Introduction

The UK’s Civil Justice Council’s recently-published research paper, ‘Reform of Collective Redress in England and Wales[i]’, tasks itself with finding ‘evidence of need’ in order to suggest that claimants in England and Wales do not fare as well as some of their Commonwealth and European counterparts in terms of access to collective redress mechanisms. The paper’s author, Professor Rachael Mulheron of Queen Mary University of London, states that the proposals should not merely be regarded as ‘a solution looking for a problem’.

Methodology and Findings

The paper's principal recommendation is the introduction of ‘opt-out’ procedures in group actions and representative claims. Professor Mulheron finds ‘overwhelming evidence of the need for a further collective redress mechanism, in order to supplement presently-existing procedural devices available to claimants.’ In setting out to look for evidence of ‘unmet need’ the paper appears to have been predicated on the assumption that the concept of ‘opt-in’ for claimants participating in group actions is an undesirable aspect of English Law.

The finding of overwhelming evidence of need emanates from two main heads of enquiry: first, a comparative review of how opt-outs work in Australia, Canada and other European jurisdictions (the paper deliberately does not dwell on the US class action experience in any detail); and secondly, feedback obtained from leading claimant practitioners in the UK via questionnaires, correspondence, interviews and meetings.

Having established that there are ‘procedural gaps’ which are in need of being filled, the report proceeds to define the type of collective redress reform envisaged as ‘a generic, statutory ‘build the field and they will come’-type regime’ covering all potential types of collective actions. Notably, the paper does not expressly task itself with seeking to address the practicalities of bringing about and implementing the changes it endorses.

GLOs Criticised

The relatively small number of Group Litigation Orders since 2000 (62 at the time the report was prepared) is contrasted with Australia and Canada (where 164 comparable orders were made over the same period) and posited as evidence that UK citizens are being let down by the UK justice system. The GLO regime is criticised for introducing what the author perceives as potentially burdensome hurdles. Such hurdles include requiring claimants to issue claim forms and to comply with statutory or court-imposed time-limits.

Claimant lawyers questioned stated that they were opposed to the current opt-in regime because it fails to capture all the potential claimants – who are said to be hampered by ‘actual or perceived barriers’ that prevent them coming forward. 87 percent of claimants in the 97 actions considered felt disinclined to opt in for a whole gamut of social or psychological reasons. These range from not feeling engaged with the legal process to the belief that litigation is never worthwhile. Other reasons that discourage claimants, said to arise from the defendant’s involvement, are the fear of reprisals if they litigate, the risk of being open to receive settlement proposals directly and the wish not to sue because the claimant still retains goodwill and loyalty toward the defendant. From the perspective of a would-be or actual defendant, it is perhaps difficult to see how an inclination to discuss settlement or the persistent harbouring of goodwill can accurately be described as a ‘barrier to litigation.’

Prof Mulheron suggests applying a 'superiority criterion' whereby claims which are unsuitable for GLO go forward by way of an opt-out collective redress action. For complex cases involving difficult areas of causation – which will very often encompass complex product liability and pharmaceutical claims – the paper acknowledges that the use of opt-out will be far more problematic because by its inconclusive nature, it less likely to subject claims to rigorous individual analysis.

LSC Funding

A representative from the Legal Services Commission (‘LSC’) also contributed evidence to the research paper. Noting that the number of legally-aided multi party actions has dropped from 133 in 2000/1 to 4 in 2006/7, Professor Mulheron comments that one should not necessarily infer from these statistics that there is a shortage of ongoing ‘common grievances’ waiting in the wings. She gives the example of unsuccessful attempts by UK claimants to join US pharmaceutical product liability actions class actions, such as those arising from the withdrawal of the anti-arthritis drug Vioxx.

To further support this point, Professor Mulheron refers to claims involving pharmaceutical products which have been litigated in Canada under its provincial opt-out regime, for which there is no equivalent active litigation in England, despite the products being available here. The robust attitude of the Canadian Courts plus their willingness to conduct common issues trials is said to explain this discrepancy.

Representative Actions

Also cited is the recent JJB Sports decision on price-fixing of footballs shirts - a representative action brought on behalf of the UK's Consumer Association. The Association is the only body formally accredited to act as a specialist representative body, following the enactment of specialist legislation included within the Enterprise Act 2002. The solicitors who acted for the Association did not themselves favour applying opt-out over opt-in to such claims, in direct contrast to the view of the Association’s own Head of Legal Affairs.

Professor Mulheron comments that the settlement achieved, of between £15-£20 per claimant would have been ‘rather less painful’ for JJB sports had it been brought under the Canadian class action regime. There is a potentially worrying subtext detectable here - as well as in other parts of the paper – implying that opt-out is necessary as a means of deterring or punishing errant defendants, who will have little choice other than to settle in the face of sheer of claimant numbers.

In 2002 the government published the results of its consultation on representative claims. Many of the respondents at the time, whilst broadly supportive of such claims in principle, voiced concerns that the necessary mechanism could not be implemented without the introduction of primary legislation. Although for competition claims such legislation took the form of the specialist representative clauses inserted into the Enterprise Act 2002, the then Master of the Rolls, Lord Phillips, was not impressed with the idea of incorporating the opt-out principle, commenting as follows: ‘To permit representative claims on behalf of unnamed individuals would be to introduce a new concept into English Law…I question whether the use of this system is the best way of procuring the consumer protection that the proposals appear to be designed to achieve.’

In 2006, a further Government Consultation set out to consider how representative actions could be implemented in consumer protection cases[ii]. The report on the consultation was not published until March this year[iii], in view of ongoing UK and EU-focused initiatives aimed at enhancing and streamlining collective redress mechanisms for consumers. In its summary of the responses, the Government states: ‘…we consider that further work is needed to examine the evidence base. Many of the responses to the consultation stated that there was still a lack of evidence for introducing representative actions.'

Responding to the question of whether representative actions should be brought on behalf of consumers at large, or named consumers, most respondents preferred named consumers, citing the existence of a 'direct connection with those consumers alleged to have suffered' and that the defendant 'had a right to know its accuser.' The increased use of restorative justice is viewed as a meaningful alternative to the expansion of representative actions. The paper also describes the problem of 'the uncertainty of the scale of liability ' that exists in opt out (consumers at large) as opposed to opt-in (named consumers).

Conclusions

It is possible to agree with the thrust of the CJC research while at the same time concluding that the findings go no further than to state the obvious conclusion that the introduction of an opt-out mechanism would result in claims becoming larger.

The report does acknowledge that ‘even under an opt-out regime…class members will ‘have to put their feet on the sticky paper’ and actively seek to establish individual entitlement to monetary recovery in the event that the common issues are decided in the class’s favour, or the action is settled.’ However, it is difficult to escape the conclusion that what is actually being suggested is the introduction of new opt-out procedures which are geared towards facilitating many thousands of claimants climbing on board on a ‘recruit now, ask questions later’ basis. Once such claims have been launched, the prospects of settlement resulting in funds reaching legitimate claimants – the separating of the wheat from the chaff – becomes that much harder.

The proposals also do not sit well alongside the CJC’s paper published in June last year[iv] which considered alternative mean of funding consumer litigation in order to improve access to justice. Whilst that paper acknowledged the need to work within the current CPR and wider civil claim framework, the proposals set out in this latest paper would necessitate a far-reaching overhaul.

The paper seems strangely at odds with the conclusions reached in the latest Government Consultation on representative actions which suggests that there is unlikely to be a sudden change of heart in Government circles that could lead to the introduction of opt out mechanisms.

In the coming months, the Civil Justice Council will be advising the government on the paper’s findings. It will be a challenge to mould the paper’s proposals into concrete procedural measures that can are ultimately workable in the harsh ‘funding winter’ that group actions currently find themselves in.

In her introduction to the paper, Professor Mulheron states that 'the research undertaken for this paper resonates with the sentiments and purposes’ of Lord Woolf in his ‘Access to Justice’ report of 1996 which laid the groundwork for the introduction of the Civil Procedure Rules. We will await the outcome with interest and in particular the precise ways it is proposed that ‘opt out’ processes can be introduced to accommodate the unmet needs of potential claimants seeking access to justice, whilst at the same time preserving the existing procedural and judicial safeguards, as enshrined in the CPR’s overriding objective.