First Opt-Out Class Action Underway In The United Kingdom
On June 21, 2016, the United Kingdom Competition Appeal Tribunal (the “Tribunal”) published notice of an application to commence collective proceedings under Section 47B of the UK’s competition act. If this action continues, it will be the first opt-out collective (class action) competition claims to be heard by the Competition Appeal Tribunal.
The current action is brought by Dorothy Gibson, who has applied for a collective proceedings order permitting her and the National Pensioners Convention (an umbrella organization for around 1000 pension groups across the UK comprising approximately 1.2 million individual members) to act as the class representative in bringing opt-out collective proceedings against Pride Mobility Products Limited (“Pride”). This action is a follow-on action for damages following a 2014 Office of Fair Trading decision that found that Pride and other retailers entered into agreements aimed at prohibiting online advertising for certain models of Pride mobility scooters below Pride’s recommended retail prices. The proposed class is any person who purchased a new Pride mobility scooter in the UK from February 2010-February 2012.
The Statutory Scheme
On October 1, 2015, the Consumer Rights Act allowed for the first time the possibility of opt-out class actions for private enforcement of competition claims. Like in the US, collective actions must be brought on behalf of an identifiable class of persons, raise common issues, and otherwise be suitable to be brought in collective proceedings.
In allowing for opt-out class actions, the new law has put into effect several provisions designed to provide “intensive case management by the Tribunal, so as to ensure that the interests of the class are adequately protected.” (See Competition Appeal Tribunal Guide to Proceedings 2015.) To initiate a collective proceeding – and unlike an ordinary civil proceeding – requires authorization of the class representative and certification of the claims as eligible for inclusion in collective proceedings. Then, the proposed class representative must apply to the Tribunal for a collective proceedings order. Notably, the class representative “need not be a member of the class and is not required to have a personal claim against the proposed defendant.” This is a marked difference between class actions in the UK and the United States. Still, similar to provisions in the United States, UK law requires that the class representative would fairly and adequately act in the interests of the class members and that it is competent to manage what is likely to be a large and complex litigation. Other factors involved in evaluating class representatives include whether there is a conflict of interest, the quality of the proposed litigation plan, and the proposed class representative’s financial resources (i.e., “would the proposed class representative be able to pay the defendant’s recoverable costs if ordered to do so?”). UK law anticipates that there are “a range of pre-existing bodies which could potentially seek to carry out the role of class representative, such as consumers’ organizations, trade associates, law firms, third party funders or special purpose vehicles.”
Many of these rules apply to both opt-in and opt-out collective proceedings. In evaluating whether proceedings should be opt-in or opt-out, the Tribunal has stated that it will generally consider the strength of the claims (the Tribunal “will usually expect the strength of the claims to be more immediately perceptible in an opt-out than an opt-in case”) and practicability. There remains “a general preference for proceedings to be opt-in where practicable.”
A settlement of opt-out collective proceedings “will only bind the parties and the class if it has been approved by the Tribunal.” The essential question in evaluating a settlement is whether it is “just and reasonable.” More specifically, the Tribunal has prepared this illustration regarding who is bound by a settlement of a collective action:
The Gibson application to commence collective proceedings argues that the mobility scooter claims are suitable to be brought in collective proceedings because, inter alia, the sums at stake are too low for it to be cost effective to bring proceedings individually; that the consumers in question are likely to be particularly vulnerable; that the class definition is clear and simple; and that the claim is suitable for an aggregate award of damages. It remains to be seen whether the UK will allow this action to proceed as an opt-out class action. If it does, this case is one to watch as it will likely pave the way for similar actions in the future.