Class actions are brought by groups of individuals against a large corporation where each person’s loss is not significant enough to justify a claim on its own. They are well-known in the US. Examples include the US tobacco litigation and shareholder dispute actions against the likes of Tommy Hilfiger and the Chinon Corporation. They are now becoming more widespread in the UK.
Follow our ten step guide to class actions in England and Wales:
What are they normally about?
There have been a number of product liability group claims in the UK – such as the MMR litigation against drug manufacturers – as well as group asbestosis claims against employers (under employer’s liability insurance) and claims against the financial services industry for investment losses.
Can companies bring them?
Class actions are increasingly being used by UK companies and institutions. These are not driven by the same financial imperative as for individual claimants but are brought because the claims may become stronger by being combined. A high-profile example is the FIDS group litigation, which is challenging the UK Foreign Income Dividends provisions on the grounds that they are in breach of the EC Treaty and the European Convention on Human Rights.
When are they allowed?
To bring a class action, all potential claimants must apply to the court for a Group Litigation Order. This will only be granted where the claims are sufficiently similar and the court thinks it would be an efficient use of its resources to try the cases together. If a GLO is granted, test cases can then be chosen and the costs shared between all the claimants.
Must all claims be identical?
They do not have to be identical but they must have common issues of fact or law. For example, if alleging negligence, claimants need to be able to show that they were owed the same duty of care by the same defendant, that the duty of care was breached in the same way and also caused them loss in the same way.
Is a minimum number of claimants required?
The Civil Procedure Rules do not set a minimum number of claimants needed for a GLO. The court recently ruled that six claimants were too few for a GLO to be made in that case but said that around 20 would have been sufficient. Of course, most class actions have hundreds, if not thousands, of claimants. What claimants cannot do is apply for a GLO as a way of advertising for further claimants.
How do claimants show they intend to bring a claim?
Simply producing a list of apparent claimants will not be accepted by the court as sufficient evidence that they all intend to bring a claim. The court is likely to require draft Particulars of Claim naming the claimants or perhaps even signed witness statements from all claimants. It should be clear that they already intend to bring a claim whether or not the GLO is granted.
Would it sometimes be better to go it alone?
Claimants who decide to bring a separate claim instead of joining in a class action will have to bear the full costs of bringing their claim to court. On the other hand, they would retain full control over the litigation. However, the court may not allow separate claims to be brought while a class action is in progress. Equally, later claims may be prevented by new legislation or because they are time-barred.
Can other claimants join in later?
There may be a cut-off date imposed by the court, after which other claimants would be barred from joining the action. However, claimants could save costs and have a better idea of their own chances of success by waiting to see the outcome of the class action before bringing a claim.
Are all claimants who join in a class action bound by the outcome of the test case?
Yes. Any order or judgments made in the test case will be binding on all claimants who are on the group register at the time, unless the court orders otherwise.
Are potential claimants who don’t join in also bound by the outcome of the test case?
No, they would not be bound by any settlement reached (and would not benefit from it either) or by any judgment or order. However, a favourable judgment would be helpful in any subsequent claim they might bring. Conversely, if the test case judgment were unfavourable, they would not be able to appeal it. Such a judgment would affect any later claim they might bring.
