Popplewell: Prohibition would need to be express
The Competition Appeal Tribunal (CAT) was wrong to identify a rule that prevents defendants communicating directly with legally represented members of an opt-out class action, the Court of Appeal has ruled.
The CAT had said it was “not proper conduct” on the part of Steptoe & Johnson and Baker Botts, US firms operating in London acting for the defendants in the case, to have sent letters to claimants.
But Lord Justice Popplewell, giving the appeal court’s ruling, found no express prohibition in the CAT’s rules, noting that “if it had been intended, it would have been easy enough to say so”.
That was reinforced by the absence of such a prohibition in other forms of collective civil litigation which existed in 2015, when the collective proceedings regime was introduced, which he said did not differ in material respects when it came to this issue.
Popplewell LJ said there was no general rule in civil litigation which prevented a defendant or its legal representative from communicating directly with a claimant about the case, nor was there any rule of professional conduct for solicitors which imposed “a blanket ban” on communications from a defendant’s solicitor to a claimant directly where the claimant was legally represented.
“This also illustrates that there is nothing in the context and purpose of the collective proceedings regime which makes it necessary to imply such a prohibition, and that the implication would have to be found in specific express terms.” These did not exist, he added.
“If it were intended to introduce a rule for collective proceedings which departed from the position in other materially indistinguishable forms of civil litigation, there is all the more reason to expect such intention to have been made manifest in express terms.”
The claim, headed by Mark McLaren, a member of the Legal Services Consumer Panel, alleges that a cartel operated by five shipping companies led to increased delivery costs for buyers of over 17m cars. The CAT granted an opt-out collective proceedings order and named Mr McLaren as the class representative.
There are 11 defendant companies across five groups in all, and the CAT recorded how Steptoe and Baker Botts – acting for one and six of the defendants respectively – sent letters on behalf of 10 of the defendants to various large business purchasers of vehicles.
The letters warned that, if the recipients did not opt out, they would “likely” face an application for disclosure, which “could involve a commitment of time, effort and cost”.
Following an urgent application from Mr McLaren to prevent any further correspondence, the CAT held there was a restriction “inherent” in the CAT rules that precluded defendants from communicating with class members, including when the application for a collective proceedings order was being sought.
The CAT said that, if direct communication with class members was necessary or desirable to obtain evidence, “that is a process that should be conducted under the overall supervision of the tribunal and not as a litigation ‘free for all’”.
The Court of Appeal noted that the ruling has been applied in a number of other cases before the CAT.
Though Mr McLaren and the CAT were critical of the contents of the letters, it was “not necessary” for the Court of Appeal to express any view about their propriety in order to resolve the appeal.
Popplewell LJ said such a prohibition was “likely to inhibit a defendant’s ability to conduct its defence, and thereby operates unfairly, an unfairness which is not remedied by the ability to seek permission from the CAT which involves having to forego legal privilege”.
The court also pointed to the experience in Canada, whose collective action regime was the inspiration for the UK’s. There was no such general prohibition there, which it said “suggests that a general prohibition is not necessary to achieve the purpose of the regime”.
However, it chose not to express a view on whether article 10 freedom of expression rights were engaged.
Earlier this year, the CAT did give the defendants permission to communicate with class members for the purpose of evidence-gathering.
Separately, the CAT has approved Mr McLaren’s settlement with the smallest of the defendants, CSAV, for £1.5m. CSAV had a market share of 1.7%. It is the first settlement in an opt-out action since the regime started eight years ago.
The settlement sum will be held in escrow and class members will receive damages once the litigation is resolved against the other defendants, with the trial likely to be held in early 2025.
Mr McLaren said: “We are delighted that we have been successful in securing a settlement that will provide redress to those British consumers and businesses who bought new cars and vans and have suffered a loss as a result of the cartel.
“This is a significant milestone in this claim, which is important for the class members and also for upholding the rule of law and demonstrating that this regime works.”
His solicitor, Belinda Hollway, partner at Scott+Scott, said: “This is a great outcome for the class in this case, and it is also a great outcome for the collective actions regime. It shows that collective settlements can be achieved and that the regime is working to deliver compensation to the victims of breaches of competition law.”
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