Case types: Class Action

Financial class actions, or group litigation brought against the financial services industry, is the broadest category of class action lawsuits. It comprises claims against public companies, private companies, financial institutions, professional advisers, and many other organisations.

There are many ways lawyers can bring a financial class action before UK, EU and international courts. The most obvious in the UK is via the Competition Appeal Tribunal, (CAST) which runs the UK’s dedicated class action pathway. Many of the recent crop of UK class actions have been financial claims.

The most notable financial class action is Merricks v Mastercard, which is currently going through the CAT. The case is a follow-on action arising from the European Commission’s finding that fees charged by Mastercard had restricted competition between banks resulting in inflated fees for every UK consumer aged at least 16 who used a debit card at a machine that accepted Mastercard between 1992 and 2008. Effectively, that is almost all UK adults for a period of 18 years.

What is the future of financial claims?

Financial class action lawsuits are likely to make up a large proportion of future class action lawsuits. Many are already in the pipeline and UK law firms are actively book-building new claims.

In 2015, the US Environmental Protection Agency stated that VW and Audi had violated the Clean Air Act. Volkswagen (VW) admitted to manipulating 11m vehicles worldwide to fool emission tests.

Since then, ‘Dieselgate’ has grown with regulators across the globe bringing fines against VW for their manipulation and for being part of an emissions cartel. There have been numerous actions around the world brought by consumers and investors. In the UK a mass consumer action is in progress.

The Emission claim in the UK alleges that VW used illegal 'defeat devices' in their diesel vehicles to cheat the tests done by regulators to check their emissions levels, before approving vehicles for sale.

Whilst VW admitted to fitting software to 1.2m of its vehicles in the UK, it argues that it rolled out a “fix” to make cars compliant with emissions law. According to VW, the software did not breach the law and consumers were not affected financially.

In December 2021, 91,000 claimants brought a claim in the High Court against VW. The company unsuccessfully sought to have a key element of the class action, ‘deceit’ thrown out.

The case is scheduled for trial in 2023.

What is the future for emissions class actions?

Law firms are actively book-building their claims against VW and are researching other manufacturers in the automotive industry to potentially bring similar claims in the future.

As shareholders are a large and defined group in themselves, it is logical that they should be able to bring litigation as a group. Typical shareholder litigation involves shareholder of a company suing the company or its board for the drop in the price of the stock caused by a corporate scandal.

In the US mass shareholder litigation has been well established for at least ten years. In the UK, there have been two notable shareholder mass actions, one brought against the Royal Bank of Scotland, and one brought against Tesco. Both cases settled before going to trial.

What is the future for shareholder claims?

UK law firms are actively book-building shareholder claims and litigation funders are prepared to finance them. There is an established path for bringing claims like this, so the UK is likely to see a new shareholder class action before too long.

Group actions relating to Bitcoin and other cryptocurrencies are relatively new as digital assets have only started to become a significant feature of the market in the last decade.

Even so, as they share many of the characteristics of securities class actions [link] there have already been a number of high-profile cases in the US and more are likely to follow in other jurisdictions.

There is, however, one major difference between cryptocurrency actions and securities actions: as cryptocurrencies are often traded in cyberspace, it can be difficult to prove which county’s securities laws have been alleged to have been violated. As a result, a number of Bitcoin/cryptocurrency class actions have been dismissed by US judges because investors couldn’t prove their trades were protected by US law.

What is the future for Bitcoin/cryptocurrency class actions?

Because the products are new, bitcoin and cryptocurrency class actions are still in their infancy. However, as cryptocurrency owners a large group of easily-identifiable investors, lawyers, with the help of litigation funders, are likely to continue to bring claims.

One way or another, data breach and cyber security class action lawsuits are likely to be a hot legal topic for years to come.

As data breaches tend to do a small amount of damage to a large number of people, they are perfect candidates for class actions.

In the US, where class action is most developed, a number of data breach class actions are making their way through the federal system contending with legal issues such as standing.

In the UK, the most recent decision was in the case of Lloyd -v- Google in 2021. The case was an opt-out group action seeking to sue Google on behalf of 4.5 million iPhone users. The Supreme Court refused to certify it as an opt-out case. Much was written at the time about how the ruling blocked data breach class actions.

What is the future of data breach claims?

It is premature to say that data breach cases can’t be run as class actions in the UK. The Supreme Court ruled that Google could be sued by Richard Lloyd, a consumer champion, but damages would have to be assessed on an individual basis, not split equally. The court mused that this might make such cases uneconomic.

The gig economy and alternative working models have brought many benefits to employment, such as accessibility and flexibility. And with the increase in technology and the drive by many for a better work/life balance, it continues to grow.

However, the growth of the sector has not been without controversy.

Around the world there have been scores of lawsuits brought against gig economy companies by their ‘contractors,’ often drivers and delivery people, seeking to improve their working conditions and legal rights.

In the UK, the most well-known recent gig economy claims have been against Uber and Deliveroo.

Uber class action

In February 2021 Uber lost its long-running battle to defend its claim that its drivers were self-employed with a defeat in the Supreme Court. The court found that Uber drivers are workers because they had no say in contract terms, the company set fares, constrained ride requests and could terminate drivers.

While the case did not mean that all Uber drivers will automatically be classed as workers, it was an important step in that direction.

As a result of the ruling, Uber offered thousands of its drivers new employment rights such as holiday pay and pensions. And it also set aside $600m to resolve "historic claims" in relation to drivers.

The case also set an important precedent for how millions of gig economy workers are treated in the UK. Other companies with similar business models such as Addison Lee and Just Eat, are now facing the possibility of similar legal challenges.

Deliveroo class action

In contrast, in June 2021 the Court of Appeal found that Deliveroo riders were self-employed. The Independent Workers’ Union of Great Britain (IWGB) brought the claim in 2017. They argue that Deliveroo riders should be classified as ‘workers’, with the right to unionise and bargain collectively for better terms and conditions.

However, the court found that there “was a distinction between the right to organise generally and the right to organise as a trade union, which enjoys specific legal protections.”

What is the future for gig economy class actions?

In cases like these, individual damages are relatively modest compared to the cost of the claim so there isn’t much incentive for individuals to bring cases on their own or for law firms to take single small claims on as the workload is high.

However, when claimants join together in a class action to bring a large group claim, the economics shifts significantly. If done properly, the cost-per-claimant reduces significantly, and the total amount of potential damages becomes much larger.

Security class actions are we well established part of the US mass litigation landscape and are fast gaining transaction in the UK and other jurisdictions.

Securities litigation refers to any litigation brought relating to listed financial instruments, such as stocks, bonds and options.

The classic securities action, one that is well established in the US, is known as a “stock drop” claim. A good example of this is an action in which a company’s shareholders come together to sue the company alleging negligent corporate actions have led to a reduction in the company’s share price.

What is the future for securities class actions?

Securities claims are well-suited for group actions because securities-owners are a large group of easily-identifiable people who can all be affected by the actions of the stocks issuer. While individually, they might have lost a small amount, as a group, potential damages are potentially very large indeed.

They are such a well-established feature of the US legal landscape that it is likely they will always remain prevalent. With the help of litigation funders they are also likely to become more established future of the UK and EU market. It is worth pointing out that securities actions tend to be a feature of bear markets as, no matter how well or badly a company is run, investors can't claim damages if the stock doesn't drop.

Under the Equality Act of 2010, men and women have the right to be paid the same when doing the same or equivalent work. This includes salary, pay rises and benefits such as pensions and holiday pay.

Even so, women who are often underpaid in comparison to their male colleagues.

In the UK there has been a sharp increase in equal pay class actions, where a number of employees with a similar or shared complaint come together to seek redress from an employer.

Retail equal pay claims

The majority of UK equal pay class actions are being brought against major retailers, including Asda, Tesco, Next, Sainsbury’s, Co-op and Morrison’s.

The claims are being fought by store workers – predominantly women – who argue they are being paid less than (predominantly male) warehouse workers.

What is the future for equal pay class actions?

The law firm Leigh Day has already brought two claims successfully against ASDA in the Employment Tribunal. We are likely to see more in the future.

In these type of cases, where the value of damages is modest it is very difficult to bring a claim as an individual. Therefore, it makes sense for these to be either class actions or volume claims.