Group litigation has been part of the UK litigation landscape for twenty years. In recent years, however, a number of contributory factors have fueled the growth of claims brought on behalf of large groups of claimants, making this sort of litigation an increasing risk for large businesses and their insurers. With their focus on ensuring that cases can be managed efficiently, the courts have been faced with the challenge of balancing the interests of groups of claimants with those of defendants faced with multiple claims with a substantial aggregate value. It is in that context that a recent High Court decision should be of interest.
We have reported in previous alerts on the unsuccessful challenge to the jurisdiction of the English courts to hear claims arising from alleged personal injury and environmental damage which is said to have been caused by operations at a Zambian mine operated by Konkola Copper Mines plc ("KCM").
The claims were brought on behalf of a large number of Zambian residents against KCM and its English parent, Vedanta Resources plc, with the latter being used as what is often called an "anchor defendant" to engage the jurisdiction of the English courts. The jurisdiction challenge was ultimately dismissed by the Supreme Court1 and the litigation is now continuing in England.
In the latest decision in Lungowe & Ors v Vedanta Resources plc & Anor2 the High Court has turned its attention to how proceedings involving more than 3,700 individual claimants across different claimant groups can be managed efficiently.
Development of collective litigation
To put the Lungowe litigation into context, recent years have seen significant growth in the number of law firms in the UK that are actively targeting collective claims, including US plaintiff class action firms who have seen opportunities in the UK market.
The subject-matter of these claims has varied from investor claims based on allegedly misleading listing particulars, public comments or filings, through to data breach, competition, health & safety and consumer claims. There have also been several overseas tort claims, brought before the English courts by advancing a claim against an English parent company as "anchor defendant". Indeed, the Supreme Court decision in Lungowe makes it clear that it is permissible for claims to be brought in this way in certain circumstances.
Unlike jurisdictions with more developed class action regimes such as the USA and Australia, damages claims brought in England on behalf of a large population of claimants are generally brought on an "opt in" basis, i.e. it is necessary for claimants to take positive action to participate in the claims, by at least consenting to proceedings being issued in their name3. The claimants also bear the costs risks associated with participating in English proceedings, although the availability of conditional/contingency fee arrangements, third party funding and insurance against adverse costs has enabled substantial group claims to be brought at no cost to the individual claimants.4 Not only is this key to claims such as Lungowe where the individual claimants do not have the resources to pursue the claim or to meet any adverse costs, but a good many other claims would not have gained any momentum if the claimants had to self-fund. The significance of the recent growth in the availability of funding for collective claims is difficult to overstate.
The structure of the Lungowe litigation
Claims for damages brought before the English courts on behalf of a large group of claimants typically involve either (i) proceedings brought by a number of claimants represented by the same solicitors who issue a single Claim Form; or (ii) separate proceedings managed together under a Group Litigation Order ("GLO").
The proceedings before the court in Lungowe were constituted as three separate actions, one of which was brought in 2015 by claimants represented by Leigh Day, with the group later expanded to absorb claimants who had originally been included in a separate action by Hausfeld & Co LLP. The other two actions, brought in 2019 and 2020 by Hausfeld and Leigh Day respectively, added further claimants.
Faced with separate actions involving two different firms of solicitors, Vedanta issued an application to have a GLO made to coordinate the management of the litigation.
Opposition to the GLO
The claimants represented by Leigh Day did not oppose the making of a GLO, but nor did they want to lose the October 2021 trial date or to have the progress of their claims affected by the Hausfeld claim.
The Hausfeld claimants resisted becoming involved in litigation between the Leigh Day claimants and the defendants, with the judge commenting that they "wished merely to stand on the side lines until that battle was done and then to re-active their action". In order to achieve this, the Hausfeld claimants initially sought a stay of their action; they subsequently withdrew that application, and instead joined with Leigh Day to propose a novel form of GLO which the judge considered would have given them the same benefit as if a stay had been ordered.
The court was unsurprisingly not attracted to the litigation being structured in that way: "there seems to be no sensible reason why these two defendants – or indeed the court – should have to deal with two almost identical and very sizeable actions, one after the other, the first dealing with the Leigh Day claims, and then the Hausfeld claims after that. Such an approach seems to be the antithesis of the overriding objective".
The judge rejected the submissions made on behalf of the two groups of claimants to support their argument that the two strands of the litigation should be kept separate, commenting that the so-called "hybrid GLO" proposed by the claimants "had more similarities to Frankenstein's monster".
The judge saw nothing unusual or unique about the types of claims advanced in the three actions, other than that they had been issued at different times and one had been issued by different solicitors from the other two. Although the claims involved different communities, the same type of damage was alleged in each action; the communities all used the same waterways and the periods of alleged damage were broadly the same. The judge held that the claims raised "classic GLO issues", i.e. common or related issues of law or fact, and saw no good reason for maintaining any distinction between those claimants represented by Leigh Day and those represented by Hausfeld.
A noteworthy element of the argument against managing all three claims together was the submission that the court could not order Leigh Day to act for any of the Hausfeld claimants and that there may be a conflict of interest between different sets of claimants. It was also submitted that even if a GLO was made, the different groups of claimants would still be able to instruct separate counsel at trial, even if the trial was dealing with common issues.
The judge considered the terms of CPR Part 19, the accompanying Practice Direction and the relevant and authorities, from which he identified the following principles:
- Litigants are generally entitled to choose by whom they are represented, but to achieve the efficient conduct and case management of the group litigation, that right is qualified in favour of advancing the rights of the group by the designation of a lead solicitor and the use of counsel instructed by the lead solicitors.
This does not mean that the lead solicitor is being forced to act for other claimants who are represented by another firm – the role of the lead solicitor is to be the contact point for the court and the other parties. The judge noted elsewhere in the judgment that the fact that there may be individual claimant-specific issues does not prevent the making of a GLO to deal with common issues, nor does it mean that the court is acting beyond its powers by designating a lead solicitor to advance the GLO issues;
- The relationship between the lead solicitor and other claimant firms must be carefully set out in writing, so the court only rarely needs to become involved in issues between them; and
- The claimants represented by the lead solicitor must instruct the same counsel team in relation to the GLO issues, which (by definition) are all common or related issues of fact and/or law, so there is no need for separate representation. Once those issues have been resolved, the court will then direct how any individual issues (such as the quantum of individual claims) are to be resolved.
The judge was not satisfied with how the proposed GLO issues had been framed, suggesting that they maintained what he considered to be an artificial and unjustified continuing distinction between the issues in the Leigh Day proceedings and those in the Hausfeld proceedings. In a good example of particularly proactive case management, the judge re-drafted the list of issues himself.
It is noteworthy that the judge had well in mind that running a group action is good business for the claimant firms involved and that this should not be allowed to influence good case management. In his judgment, the claimants' submissions were underpinned by the: "commercial advantage to each firm of solicitors of keeping all the interests of all of its own claimants entirely separate from the other firm, and advancing their claims in a way that would permit these actions, highly similar if not identical in terms of facts and causes of actions, [to be kept] separate from one another". He made it clear that this was not a good reason, was contrary to the ethos of group litigation and should not influence sensible case management.
He also noted the parties' express duty to assist the court to further the overriding objective, and emphasised that cooperation is particularly important in group litigation. Not only does the court have the full range of case management powers conferred by the CPR generally, but the Managing Judge in group litigation has even wider powers – a welcome signal that the court can and should intervene if the parties do not work constructively to manage the litigation efficiently.
Those who might be faced with collective proceedings will be encouraged by the court's strong emphasis on cooperation and good case management, including the clear guidance on the interaction between individual claimants' right to be represented by their own choice of legal team and the management of the group, and the court's refusal to leave the defendants exposed to having to deal sequentially (and at considerably greater expense) with claims that could properly be dealt with together.
1  UKSC 20
2  EWHC 749 (TCC)
3 Since 2015 it has been possible to bring "opt out" group actions in relation to competition infringements before the specialist tribunal and last year saw further momentum in high profile (and multi-billion pound) claims relating to interchange fees and truck sales, together with new claims against various financial institutions in respect of forex trading. There are also circumstances where collective litigation can be brought as a representative action, where the claimant acts as a representative of a class with the same interest, which is a form of "opt out" process.
4 Those who funded the claim and provided insurance against adverse costs will typically be compensated from any damages or settlement sum recovered.