Scanning the Class and Collective Action Horizon

Orrick, Herrington & Sutcliffe LLP

While group litigation and collective actions have traditionally been more difficult to pursue in the UK than in the U.S., changes to UK civil procedure rules and societal attitudes towards group ligation means that these types of claims are becoming more common.

Drawing on Orrick’s experience in the well-established U.S. class actions landscape, we have drawn parallels between the U.S. and UK models, and considered how the strategies and tactics utilized in the U.S. can serve as a roadmap for clients facing collective actions in the English courts.

Who is at risk? UK-based entities and foreign-based entities with interests or subsidiaries in the UK could be at risk. In particular, if an international company is facing U.S. class action claims this could lead to global contagion and a potential UK class action style claim. Given the nature of these claims, they are typically faced by companies who provide goods or services to individuals. In particular, organizations subject to cybersecurity breaches and privacy laws are likely at significant risk.

What can at-risk companies expect in this new UK litigation landscape and how should they react? Lawyers from Orrick’s Class Actions team in the U.S. and UK developed a comprehensive guide analyzing these actions in both countries, which can be found here.

We’ve outlined below the key stages of such an action, compared and contrasted the U.S. and UK regimes and distilled our key observations and actions for each stage.

Current Landscape of Class Action Mechanisms

  • The U.S. has well-established history and caselaw, whereas class actions are relatively new in the UK
  • The procedural hurdles to bringing a class action in the UK are higher.
  • In the U.S., plaintiffs generally have the right to a jury trial.

Role of Counsel

  • Both systems allow for designation of lead counsel, but in the U.S. the named plaintiffs generally make the determination whereas in the UK it will depend on the nature of the collective action but the opt-in nature of group litigation orders (GLOs) means that numerous plaintiffs may be involved in the determination.
  • UK class actions maintain the solicitor/barrister distinction in terms of roles and responsibilities.

Litigation Funding and Its Impact

  • Litigation funding in the UK is more common, accepted and established. In the U.S., litigation funding is beginning to see wider acceptance, but traditional barriers of maintenance and champerty remain in many jurisdictions, and there are ethical concerns regarding attorney conflicts and the duty of loyalty to clients, as well as interference with attorneys’ professional judgment.

Tolling of Statute of Limitations for Absent Class Members

  • In the U.S., the filing of a class action tolls the statute of limitations for federal and certain state claims of absent class members; by comparison this practice is generally only employed in Competition Appeal Tribunal proceedings in the UK
  • The question of tolling absent members’ claims is of greater consequence in the U.S. because certification proceedings may drag on for years, whereas in the UK the appropriateness of using a collective proceeding is generally determined in a more truncated initial application process.

Striking Class Claims

  • Claims in the UK are generally more difficult to strike on pleadings than in the U.S.
  • It is easier for a plaintiff to get to extensive class discovery in the U.S.

Bases for Dismissing Claims

  • The UK has a strict standing requirement that may serve as a basis for dismissing or striking out class action claims.
  • Personal jurisdiction and class action waivers may be grounds for dismissing class claims in the U.S. but are unlikely to serve as grounds in the UK given the issues surrounding the efficacy of alternative dispute resolution clauses in consumer contracts.
  • Other bases for dismissing are fairly similar, including: statute of limitations, insufficient service of process, insufficient pleading, failure to state a claim, failure to administratively exhaust and lack of subject matter jurisdiction.

Class Certification / Application

  • Unlike the U.S., which allows lengthy discovery and proceedings to determine whether a class should be certified, the UK generally requires claimants to engage in an initial application process prior to embarking on discovery. UK courts are generally very wary of perceived “fishing expeditions” and so claimants will need to show their ability to meet the test for a collective proceeding up front when they apply for one.

Discovery / Disclosure

  • The U.S. allows for much more extensive and adversarial discovery than does the UK
  • The U.S. process includes extensive depositions and declarations not provided for in the UK
  • Witness preparation in the UK is stricter and more limited than in the U.S. with a strict ban on “witness coaching” and additional procedural safeguards in relation to witness statements.

Role of Experts

  • There are often multiple types and layers of experts relied upon in U.S. cases.
  • Expert reports, depositions and testimony are often more extensive in the U.S. than in the UK, which typically requires the filing of a joint report indicating areas of agreement and disagreement and is subject to the court’s discretion.

Test for Pretrial Disposition

  • U.S. focuses on whether dispute remains and UK focuses on whether there is a real prospect of success on the claim or defense.

Bellwether Trials

  • In the U.S., litigants may have more control over the use of bellwether trials, and the use and effect of such trials is better-established.

Damages

  • Damages are more limited in the UK than in the U.S., particularly punitive, exemplary and statutory damages.
  • The use of individualized damages proceedings is more fluid in the U.S. and may be determined late in the litigation. In the UK, the question tends to be more limited up front, based on whether a GLO is being used and whether all issues are proceeding collectively, or on limited issues with some issues reserved for individual determination.

Litigation Costs

  • A major difference between the UK and U.S. is that in the UK, the loser generally pays costs and fees, whereas in the U.S., each party generally bears its own costs.

Attorneys’ Fees

  • Both countries allow for contingency fees, though the percentage of such fees are often limited in the UK by conditional fee agreements, and plaintiffs’ attorney fee awards in the U.S. must be approved by the court.

Settlement

  • Unlike in the UK, approval of class settlements in the U.S. can be a lengthy process. Fed. R. Civ. P. 23(e) obligates courts to approve class action settlements to ensure settlements are “fair, reasonable and adequate.”

Rule 68 / Calderbank Offers

  • Without prejudice offers in the UK allow for a broader range of costs to be impacted.
  • On the other hand, due to extensive discovery costs in the U.S., a Rule 68 offer can create significant pressure/leverage.

Appeals

  • U.S. trial courts have broad discretion to grant or deny class certification; however, they are subject to judicial review either immediately as a matter of discretion or at the end of the case as a matter of right.
  • In the UK, there is no automatic right to appeal and it is subject to judicial discretion.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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