All together now: class actions future landscape—a view from LIDW22

All together now: class actions future landscape—a view from LIDW22

As part of the London International Disputes Week 2022 (LIDW22), the panel in ‘Class actions and collective redress: the current landscape and what’s on the horizon’ considered the following four questions:

  1. what does the data privacy experience tell us about the future landscape for opt out class actions?
  2. what experience can we garner from the Competition Appeal Tribunal’s (CAT) collective proceedings regime?
  3. what is the role of funders in the growth and use of class action and collective redress?
  4. how will the growth of ESG related litigation impact this area?

The fall out (but no opt-out) following Lloyd v Google

The decision in Lloyd v Google [2021] UKSC 50 confirmed and highlighted the gap in our procedure for a form of representative or class action which enables claims to be brought on an opt-out basis without the need for individualisation of each claimant’s loss. The claimant in Lloyd had attempted to use the CPR 19.6 representative procedure to bring a claim seeking compensation (for himself and as a representative for millions of others) for alleged data breaches by Google. The bottom-up compensatory approach of the English courts, however, meant that for the claim to proceed on this basis, Mr Lloyd had to identify and assess the individual loss of each and every claimant at the outset. This was simply not feasible and it meant that the claim could not proceed. This contrasts with the class action regime in the US which starts from a more punitive premise: there has been a wrong, there should be compensation, aggregated at X and then allow the damages pot to be distributed out. This may be seen to reflect an unwillingness on the part of the English judiciary to lead a change in approach, preferring to wait for a legislated regime change as seen in the competition sphere. Thus, for now at least we are left with an opt-in future landscape, lacking the potency of an opt-out process.

Is the competition collective procedure effective?

It seems so from the stats discussed. The CAT is the only arena in this jurisdiction which provides a true class action mechanism. There are a mix of claims in the sense that, initially the focus was on follow-on claims, ie claims predicated on a pre-existing Commission finding; this has shifted and the CAT is now starting to see more standalone claims for abuse of dominant position. There is also a mix between consumer loss claims and business claims. The CAT’s collective proceedings regime also allows for sub-classes within a claim so that where there are mixed consumer and business loss issues within a claim, the CAT can give directions to deal with any potential conflicts between sub-classes within the claimant class. This contrasts with the generic group litigation format where, despite the ability to bring a claim on a group litigation basis, the claimants may yet have different focusses throwing up potential issues and conflicts for which there is no recognised process for dealing. Furthermore, whilst the CAT approach is, where possible, to calculate damages on a bottom-up basis, it can take a more rough and ready approach where appropriate – giving it a degree of flexibility which is absent the generic litigation process for class actions.

Funding is all

Throughout the panel discussion the issue of the economics of class actions was evident. Class actions and collective proceedings are dependent on funding to get off the ground. Funders will assess every potential claim on an investment basis – does the likely level of recoverable damage represent a good return on investment? This is increasingly requiring sophisticated economic modelling, at a cost, at the outset before a claim is launched and in the absence of any real disclosure. This presents complexities for funders and is another factor which makes the existing option for class action litigation in this jurisdiction less attractive.

How will the existing procedure be affected by the rise in ESG litigation?

No-one can doubt the rising prominence of ESG issues and their influence on how businesses are operating and the risks they face. In terms of disputes, there are two key types of potential claim: (i) direct claims brought by community groups and NGOs whose aim is to hold businesses and states to account for breaches of regulatory obligations, with the objective of bringing about change through enforcement action and (ii) indirect claims in the form of private rights of action which are aimed at seeking compensatory recovery for breach. Both present significant risk to business and state agencies. A breach of a statutory code may present a ripe opportunity for a class action. Note, however, that whilst the funding issues remain and the absence of a more claimant-friendly opt out regime pertains, the ability to get such claims off the ground may still prove a challenge. However, given the global importance of these issues and the track record of determination in the face of adversity of ESG focussed pressure groups, where there is a will, a way will no doubt be found. The landscape is looking busy.

Note: this is a summary of the discussion and does not purport to be a full account of the event.

Latest Articles:
About the author:
Ruth specialises in general corporate and commercial dispute resolution with particular experience in shareholder disputes, fraud and warranty claims. Ruth trained and qualified at Berwin Leighton Paisner LLP (now Bryan Cave Leighton Paisner LLP) where she remained in practice for ten years. Her work has involved project managing large-scale cases to trial in the chancery and commercial courts. Ruth was actively involved in in-house training with a particular focus on all aspects of evidence gathering and production, including authoring a user-manual on E-disclosure. She is also a contributor to the New Law Journal.