GROUP LITIGATION: An Introduction

GROUP ACTIONS: An introduction  

Contributed by Adam Heppinstall KC and Lucy McCormick of Henderson Chambers

Group actions are, of course, fundamentally about procedures for progressing together several claims giving rise to similar issues. As such, they are capable of being deployed across a wide range of practice areas. Originally, techniques for the management of large numbers of claims were developed in the context of transport disasters and medical product liability. From the mid-1990s onwards, group litigation techniques were brought to bear more widely, particularly in litigation arising out of financial and environmental issues. Most recently, data protection has been a major growth area for group actions.

The number of formal “Group Litigation Orders” granted in the last few years has been relatively few, with the most recent being the Nchanga Copper Mine Group Litigation in March 2020, the British Airways Data Event Group Litigation in October 2019 and the VW NOx Emissions Group Litigation in May 2018. However, that does not mean that the group litigation landscape is quiet. On the contrary, claimant and defendant lawyers are being kept busy by a range of claims across the sectors, often adopting court ordered group structures falling short of a full GLO. Recent group litigation activity includes the Court of Appeal decision in July 2022 in Municipio de Mariana & Ors v BHP Group plc and BHP Group Ltd [2022] EWCA Civ 95, which confirmed the jurisdiction of the English courts to hear the claims of some 200k claimants in Brazil in respect of the collapse of the Fundão Dam. Emissions litigation continues to rumble on, with claims having been issued against almost every major car manufacturer. Moreover, spring-boarding on the 2021 Uber v Aslam [2021] EWCA Civ 2748 decision which confirmed that Uber drivers are workers rather than independent contractors, this year has seen vigorous recruitment for similar claims against Amazon, Addison Lee and others. There is also every sign that the pause occasioned by the change in the jurisdiction rules post-Brexit in multi-national mass tort litigation is dissipating, with a raft of ESG/climate change/parent company/supply chain claims coming before the courts in the next few years.

In this jurisdiction, multiparty litigation is usually ‘opt-in’, that is to say a claimant must individually take the decision to opt into the litigation. In 2015, the gates were opened for ‘opt-out’ litigation in the Competition Appeals Tribunal, allowing a claim to be brought on behalf of an entire class of potential claimants without the need for them to choose to participate. However, this much anticipated step towards the US-style class action began with a whimper not a bang, with not a single action being certified between 2015 and 2020. Finally, over the last year such actions have begun to gain momentum. There are now some nine claims certified at the Competition Appeal Tribunal, with more waiting in the wings. They include, for example, claims arising from Meta’s alleged misuse of personal data, a foreign exchange spot trading cartel, and a truck cartel.

Funding is essential to bringing any major group action. The health of group litigation as a sector can be seen by reports that the British litigation finance industry has almost doubled the size of its UK assets over the past three years, with as much as £2.2 billion in play. Against that background, those who wish to anticipate trends in this sector are well advised to have an eye on recent group actions costs decisions. Highlights include:

• A pair of interesting CAT decisions, Kent v Apple Inc [2021] CAT 37 and Coll v Alphabet Inc [2022] CAT 6. In both cases the CAT refused to order disclosure of the ATE premiums, as well as (in Kent) the solicitor’s excess provision and (in Coll) the percentage level of success fees payable under the conditional fee agreements. This decision is likely to increase the appetite for funders and insurers for such claims.

• In Weaver and others v British Airways plc [2021] EWHC 217 (QB), a CCMC in the British Airways Data Event Group Litigation, Saini J held that advertising costs to publicise the claims in the media fell outside the budget. The GLO in question made provision for the lead solicitors to take reasonable steps to publicise the GLO in accordance with CPR 19.11(3)(c) in the form of an attached advertisement, and the judge accepted that the costs of this would in principle be recoverable. However, he found that the costs in Cs’ budget were not costs being incurred under that provision, but rather were the costs of Cs’ solicitors "getting the business in", and so fell outside the budget. One can extract from the judgment that despite £443,000 spent on advertising to date, the claimants had only been able to recruit 5% of those eligible to bring a claim.

• In Sharp and others v Blank and others [2020] EWHC 1870 (Ch) (14 July 2020), following the dismissal of the claim by some 5,800 claimants against former directors of Lloyds, the Court made a costs order including that the litigation funder was jointly and severally liable to pay the Defendants’ costs. The Defendants claimed costs in excess of £30 million. The Claimants had primary ATE cover of £6.5 million, plus a third party funding arrangement. The funder had excess insurance totalling a further £14.95 million, providing aggregate insurance cover of £21.24 million. An interim payment of £17m was ordered. The funder wanted to limit its liability to the extent of the funding it provided (i.e. known as the ‘Arkin cap’), to the extent the Claimants failed to satisfy the adverse costs order, but the Court noted that the Arkin cap was guidance rather than binding, as has been underlined in a string of recent decisions. The same outcome was obtained in the Seroxat Group Action (Bailey & Anor v Glaxosmithkline UK Ltd [2020] EWHC 1766 (QB)), where Lambert J held the Claimants liable for the costs of the failed action, to some extent on the indemnity basis, which bill landed with the funder of the action who had already been ordered to give security for those costs earlier in the group action (where the Court had held that the Arkin cap was a factor to consider rather than an operative “cap” when considering the amount of security for costs to order – see [2017] EWHC 3195 (QB)).

Funders and insurers will take heart from the fact that the current trend is against disclosure of ATE and funding arrangements. However one may expect funders – already very discerning – to be increasingly cautious about which cases they take on, given that in light of Sharp/Bailey et al they cannot wholly rely on the Arkin cap and may end up paying out more than they originally funded.