Court of Appeal rejects attempt to introduce wider forms of class action in civil proceedings

18/11/10

On 18 November, the Court of Appeal dismissed an appeal that has important implications for the scope of collective forms of action under the rules of civil procedure in England & Wales. 

Two named flower importers, represented by the US class action law firm Hausfeld LLP, brought a claim for damages against British Airways in respect of the air cargo cartel.  They purported to represent all direct and indirect purchasers who were affected by the cartel, ostensibly worldwide.  The "class" was not named or otherwise catalogued.

BA challenged the representative action element.  The Chancellor granted BA's application.  On appeal, Mummery LJ, giving the lead judgment, dismissed the Emerald appeal against the Chancellor's ruling.  The main points of interest are:

1.      It is a requirement of CPR 19(6) that the parties have the "same interest" at all stages of the proceedings.

2.      While the membership of the group does not need to remain constant and closed throughout the proceedings, and may fluctuate, the problems with the Emerald representative action were more fundamental.  Because, broadly speaking, the class was defined as "those who suffered damage by virtue of the cartel," the liability to the claimants sought to be represented would have to be decided before it could be known whether or not a person was a member of the represented class.  This "fail safe" way of defining the class is not permissible.

3.      A second fundamental problem with the representative action as posited was that the inclusion of multiple levels of different purchasers in the distribution chain meant that a defence would be available in answer to the claims of some of them, but not to the claims of others (and in particular the defence of "pass on" of the overcharge).  This precluded the "same interest" under CPR 19(6).

The judgment is here.