On March 31, 2017, the U.K.’s Competition Appeal Tribunal issued its judgment on the first-ever application for an opt-out Collective Proceedings Order (the equivalent of a motion for class certification) under the regime set forth in the Consumer Rights Act 2015 (“CRA”). Although the Tribunal ultimately allowed the claimant to amend and refile her application, its analysis of the CRA’s certification requirements provides crucial guidance on how it will view pending and future class actions.
The case, Dorothy Gibson v. Pride Mobility Products Ltd, is a follow-on action from a finding by the Office of Fair Trading that Pride – one of the largest suppliers of mobility scooters in the U.K. – had violated the Competition Act 1998 by entering into agreements with its dealers so that the latter would not advertise certain models of mobility scooters below prices set by Pride. The proposed class representative brought claims on behalf of approximately 30,000 consumers who alleged they overpaid for their mobility scooters as a result of Pride’s conduct.
According to the CRA – which the Tribunal commented to be “radical” and particularly “striking when the collective proceedings are brought on an opt-out basis” – an applicant must satisfy the following conditions in order for a Collective Proceedings Order to issue:
- The claims must be considered by the Tribunal to raise the same, similar or related issues of fact or law (“common issues”) and to be suitable to be brought in collective proceedings; and
- The proposed class representative must be authorized by the Tribunal on the basis that it is just and reasonable for that person so to act in the proceedings.
Regarding the “common issues” requirement, the Tribunal rejected Pride’s argument that it should follow the “US approach to certification of common issues” by “weigh[ing] the competing expert evidence adduced by both sides and apply[ing] a robust or rigorous standard.” The Tribunal explained that “certification of class actions in the United States involve extensive discovery, deposition and cross-examination of witnesses and long hearings.” In contrast, the CRA collective proceedings regime has “no or only very limited disclosure and shorter hearings held within months of the claim form being served.” Moreover, “a critical question in many US certification proceedings is whether the common issues ‘predominate’ over individual issues”; as the Tribunal explained, there is no corresponding requirement in the CRA.
The Tribunal instead decided to follow the Supreme Court of Canada’s approach to commonality as set forth in the latter’s decision in Pro-Sys Consultants Ltd v. Microsoft Corp.  SCC 57. There, the Supreme Court of Canada held that an applicant’s expert evidence “must be sufficiently credible or plausible to establish some basis in fact for the commonality requirement,” which means it “must offer a realistic prospect of establishing loss on a class-wide basis.” The Tribunal found this to be the more appropriate approach, given that the application hearing is “not a mini-trial, and the essential question is whether the Applicant has established a sufficiently sound and proper basis for the case to proceed[.]” According to the Tribunal, certification is not the proper stage for it to “choose between the approaches of the [parties’] expert economists.”
The Tribunal ultimately did not decide whether the proposed class representative had met the “common issues” requirement for certification, because it found the putative class definition to be overbroad with respect to the OFT’s findings regarding Pride’s violations. However, rather than dismiss the application, the Tribunal ruled that the proceedings should be adjourned to permit the proposed class representative to amend and refile her application in accordance with the Tribunal’s guidance.
Takeaway: The Tribunal’s judgment – although not a full-blown class certification opinion – nevertheless sets a precedent for the U.K.’s class certification approach. Unlike U.S. courts, the Tribunal will not engage in a “mini-trial” at the class certification stage to determine whether the “common issues” requirement is met; rather, the Tribunal will adopt the approach set forth by Canadian courts and only examine whether the expert evidence in support of certification is sufficiently credible or plausible.
The Tribunal’s establishment of a low evidentiary threshold for certification will predictably make class action defense more difficult in the U.K., and may conversely start the U.K. on a path to becoming an attractive forum for class action plaintiffs. We expect that the Tribunal’s class action jurisprudence will be further refined when it rules on the application presented in Walter Hugh Merricks CBE v. MasterCard Inc. & ORS, which is a case that our colleagues at the UK Finance Disputes and Regulatory Investigations Blog reported on last year.