In one of the most exciting developments in recent years in the field of civil litigation in Scotland, the Court of Session is now accepting group litigations under rules recently introduced.
Group litigation is a type of court action in which a group of claimants with similar claims against the same defender (or defenders) are able to have their claims considered together.
This type of action allows potential litigants with similar claims to spread the risk and upfront cost of raising court proceedings. The ability to litigate as a group is particularly advantageous for those whose claims have a lower monetary value, which would otherwise not be financially worthwhile to bring to court. Consumer claims are one example of the type of cases which may be suitable for group litigation. Other examples are competition claims and product liability claims.
Furthermore, if a large enough group of claimants can join together small claims, the combined value of the claims may be enough to attract third party litigation funding. In theory this means greater access to justice for those who simply could not afford to bear the costs of litigation on their own.
Group litigation is also a useful case management tool for the courts, where they would otherwise be processing hundreds or even thousands of individual cases separately.
Until recently there was no mechanism for group actions to be raised in the Scottish courts. However, the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018 and the accompanying 2020 Rules (Act of Sederunt (Rules of the Court of Session 1994 Amendment) (Group Proceedings) 2020)) introduced group proceedings to the Court of Session. Group litigation has therefore been possible in Scotland since the new law came into effect almost a year ago on 31 July 2020, and we are just starting to see practitioners using the new procedure for the benefit of clients.
Group proceedings may be brought by two or more litigants, led by a representative party – someone to act as the leader of the group. The representative party can be a claimant in the group proceedings themselves but is not required to be. This could be an individual or an organisation e.g. a consumer group.
The representative party must apply to be appointed by the court (and the defender must be given the opportunity to object to their appointment), and must meet certain criteria in order to be confirmed in the role. The court will consider various factors including the candidate’s suitability for the role; their own interest in the proceedings and their competence to litigate the claims properly (including having sufficient financial resources to meet any award of expenses). Once appointed, the representative party must then lodge with the court a group register containing the details of all claimants in the group.
Group litigation can operate using either an opt-in or an opt-out system. With opt-in, parties must actively choose to join the group. If they choose not to opt in, they can raise proceedings individually but will not be entitled to a share of any damages awarded to the group and will not be bound by any decisions relating to the group. In an opt-out regime (more like the US class action system), similar claims against the same defender are automatically grouped together unless individuals choose not to be part of the group. Whilst the 2018 Act provides for the Court of Session to use either or both opt-in and opt-out, the 2020 Rules only enacted opt-in proceedings. Whether opt-out proceedings will eventually be brought into the Court of Session remains to be seen.
An application must be made to the court for permission to raise group proceedings – there is no automatic right to raise this kind of court action. The application must be made by the representative party, and the defender or defenders must be given the opportunity to object to the application.
For permission to be granted, the court must be satisfied that all of the issues raised in the group claim are the same as, similar or related to each other in fact or law.
The court must also be convinced that the representative party has made all reasonable efforts to identify and notify all potential members of the group about the proceedings, for example, through advertising.
Permission may be refused if the representative party has not demonstrated a prima facie case (meaning that on the face of it there appears to be a case to be heard), and that group proceedings would allow for a more efficient administration of justice than separate individual proceedings. The court must also be convinced that the group proceedings have a real prospect of success.
We wait to see how group proceedings will play out in the Court of Session. We understand that the first group action in Scotland will be regarding the Volkswagen emissions scandal, or “Dieselgate”. The English High Court ruled in 2019 that the car manufacturer had fitted unlawful defeat devices in 1.2 million cars, in order to cheat Government emissions tests. With approximately 90,000 car owners involved in an English group action for compensation, this case is set to be the biggest group action in UK history. Volkswagen has already paid out more than $9.5 billion in compensation to drivers of affected vehicles in the US. A group at least 2,000 claimants is being organised in Scotland. Legal practitioners in Scotland will be watching closely to see how this group action plays out.