A significant difference between the US class action model and how collective litigation is generally conducted in England is that US class actions are predominantly conducted on an "opt-out" basis, whereas English group litigation takes an "opt-in" approach.1
The "opt-in" approach requires putative class members to take positive steps to be included, so lead claimants will often need to build a book of claimants to make the claim viable. But can that be avoided by structuring the claim as a "representative action" within CPR Part 19.6, so that everyone within the representative class is automatically included?
The use of the representative action procedure has received support from the Court of Appeal in the context of data breach claims, but the recent decision in Jalla & Ors v Shell International Trading and Shipping Company Limited 2 highlights the potential difficulties facing claimants when trying to bring damages claims on this basis.
The litigation arises from an oil spill off the coast of Nigeria on 20 December 2011, which is said to have affected individuals and communities along the Nigerian coast on the Atlantic Ocean.
Proceedings were issued in the Technology & Construction Court in London in December 2017, shortly before the sixth anniversary of the spill. During the interlocutory stages of the proceedings, it was suggested that some of the Claimants may have suffered damage materially later than others, with the effect that there could be important differences between them in relation to when time started to run for limitation purposes.3 This was addressed in principle in a judgment handed down in March 2020.4
Following the March 2020 judgment, the Defendants applied to strike out the proceedings. For present purposes, the important part of the application is the Defendants' argument that the proceedings were not properly constituted as a representative action under CPR Part 19.6 because the Lead Claimants and those they purport to represent do not all have the "same interest" within the meaning of that rule.
Before the hearing of the application in May 2020, the Claimants' solicitors issued further proceedings, naming 27,830 individuals and 479 communities as claimants, apparently to guard against the possibility that the first proceedings would be struck out. The Court noted the complexity of how the second proceedings had been structured, with individuals bringing claims on behalf of communities which were also named as claimants.
The representative proceedings
In the context of the strike-out application, the Court had to determine two issues:
- whether the Lead Claimants and those that they purport to represent have the "same interest" in the claim; and
- whether the represented class can be ascertained with sufficient certainty.
The judgment contains a helpful overview of the principles governing how these questions are to be determined.
The Defendants submitted that the "same interest" test should be interpreted according to its terms. The Claimants argued for a more generous interpretation of the test, submitting that there was a sufficient identity of interest between the lead claimants and the class that they purport to represent for the claim to continue as a representative action.
After examining the relevant authorities, Mr Justice Stuart-Smith identified the following principles:
- Representative actions are not the only vehicle for multi-party litigation – some claims are more suited to being handled using the group action procedure (for example, in personal injury claims that arise from a single event there will be differences between the injuries and losses suffered by the individual claimants);
- the same interest requirement is statutory and is not to be "abrogated or substituted by reference to the overriding objective", although it should be interpreted having regard to the overriding objective and should not be used as an "unnecessary technical tripwire";
- the purpose of the representative action procedure is to accommodate multiple parties who have the same interest "in such a way as to go as far as possible towards justice rather than to deny it altogether" and its use may be appropriate where the remedy sought is beneficial to all those in the class;
- the represented class must have the same interest, based on a common grievance, in seeking relief that is beneficial to all represented parties – this is a higher threshold than the threshold test for a group litigation order, which is satisfied where the multiple claimants have claims which have some common question of fact or law;
- the claims or causes of action of all represented parties do not have to be absolutely identical but they must be "in effect the same for all practical purposes";
- the existence of individual claims does not necessarily mean that a representative action will be inappropriate – it is necessary to consider whether the additional claims are subsidiary or whether they affect the overall character of the litigation (if so, the claim might instead better be regarded as a series of individual claims which raise some common issues of law or fact);
- although "the existence of potential defences affecting some represented parties' claims but not those of others tends to militate against representative proceedings being appropriate" the court will "pay little attention to potential individual defences that are merely theoretical"; and
- if the "same interest" test is satisfied the Court's discretion to permit the representative action to continue should be exercised in accordance with the overriding objective.
Applying these principles, the judge accepted that the claims raised common issues of law and fact, but he was not satisfied that the higher "same interest" test was met. This was not because of material differences between the claims – he was prepared to assume that the basis of the claims was the same for practical purposes even if there were some differences in the precise causes of action alleged – but because each claimant needed to prove that they had suffered damage.
The Claimants had tried to overcome this difficulty by abandoning individualised claims for damages5 and focusing instead on claims for what they described as "remediation relief". However, the judge accepted the Defendants' submission that this did not overcome the difficulty inherent in the claims for individualised damages: it was still necessary for each individual or community claimant to prove that they had been adversely affected by the incident. It could not be said that issues of loss, damage and causation are subsidiary to the main issues in the proceedings – they are an integral part of the overall issues raised by the proceedings.
The judge also regarded limitation as a factor that militated against the proceedings being permitted to continue as a representative action. Although an earlier judgment in the proceedings had established a framework in which limitation would be considered, the Defendants could be expected to scrutinise the dates on which damage was alleged to have been suffered, in anticipation of running limitation defences against particular Claimants on an individualised basis.
Ascertainment of the class
Although the judge looked at "same interest" and "identification of the class" as separate questions, he recognised that they are closely connected. He indicated that had he been satisfied that representative proceedings were otherwise available and appropriate, he would not have struck them out on the basis that the class had not been ascertained.
It was common ground that it must be possible to identify the members of the represented class (at all stages in the proceedings, not just at the end), so the main questions to be determined by the Court were how precisely must the class be identified and the relevance of conflicts of interest between persons who are said to be represented as part of the class.
The judge noted that the authorities do not establish precisely what is required, but he identified from the authorities (albeit, he said, with considerable hesitation), the following "touchstones" to identify whether the class was sufficiently ascertained:
- the clarity of the definition of the class;
- the absence of internal conflicts within the class;
- the ability to evidence whether someone was within the class, which could be by self-certification; and
- whether it appears that the class shares the same interest in the outcome.
A significant feature in this case was that the Claimants were listed in schedules to the Particulars of Claim and the Court had been told that they had all given the lead claimants authority to act on their behalf. The judge was therefore satisfied that the class was sufficiently identified; the fact that some class members might not have suffered damage or might fail on limitation grounds does not demonstrate that the class has not been ascertained.
This judgment is a useful reminder of the high threshold for establishing that the claimants and the members of the class that they propose to represent satisfy the "same interest" test, particularly in those cases where the availability and quantum of damages will depend on individual claimants proving the particular losses that they have each suffered as a result of the alleged breach on which the claims are based.
Although there have been developments towards the greater use of opt-out procedures in certain defined areas (notably data breach claims and competition damages claims before the Competition Appeals Tribunal), it remains the case that most collective actions for damages brought in England follow the opt-in model.
It is not difficult to see why claimant class action lawyers are looking closely at representative actions as a means by which to try to structure actions on an opt-out basis. Those faced with potential collective claims, particularly claims where the existence and extent of loss would be expected to vary between claimants, will welcome this judgment as highlighting the difficulties facing potential lead claimants who seek to establish that a CPR Part 19.6 representative action is both available and appropriate.
We understand that the lead claimants have sought permission to appeal, so it remains to be seen whether the Court of Appeal might take a broader approach to when the representative action procedure can be used, or whether it will take the view that this sort of litigation should be brought using the opt-in group litigation procedure.
1 The principal exceptions to this approach are (i) competition actions in the Competition Appeals Tribunal (subject to certification in a collective proceedings order); and (ii) certain data breach claims brought under the Data Protection Act 2018.
5 These individualised claims were being pursued in the other proceedings which had been issued after the strike-out application had been issued, with the effect that when the application was heard there were parallel proceedings involving virtually the same parties and claims, but with different relief sought in each.