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Managing complexity in group actions

Posted on 10 April 2024

Group actions, particularly those brought by very large numbers of claimants, can involve complex questions as to the appropriate way to manage proceedings. In three recent decisions, the English High Court has demonstrated its flexibility in managing this complexity, addressing questions of disclosure, collateral use of documents, authority to act and costs, providing helpful reminders of potential pitfalls that parties should bear in mind, particularly in the early stages of a claim.

Disclosure issues: Alame & Ors v Shell PLC & Anr

The first of these cases concerned the approach to disclosure in group actions. Alame & Ors v Shell PLC & Anr (Re Billie and Ogale Group Litigation) [2024] EWHC 510 (KB) relates to claims arising from oil pollution in the Niger Delta brought by thousands of inhabitants of the affected areas. Unusually, the claims are currently due to be heard on a global or "all-or-nothing" basis, following findings that a lack of pleaded detail on causation currently precludes any sensible identification of lead individuals. A three-week preliminary issues trial has been listed for early 2025 to determine principles of Nigerian law and statutory construction, with a factual trial to follow addressing the contamination, its consequences and its causes.

In that context the claimants sought specific disclosure of various categories of documents, together with standard disclosure "look[ing] beyond" both the preliminary issues trial and the factual trial. They contended that this would prevent undue delay to the progression of the litigation, and referred to the "informational asymmetry" between the defendants, who had all the information about their operations in Nigeria, and the claimants, who had none or very little, preventing them particularising their case on causation.

The new rules on disclosure in the Business and Property Courts explicitly apply to multi-party cases (albeit with some allowance for a more bespoke timetable). Those rules did not apply in this case, which is proceeding in the King's Bench Division and is therefore subject to the pre-existing disclosure rules in CPR 31. Mrs Justice May nevertheless emphasised that no special or different disclosure principles apply to group litigation, although she acknowledged that phasing is likely to be appropriate in larger cases. As this was an "all-or-nothing" case, determining what disclosure was relevant and proportionate had to be approached on that basis. In her view an information imbalance between the parties was not a sufficient to reason to order disclosure where relevance had not first been established. Where the claimants had brought a case based on multiple polluting events of many differing kinds occurring in a wide area over an extended period of time, it was for them to provide the necessary clarity so as to permit disclosure "properly tethered to the issues". The defendants could not be expected to "throw open the doors to their archives or permit a general trawl thought their records".

Accordingly, while it was accepted that many of the documents sought by way of specific disclosure were relevant and were ordered to be disclosed, standard disclosure was limited to documents relevant to establishing contamination, consequences and causes at the factual trial. However, Mrs Justice May emphasised that "the court remains adaptable, open to a reconsideration both of disclosure and of the future path of this litigation in the light of subsequent events".

Costs and funding: Jalla & Ors v Royal Dutch Shell PLC & Ors

Meanwhile, Jalla & Ors v Royal Dutch Shell PLC & Ors [2024] EWHC 578 (TCC) demonstrates the risks of proceeding on behalf of parties without appropriate authority to do so. This was another claim concerning liability for environmental harm in Nigeria. Before the claim was dismissed on limitation grounds last year (see our article here for further detail), the High Court had concluded that, under Nigerian law, the claimants' solicitors (RBL) lacked the requisite authority to represent many of the 27,000 claimants on whose behalf they purported to act. The defendants therefore sought their costs of and occasioned by the issue.

Mrs Justice O'Farrell DBE ordered the claimants to pay 90% of the defendants' costs, and then turned to consider an application for wasted costs against RBL, concluding that it was appropriate to join RBL as a defendant to answer the application given that:

  1. The court had already found that RBL lacked authority to act for the vast majority of claimants, and as such was vulnerable to a wasted costs order because solicitors who issue proceedings thereby warrant that they have authority to do so, and without such authority are in breach of warranty (which is an abuse of process).
  2. A late suggestion by RBL that it did in fact have the necessary letters of authority from individual claimants would mean that it acted improperly, unreasonably or negligently in failing to produce them or notify the defendants.
  3. The costs of the authority issue were substantial (over £1 million), such that a separate hearing to resolve them was justified.

The defendants also sought disclosure of various information regarding the funding of the claims. They contended that this would assist them in determining whether to seek non-party costs orders from RBL in circumstances where they had incurred more than £14 million and the claimants had already been ordered to make interim payments of £6 million but had failed to do so.

The judge noted that non-party costs orders are to be regarded as outside the run of ordinary cases, and that the mere fact that a legal representative provides funding and has a substantial financial interest in the success of the litigation will not necessarily expose that legal representative to a costs order.  The necessary consideration was whether the legal representative in the circumstances of the case "crossed the line" so as to become a real party to the litigation.

In this case, Mrs Justice O'Farrell concluded that the disclosure application could not be described as fanciful or speculative, given RBL's control of and potential benefit from the litigation, the absence of authority, and the lack of ATE insurance and third party investors. The documents sought were likely to "shine a light" on the funding arrangements and therefore assist the court in determining whether the jurisdiction to make a non-party costs order was engaged. In the context of the very high level of costs incurred, an order for relatively modest disclosure was proportionate and just.

Funding and collateral use: Various Claimants v Mercedes-Benz Group Ag & Ors

The question of disclosure of funding arrangements also arose in Various Claimants v Mercedes-Benz Group Ag & Ors [2024] EWHC 695 (KB). This case, otherwise known as the NOx Emissions Group Litigation, involves a huge group of claims brought against multiple car manufacturers for allegedly using software to cheat on vehicle emissions tests.

The majority of the claimants were represented by the firm Pogust Goodhead (PG) pursuant to conditional fee agreements but their claims were not directly funded by litigation funders. Instead, PG had its own funding arrangements with third parties which provided a corporate debt facility of over $520 million to fund the business as a whole, including PG's entire portfolio of claims. The defendants contended that this arrangement could nevertheless constitute an agreement to contribute towards the claimants' costs in return for a share of recoveries, such that an order for security for costs could be made against the third party funders under CPR 25.14(2)(b). They therefore argued that PG should disclose the relevant funding agreements to determine the issue.

The court emphasised that the question of whether a non-party has contributed or agreed to contribute to a claimant's costs in return for a share of future recoveries is a question of substance not form.  It went on to conclude that it was unrealistic to say that PG's funding arrangements could never satisfy the test simply because the funding was being provided directly to PG by the funders, rather than indirectly via the claimants by way of fees. Indeed, on the evidence before the court, the argument that the funders may fall within the test was more than fanciful or speculative. However, the court accepted that in this case the application was redundant in circumstances where the claimants intended to ensure that sufficient ATE insurance would be in place so that the defendants would not be left exposed to a risk of irrecoverable costs.

The defendant was also unsuccessful in an attempt to restrict the collateral use of certain disclosed documents. In English litigation, there is a general prohibition on use of disclosed documents for anything other than the litigation in which they are disclosed but, under the open justice principle, once a document is referred to in open court, the prohibition is lifted. In this case, the defendant accepted that the relevant documents may not be confidential, but argued that they nevertheless contained sensitive commercial information which should be protected, and sought an order restricting use until the determination of all the claims in the group action.

However, the court rejected the defendant's broadbrush approach, emphasising that it was necessary to justify restricting publication of particular documents by reference to specific reasons. While a genuine concern about collateral use of specific material whose commercial sensitivity was properly made clear could be justified, particularly if the role of that material at trial was dubious, any such application had to be properly particularised and evidenced.

Key takeaways

Although these three cases deal with distinct issues arising in the context of diverse claims at varied stages of the litigation process, together they are a reminder of the careful and flexible approach to case management that the English courts will adopt for such large-scale claims.

As the use of group litigation continues to increase in England and Wales, it is promising that the courts are open to continually revisiting how cases should be run depending on the circumstances of each case, and how those circumstances evolve.

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