Fullbright & Jaworski International attorneys Antony Corsi and Ian Pegram authored an article published yesterday in the Times Online discussing whether proposed opt-out collective action procedures are likely to lead to huge increases in litigation costs for companies doing business in the UK and due to a rash of frivolous class actions.
As I have noted in previous entries, the British reforms have been proposed by a quasi-governmental “Public Advisory Body” called the Civil Justice Council. Following a report issued in February, the CJC held a conference in March and issued specific recommendations for reforms to collective action procedures in August. Most recently, a conference was held to discuss those recommendations in September in which lawyers, judges, academics, and trade union representatives provided comments on the recommendations. Reports on all of these events are available on the CJC’s main web page under “What’s New.”
The recommendations would make British collective action procedures more similar to U.S. class actions, but overall collective actions in the UK would still be different from the truly representative class action system in the U.S. This August 28 ClassActionBlawg entry summarizes the proposed changes. One of the most significant changes would be the adoption of a procedure allowing collective actions to be brought on an “opt-out” basis (where absent plaintiffs would be bound by the result unless they affirmatively excluded themselves from the litigation). Currently, the current UK standard for collective actions is ”opt-in”, where plaintiffs have to affirmatively join the suit in order to participate. As examples in the Corsi and Pegram article illustrate, allowing cases to be litigated on an opt-out basis as opposed to an opt-in basis can make a huge difference to the legal exposure, since oftentimes only a very small percentage of the potential plaintiffs bother to participate in an opt-in case.
Corsi and Pegram conclude that despite changes that would add certain features of U.S.-style class action procedure to the UK, those changes are not likely to produce the “American-style excesses” that many in the business community fear. They point out that the CJC has been particularly sensitive to these concerns and has proposed procedures, including strict oversight by specialist judges, to prevent abuse of the process. Walter Olson of Point of Law, discussing the article in this entry, opines that other aspects of civil procedure in the UK–such as stricter limits on forum shopping and a loser-pays attorneys fee-shifting rule–are more likely reasons why we might not expect a flood of class action litigation if the reforms are adopted. As other commentators have pointed out, Europeans have different societal attitudes toward litigation in general and toward the role of the courts in providing redress for private harm, which may also play a part in tempering the legal exposure to businesses that might otherwise be expected to result from an increased availability of collective redress.