Legal briefing | Corporate & Commercial Disputes |

Jalla v Shell: A blow to US style "class actions" before the English courts, or welcome clarity on "same interest" test under CPR 19.6(1)?

Overview

The English courts have, until recently, shown reluctance to encourage the kind of "class-action" regime so beloved in the US. This mechanism can provide easier and cheaper "rough justice" to potentially cash-strapped claimants against deep-pocketed corporations, and can get cases through the court system faster.  However, last year's Court of Appeal decision in Lloyd v Google ([2019] EWCA Civ 1599), alongside the relatively new collective action regime for competition claims, suggested a more promising future for "class-action" style proceedings.

At first glance, in the recent High Court decision in Jalla v Shell International Trading and Shipping Co Ltd ([2020] EWHC 2211 (TCC)), the English courts appeared to take two steps back from the more expansive approach shown in Lloyd v Google. Mr. Justice Stuart-Smith's judgment does however provide helpful guidance on representative actions in what is still a very uncertain landscape for multi-party proceedings. It also emphasises that there remain alternative methods of pursuing multi-party litigation, which is perhaps an indication that the UK courts will continue to reserve CPR 19.6 representative actions for low-value data protection claims similar to that in Lloyd v Google.

What is a representative action?

Currently, the closest mechanism to a US style "class action" in the English courts is a representative action (governed by CPR 19.6), which provides that a claim can be commenced or continued by or against one or more other persons who have the same interest as those being represented ("Representative Action"). A Representative Action is "opt-out" in nature (an important trait it shares with its US "class action" cousin); it does not require individual claimants to be joined as parties to the action or even identified individually, even though any judgment or order will be binding on all represented persons. Represented claimants do not need to actively participate, and the representative claimant has full control over how the claim is fought. Others benefits include significant cost and time savings, given the reduced number of parties to the claim, as well as the possibility of much larger awards and quicker settlements. The representative claimant also avoids incurring time and cost at the outset "book building" a class of claimants and adding them to the proceedings as parties.

What alternative mechanisms are available?

Aside from a Representative Action, the following types of procedures can be explored by groups of claimants in the English courts:

  • Multiple joint claimants using a single claim form – governed by CPR 7.3 and suitable where the multiple claims can be "conveniently disposed of in the same proceedings".

  • Representative claimant (claim about a trust or interpretation) – similar to a Representative Action but instead governed by CPR 19.7 and suitable where the claim is about the estate of a deceased person, property subject to a trust or the meaning of a document, including a statute.

  • Investor actions – governed by CPR 19.9 and CPR PD 19C, and suitable where a shareholder seeks relief on behalf of a company in respect of a cause of action vested in the company.

  • Multiple claims managed by the court under a group litigation order ("GLO") – governed by CPR 19.10 to CPR 19.15 and CPR PD 19, and suitable where claims have "common or related issues of fact and law".

  • Collective Proceedings Orders ("CPOs") in competition litigation – governed by the relatively new section 47B of the Competition Act 1998, which came into effect in 2015, these claims are a form of collective proceeding which is only available in the sphere of competition litigation. A CPO may only be granted if the individual claims of the members of the class are eligible and raise "the same, similar or related issues of fact or law". To date, this test has been strictly interpreted in a similar vein to the "same interest" condition under CPR 19.6. However, competition practitioners are eagerly awaiting an imminent judgment from the Supreme Court in Merricks v Mastercard Incorporated & ors ([2019] EWCA Civ 674), which is effectively a test case on when a CPO can be made.

Initially hailed as the answer to the US style "class action", GLOs were introduced almost 20 years ago to improve perceived weaknesses in court rules governing proceedings with multiple claimants.  They have, however, been utilised sparingly. GLOs differ from both US style "class actions" and Representative Actions in some key aspects, notably that (i) under a GLO each claimant's claim remains an individual claim, and (ii) the mechanism is "opt-in", which in practice means a great deal of time and money must be available upfront to bookbuild a GLO and structure the issues to be adjudicated in a way that the courts will accept. This goes some way to explaining why a Representative Action can be much more appealing to potential claimants.

Lloyd v Google – opening the floodgates on Representative Actions?

In October 2019 the Court of Appeal allowed an appeal in Lloyd v Google in what was seen as a milestone case in this area, holding that Mr. Lloyd's use of the Representative Action procedure to bring an "opt-out" style class action was "unusual" but permissible.

Mr. Lloyd is bringing the action on behalf of more than 4 million Apple iPhone users for damages reflecting the non-consensual harvesting and use of their data, in response to Google's use between 2011 and 2012 of the "Safari Workaround" (allowing Google to bypass cookie settings on the Safari browser and place tracing cookies without the individual's knowledge or consent). The claim seeks a uniform amount of damages – Mr. Lloyd has suggested £750 per claimant – without seeking to prove that each individual has in fact suffered damage in that amount .

The High Court held that members of Mr. Lloyd's representative class did not share the "same interest" required by CPR 19.6(1) because the nature and extent of the breach and the impact on individual claimants would be varied and in some cases non-existent.  It referred to the claim as "officious litigation, embarked upon on behalf of individuals who have not authorised it, and have shown no interest in seeking any remedy for, or even complaining about, the alleged breaches".

In overturning the decision, the Court of Appeal held as follows:

  • Damages are, in principle at least, capable of being awarded for loss of control of data under data protection law, even in the absence of pecuniary loss or distress.

  • The Claimants all have the "same interest" in the claim, which is a claim for loss of control of their browsing information (as opposed to a claim for damage or distress, which may vary greatly from claimant to claimant), taken at the level of the lowest common denominator data.

  • The Court of Appeal should exercise its discretion to allow the case to proceed as a Representative Action.

The Court of Appeal's judgment sparked much interest in the market, appearing at first glance to reflect a new, more relaxed approach to "class action" style claims in the English courts. However, the judgment itself accepts that the decision may be peculiar to the facts of the case, or at the very least restricted to similar data protection claims. It has also been appealed to the Supreme Court, and a decision is expected early next year.

Jalla v Shell – a step backwards?

The decision in Jalla v Shell might be said to represent a step back for UK "class-action" style claims in its stricter interpretation of CPR 19.6. In reality, though, it simply highlights the difficulties in satisfying the "same interest" condition in non-data protection claims, as well as providing some helpful clarity and guidance for those who attempt to do so in future.

Background

In August of this year, the High Court struck out the representative element of a claim brought on behalf of various Nigerian individuals and communities, seeking redress for damage allegedly caused to land and water supplied by a 2011 oil spill. The defendants applied to strike out the proceedings on various grounds, including that they could not properly constitute a representative action because the lead claimants and those they purported to represent did not all have the "same interest" as required by CPR 19.6.

Pending the hearing of the defendants' strike-out application, and in an attempt to circumvent it, the claimants issued fresh proceedings which largely mirrored the initial claims, with the exception that their additional proceedings (the "Protective Proceedings") were brought in the name of each individual and community. The claimants then applied to consolidate the two actions and submitted that the Protective Proceedings should be reserved for the "individualised" claims for damages, and that the original action need only address the claimants' remediation relief.

Decision

The High Court held that the proceedings could not continue as a Representative Action because the claimants did not satisfy the "same interest" condition; the representative element of the proceedings were therefore struck out, leaving the personal claims of the two lead claimants as well as the Protective Proceedings. Notably, Mr. Justice Stuart-Smith acknowledged that there could be no doubt that the claims raised common issues of law and fact, but that those alone would not give rise to a right to relief. Each individual claimant or community would have to prove that the oil spill caused them damage, a requirement which could not be reconciled with the "same interest" condition. Mr. Justice Stuart-Smith did, however, hold that were the "same interest" condition satisfied, the representative proceedings would not have been struck out on the basis of failure to ascertain the relevant class.

Mr. Justice Stuart-Smith helpfully distilled the relevant principles on the "same interest" condition in CPR r. 19(6)(1) as follows:

  • The “same interest” condition is statutory and should not be abrogated or substituted by reference to the overriding objective. It is, however, to be interpreted having regard to the overriding objective and should not be used as an "unnecessary technical tripwire".

  • The “same interest” which the represented parties must have is a common interest, which is based upon a common grievance, in obtaining relief that is beneficial to all represented parties. It is not sufficient that multiple claimants wish to bring claims which have some common question of fact or law.

  • The existence of individual claims over and above the claim for relief in which the represented parties have the same interest does not necessarily render representative proceedings inapplicable or inappropriate. The question is whether the additional claims can be regarded as “a subsidiary matter” or whether they affect the overall character of the litigation.

  • Similarly, while the court will pay little attention to potential individual defences that are merely theoretical, the existence of potential defences affecting some represented parties’ claims but not those of others tends to militate against representative proceedings being appropriate.

  • There need not be a congruity of causes of action between the lead claimants and those they represent, so long as there is no conflict between them, and the causes of action are "in effect" the same for all practical purposes. This was the case in Millharbour Management Ltd v Weston Homes Ltd ([2011] EWHC 661 (TCC)), a rare example of a representative action granted in a non-data protection claim, involving allegations of defects in a block of flats.

  • If the criterion of “the same interest” is satisfied, the court’s discretion to permit representative proceedings to continue should be exercised in accordance with the overriding objective.

What can we take from Jalla v Shell?

The decision in Jalla v Shell reflects a continued strict interpretation of the "same interest" condition required for a Representative Action, but the following useful guidance can be gleaned for future purposes:

  • Individual elements over and above the claim in which the parties have the "same interest" will not preclude a Representative Action, so long as the individual elements are "subsidiary" to the main issue. In this case, individual issues of causation and damage were held to be integral to the issues raised.
  • Claimants are more likely to satisfy the "same interest" condition if the claimants are seeking a uniform amount of damages, without having to prove damage for each individual.

  • The defendants' ability or requirement to advance individualised defences will militate against the appropriateness of a Representative Action, although it will not automatically preclude one.

  • Claimants should not forget that there are alternative, perhaps more easily sought, mechanisms by which they can commence multi-party proceedings.

Final thoughts

Representative Actions are binding on all represented persons, even those who have not given leave to have lead claimants litigate on their behalf (unless they actively "opt out") and who do not actively or actually participate in the proceedings. It is perhaps not surprising, therefore, that the English courts have appeared reluctant to relax the rules.

The Supreme Court's decision in Lloyd v Google will no doubt be seminal for future representative actions in the data protection sphere, but it remains difficult to see how other types of claims could ever be suitable on the current interpretation of the rules, without statutory intervention. Whether or not public pressure following Brexit, or the effects of Covid-19 on the court backlog, will have an impact on the high hurdle of the "same interest" condition remains to be seen.    

Key contacts

Read Hannah Hartley's Profile
Back to top