Emerald Supplies Ltd. v. British Airways PLC is already being heralded as a rejection of US-Style class actions in the UK, but my reading of the opinion leaves the question far from settled. The opinion falls far short of foreclosing the possibility of a representative action in every case where the plaintiffs’ interests are not literally identical. In fact, the opinion appears to turn on two flaws that may very well have prevented class certification under US procedure.
In articulating the standard for what constitutes “the same” interest sufficient to justify treatment of a case as a representative action under Civil Procedure Rule 19.6, Lord Justice Mummery was careful to say that “[t]his does not mean that the membership of the group must remain constant and closed throughout. It may indeed fluctuate. It does not have to be possible to compile a complete list when the litigation begins as to who is in the class or group represented.” Opinion ¶ 63. Instead, he articulated two problems in treating the case as a representative action, both of which would also be potentially fatal to class certification under Rule 23.
First, he observed that there were problems in ascertaining who was a member of the proposed class:
The problem in this case is not with changing membership. It is a prior question how to determine whether or not a person is a member of the represented class at all. Judgment in the action for a declaration would have to be obtained before it could be said of any person that they would qualify as someone entitled to damages against BA. The proceedings could not accurately be described or regarded as a representative action until the question of liability had been tried and a judgment on liability given. It defies logic and common sense to treat as representative an action, if the issue of liability to the claimants sought to be represented would have to be decided before it could be known whether or not a person was a member of the represented class bound by the judgment.
Id. Second, he observed that certain defenses might be available as to some members of the would-be class, but not others:
Id. ¶ 64. In conclusion, Lord Justice Mummery returned to his concern about the inability to determine class membership without first ruling on the merits:
Id. at 65.
The primary concern raised by Lord Justice Mummery is the problem of a “fail-safe” class, a common obstacle to class certification in the U.S. Even under the seemingly more liberal US Rule 23, a class cannot be defined in such a way that requires the case to be adjudicated on the merits before it can be determined who is in the class. (See recent CAB review quoting Anderson & Trask’s, The Class Action Playbook, comparing fail-safe classes to Schrödinger’s cat). Thus, classes consisting of “all consumers who were defrauded” or “all purchasers who paid inflated prices due to the defendant’s act of price fixing” are not sufficiently ascertainable to be certified under Rule 23.
The secondary concern could also prevent certification under US law. The fact that a defendant’s defenses may vary from person to person is often a consideration in denying class certification under Rule 23.
In short, it appears to this outsider that it may be too early to tell whether Emerald Supplies is truly the death knell for US-Style class actions in the UK, or whether it is simply the first in a line of decisions defining the contours of a more robust law of representative actions across the pond.
One thing is certain, though. There are very few US judges who could get away with using the word “Micawberish” in an opinion.
Consumers Don’t Benefit from UK Collective Actions. So How Exactly Does that Make them Different from US Class Actions?
Posted in Class Action News, Class Action Trends, Commentary, International Class Action Law, tagged antitrust, antitrust conference, class action reform, collective action, International Class Action Law, jjb sports, opt in, opt out, UK class action, UK collective action on December 1, 2008| 2 Comments »
UK legal publication The Lawyer has an interesting article out today for anyone tracking trends in class and collective action reform across the pond. According to the article, Which?, a consumer organization granted the right to pursue collective redress on behalf of consumers harmed by conduct declared to have violated antitrust laws, isn’t convinced that it would pursue another one after facing several practical barriers in pursuing a case against a sports merchandiser for allegedly selling overpriced replica soccer jerseys. Among the challenges cited by a lawyer for the group was the fact that few consumers found it worth their while to pursue a claim in light of the relatively modest amounts they stood to gain (£20 per person), the fact that consumers had to provide proof of purchase, and the fact that years had passed by the time the opportunity to make a claim became available.
The report notes that even after a highly publicized media campaign highlighting the case, only about 500 consumers decided to participate. The total amount of the settlement payout was around £18,000, plus reasonable litigation costs, as compared to a multi-million dollar penalty imposed against the company for its anti-competitive actions in the first place. An earlier article by The Lawyervalued those costs at many hundreds of thousands of pounds, dwarfing the amount of the payout. That article quotes a lawyer for which as saying that the use of an opt-in versus an opt-out system contributed to the discrepancy.
The issue of the cost of litigation versus the actual benefit to victims, however, is one that arises whether the system is opt-in or opt-out. Even in the U.S., which technically has an opt-out system, actual monetary redress to alleged victims happens as a result of some sort of claim-in process, either as part of a settlement or a distribution of a judgment. Unclaimed funds are either distributed pro-rata to those class members who do file a claim, returned to the defendant, paid to the government, or distributed to charity as part of a cy pres remedy. In any event, the system does not in any way guaranty redress to those who don’t have the means to prove their entitlement to relief or who don’t find it worthwhile to pursue a remedy.
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