Class dismissed

Hausfeld will seek leave to appeal the Court of Appeal decision to dismiss a bid to bring a representative class action through the High Court.

The ruling, given by Lord Justice Mummery on Friday (see story), struck a blow to the class action movement  and left many claimant lawyers wondering how consumer clients who are victims of cargo conspiracies will get access to justice.

Mummery LJ was scathing in his view of the claim, which he threw out for being “fatally flawed”. As one lawyer close to case summed up succinctly: “They got stuffed.”

The claim was originally launched by Hausfeld against British Airways (BA) in September 2008. The firm sought damages for clients who had suffered a loss a result of a airfreight services cartel which the airline participated in.

Earlier this month BA was fined £90m by the European Commission (EC) for its involvement in the cartel, bringing to an end a three-year investigation into BA.

In a bid to have the cases being brought by the firm’s 250 clients heard in a cost effective manner, the firm attempted to bring a representative action in the High Court.

Hausfeld put forward two clients, Emerald Supplies and Southern Glass House Produce (both suppliers of cut flowers), to act as representatives of all “direct and indirect purchasers of airfreight services, the prices for which were inflated by the agreements or concerted practices”, in essence seeking to extend the number of potential claimants to an almost limitless number.

Giving his first instance ruling and rejecting the case, the chancellor of the High Court Sir Andrew Morritt said: “It’s not that the class consists of a fluctuating body of persons, but that the criteria for inclusion in the class cannot be satisfied at the time the action is brought because they depend on the action succeeding.”

At the Court of Appeal, 20 Essex Street’s Iain Milligan QC, instructed by Hausfeld partner Anthony Maton, argued that the representative action rule had become broader and more flexible and therefore the court had the power to determine the shape of the action.

Milligan said Morritt’s ruling should be reversed because the case was for a class of more than one person who shared the same interest “at the relevant time”.

It did not follow, he said, that the claimants represented had to be the same at the start of the action and at the point of judgment and in the period between those two points of time.

In his ruling, Mummery LJ dismissed the argument with little consideration because, he said, the case fell outside the CPR rules.

The CoA judge stated: “After all the applications, arguments, authorities, amendments and adjournments, it is a straightforward Bear Garden kind of case that falls outside the rule on representative actions.

“Emerald and those they purport to represent do not all have “the same interest” required by the rule. The persons represented are not defined in the pleadings, either initially or in the proposed amendments, with a sufficient degree of certainty to constitute a class of persons with “the same interest” capable of being represented by Emerald.”

If the Supreme Court rejects the appeal bid Hausfeld will be left with 250 clients representing $3bn of freight spend, all looking for compensation.

Maton said: “Everybody has said that this was about class actions, but that was not what we were looking to do. We were seeking to find a way to manage these cases.” The judiciary has shown a hostile attitude towards those attempting to change the class action model through the courts. That will not stop lawyers from trying, however. Hausfeld’s clients are relying on it and, consequently, so is the firm.