Bringing the World Together: UK Considers Class Actions

Class action lawsuits aren’t everyone’s cup of tea, but it’s hard to doubt their effectiveness when other countries – South Korea and France, for example – are introducing U.S.-style collective actions to their own legal systems. Now it looks like the UK could be the latest to bring about some form of collective consumer action, with a bill currently being heard in Parliament regarding “opt-in” and “opt-out” classes.

Companies are more likely to listen to a unified and strengthened group of plaintiffs than isolated cases.

The bill is known as the Consumer Rights Bill, and the UK’s Competition Appeal Tribunal (CAT) has been asked by the government to report on how collective actions could work in Britain - and, specifically, how class membership could be defined if a lawsuit were approved.

It’s another step in the spread of class action lawsuits around the world. For consumers, collective action offers obvious benefits – after all, companies are more likely to listen to a unified and strengthened group of plaintiffs than isolated cases. Last May, the first class action lawsuit in Italy was given final approval and a group of holiday-makers were successful in their attempts to recoup costs from a tour operator that, they claimed, had misrepresented the quality of a hotel.

Italy, France, and now the UK make it clear that class action lawsuits (in one form or another) are finally coming to Europe.

So, how would Britain’s new lawsuits work?

The Competition Appeal Tribunal has now published its draft rules for “collective proceedings orders” – the rules for working out whether a plaintiff qualifies. According to the CAT, any class action lawsuit would need to be brought on behalf of an “identifiable” class of consumers, while also raising common issues. It’s worth noting that Italy’s own class action lawsuits require members to share very specific circumstances, rendering the suits somewhat less effective than their U.S. counterparts. Which way will UK suits go?

According to the CAT’s guidelines, several factors will be considered before a collective action can continue after filing. These include:

• An assessment of the costs and whether a collective process is deemed efficient
• Determining whether any similar or separate claims already exist, filed by class members
• Examining the proposed class membership’s “size and nature” in order to help determine whether an aggregate damages award could resolve the case satisfactorily

It’s early days yet, but the signs are promising. Proposals have also been put forth for determining whether a lawsuit would progress as opt-in or opt-out. In an opt-in class action, only those individuals who affirmatively elect to participate in a lawsuit are included on the class. In an opt-out class action, affected consumers are automatically included in the class (and legally bound by the judgment or settlement) unless they request to be excluded from the class. Factors to help determine this may include:

• The claims’ strengths
• How practical an opt-in class would be (regarding size, etc.)
• The size of any potential damages awarded to members

CAT’s proposed rules also suggest that:

It’s interesting that so much of the CAT’s proposed procedural rules for collective proceedings is concerned with clarifying members’ ability to both opt-in and opt-out of suits, perhaps revealing a wariness in the British legal system of rolling out class actions before the public at large are comfortable with the idea of lawsuit encompassing such large groups of people – especially since in opt-out cases individuals won’t have to actually do anything to be included.

Overall, though, class action lawsuits have proved extremely successful as a tool to empower consumers and make courts more efficient. Will other European countries follow suit? It may be about time.