Reforming the classes

In February 2001, the Lord Chancellor's Department (LCD) issued a consultation paper called 'Representative Claims: Proposed New Procedures'. The proposal has been issued in line with the Government's aim to improve access to justice.`In private law cases, claimants must show that they have a legal right that they are seeking to enforce. But in public law cases, anyone with a sufficient interest may apply for judicial review. Representative groups such as Greenpeace and the Consumers' Association have been granted leave to apply for judicial review.`The consultation paper suggests that further steps need to be taken to provide an additional and complementary way of providing access to justice. It is believed that this would be achieved by allowing representatives and representative organisations to bring proceedings. It would not be necessary for those acting in a representative capacity to have a direct interest in the proceedings.`There is no equivalent to the US class action in English law. However, there are numerous examples of multi-party actions commenced before and after the introduction of the Civil Procedure Rules (CPR) in 1999. Under the old Supreme Court rules, claims could be brought as representative actions, joined or consolidated claims, coordinated proceedings or group actions. Examples include the litigation relating to Opren, the whooping cough vaccine, and the infamous tobacco litigation. But such group actions have rarely been successful, often floundering on procedural difficulties such as costs.`Under the CPR, a group action can be brought as a representative action, where a claim is brought by one person representing those who have the same interest. Alternatively, a group litigation order (GLO) can be made by the court. This provides for the case management of claims giving rise to common or related issues of fact or law. A GLO was recently granted in the organ removal litigation, covering claims against up to 355 NHS trusts nationwide.`The current rules are purely procedural, allowing numerous potential claims to be heard as one. However, the proposal includes some startling proposed changes to procedural and substantive rules that should be the subject of careful consideration before they are taken any further.`The proposal is to allow representative claims which are defined as “claims made by, or defended by, a representative or representative organisation on behalf of a group of individuals who may or may not be individually named in a situation where an individual would have a direct cause of action.”`The LCD accepts the need for a preliminary stage of an application for permission to proceed, which would act as a filter allowing the court to give preliminary consideration to aspects of the claim peculiar to its representative nature. But the proposal makes no reference to any consideration of the substantive merits of the claim at an early stage. This should be included at the stage of the application for permission to proceed in the same way as an application for permission for judicial review would include a consideration of the merits of the claim as well as the standing of the applicant. Hopeless cases should not be allowed to proceed.`The most important issue is the identification of the group to be represented. In a US class action it is decided by means of the certification of the class. This is usually the most critical stage of any class action and often results in settlement of the claim.`The LCD working group considered various different types of representative claims. The first is both named and identifiable individuals with a direct cause of action, such as a trade union bringing an action on behalf of its members. The next is unnamed but identifiable individuals with a direct cause of action, such as all purchasers of a product or service who have been overcharged. The group also suggested that it may not be possible for some large groups to name individually, even though the group to which they belong is clearly identifiable – such as customers of a public utility company serving a particular area.`Another type of representative group is unnamed and unidentifiable individuals who have a direct cause of action, such as to allow a consumer group to bring a test case on behalf of “all consumers”. It is not clear from the proposal whether this third type of claim is formally proposed or not. If it is, it would go beyond the current position in the US where a claim cannot be brought by unnamed and unidentifiable claimants.`Another group is where no cause of action has arisen as yet but preventative action is taken by a representative group, such as where a consumer group wishes to demonstrate that a product is potentially harmful prior to any damage being caused. The proposal recognises that this last potential type of claim would create a new cause of action and would require primary legislation.`The proposal suggests certain criteria to ensure that an applicant is suitable to bring a representative action and truly represents the interests of those for whom it is acting. These include organisations that have an appropriate constitution or statement of purpose, or that are qualified entities from an EU member state. Also, organisations that can show evidence of general involvement in the relevant area, a history of such campaigns, national or local recognition in a particular field, or affiliation to other pertinent organisations.`The applicant must satisfy the court that it is an “appropriate body or person” to represent the interests of the individuals concerned and that it has “sufficient interest” in the matter.`While this might be accepted in the case of certain established bodies, detailed criteria on what constitutes “appropriate” and “sufficient” are essential to minimise the risk of ad hoc groups being formed specifically to pursue vexatious claims.`The LCD working group has identified a range of possible remedies, allowing corrective action and awarding damages such as injunctions. But the nature of the remedy will largely depend on whether the claimants are identified or not. Where it is not possible to distribute a monetary award, in the case of a non-identifiable group of individuals, other options have been explored. These include the possibility of taking action that would benefit consumers generally, such as reducing prices or investing in health and safety, or even setting up a trust fund to distribute damages to claimants as they identify themselves.`Most radically, the proposal suggests that the inability of representative bodies to pay defendants' costs should not be a bar to an action proceeding. This exacerbates the risk posed by ad hoc groups formed to pursue litigation. Coupled with CFAs, this holds out the prospect of cost and risk-free litigation. Views are sought on whether proceedings brought against the Government or a plc that are “in the public interest” should be able to be conducted on a no-costs basis. While a case may be made for applying such a provision against the Government, doing so against plcs or other private sector organisations would effectively mean that a successful defendant would have to bear its own costs because a judge had taken the view at an early stage that the case was in the public interest.`In the US, a class action can only be brought by a group of claimants who are identifiable and in circumstances where the representative of the group has itself suffered loss and has a cause of action against the defendant.`The proposed rules leapfrog current US procedure on class actions. They contemplate that a claim can be brought by a representative group which has not itself suffered loss and by unnamed and unidentifiable individuals. But of most concern is that divorcing the economic interest in the outcome from the conduct of the litigation may only serve to encourage litigation and make settlement more difficult. It must be wondered whether the LCD is not trying to run before it can walk. n`Elizabeth Morony and Ian Moulding are partners at Clifford Chance