups are collaborating, two Trucks collective actions, brought by the Road Haulage Association[16] (RHA) and UK Trucks Claims Limited[17] (UKTC), are in conflict, with the class representatives vying to be certified. The UKTC claim is opt-out, meaning that it proposes to represent all members of the proposed class[18] automatically, unless they specifically opt-out (although in the alternative, UKTC has argued it could be re-formulated as an opt-in claim). The RHA claim, on the other hand, requires class members[19] to opt-in and is brought on behalf of residents in both the UK and the European Economic Area.[20]

At a hearing in April 2021, the CAT heard both the RHA and UKTC argue why its respective application should be certified. Certification is required before a collective action can proceed in the CAT. Both potential claimants criticised each other’s cases to establish why it should be the sole representative with carriage of the collective action.

The RHA explicitly argued that although technically both claims could be certified, only one should be. It argued there should be a preference for opt-in claims and, as the RHA had already signed up a substantial pool of class members, the UKTC’s claim could not overcome that preference.

UKTC stated that each of the applications should be assessed on its own merits, rather than a comparison of the two claims, but argued that the RHA claim suffered clear and serious difficulties. Those difficulties included that the RHA’s proposed class definition may allow for overlapping claims and that there is a conflict of interest due to the cartelists being associate members of the RHA. Judgment is still awaited, and it remains to be seen whether this approach of competing claims, with claimants each having to debate the merits of their respective claims, gave the defendants a significant advantage.

Similarly, there are two applications in the CAT to pursue collective proceedings against addressees of two Commission decisions in which it found that six banking groups were involved in foreign exchange (FX) cartels. The applications, by Philip Evans[21] and Michael O’Higgins FX Class Representative Ltd,[22] are competing against each other for ‘carriage’ of the claims for the first time under the UK’s developing regime. Judgment is pending.

It is noteworthy that the proposed class representatives' applications for certification in both the Trucks and FX collective action claims were being heard at the same time. This significantly impacted the potential class representatives’ workloads because, in addition to challenging each other’s applications, they were also resisting the defendants’ position that neither claim should be certified. In the FX litigation, both proposed class representatives asked the Tribunal to hear the carriage dispute as a preliminary issue prior to the certification hearing, but the Tribunal declined.[23] It remains to be seen whether this is a feature of the new regime that will persist in other cases, particularly as it is different from the approach taken in Canada and the US where carriage disputes are heard prior to certification.

Commentary

Experience shows that when co-claimants can collaborate successfully and adopt a cohesive strategy, there is the potential for cases to be run more efficiently, benefitting both themselves and the court. Collaboration can be more challenging, however, when the claimants’ interests are not aligned.

The collective action and representative action regimes appear to leave less space for collaboration because, unlike a claim in which lots of individuals with complementary interests are involved, prospective representatives are applying to be the single representative for an entire class. However, it remains to be seen whether these group actions need to be run in such an exclusionary way. For example, where there is scope to divide classes, or where the claims do not completely overlap, representatives might be able to allocate the issues or sub-classes between one another (or indeed a court may opt to certify them in this way). There is also scope for potential class representatives to collaborate if the carriage disputes are heard separately from certification.

In this respect, the experience of Canadian class counsel is likely to be most influential, as the UK’s Supreme Court has drawn parallels between the Canadian and UK collective action regimes.[24] That experience includes Canadian class counsel grappling with issues such as carriage disputes, the division of classes, co-operation with co-counsel based in the US and, in 2011, the introduction of an informal protocol to assist with coordinating multi-jurisdictional class actions by the Canadian Bar Association.

The UK is still in the early days of collective and representative actions, so it remains to be seen what mechanism may develop to allow or even encourage co-claimants to work together. What is clear, however, is that greater co-claimant collaboration can be beneficial both for the courts and for the claimants who deserve redress.