Deminor Wiki - Group Litigation

Key Characteristics of Group Litigation in the UK

Multiple Claimants

Group litigation involves a large number of claimants who have suffered similar harm or injuries due to the actions or products of the claimants.

Common Issues

The cases share common factual or legal issues, making it practical to handle them together rather than separately.

Efficient Process

Consolidating similar claims into a single legal action streamlines the process, reduces costs, and ensures consistent rulings.

Collective Representation

In some forms of group litigation, such as class actions, a few representative claimants act on behalf of the entire group.

Opt-In Mechanism

Group litigation in the UK follows an opt-in model. This means that claimants must actively register their case under the GLO in order to participate in the proceedings. Unlike opt-out systems (more common in jurisdictions like the United States), claimants who do not register are not automatically included and must pursue claims separately if they wish to do so.

Comparative Models of Group Litigation Across Jurisdictions

Class Actions (United States)

Class actions involve one or more plaintiffs representing a larger group with similar claims. This mechanism is common in the United States and allows for the efficient resolution of widespread harm. Judgments are binding on all class members unless they opt out.

Mass Torts (United States)

Mass torts involve numerous individual lawsuits consolidated for pretrial proceedings due to common issues. Unlike class actions, each plaintiff retains a separate claim and must prove individual damages.

Representative Actions (European Union)

In the European Union, representative actions under Directive (EU) 2020/1828 allow a qualified entity, such as a consumer organisation, to sue a defendant representing a group of individuals in a single legal action. This form of collective redress is recognised in the EU, and Member States may implement either opt-in or opt-out mechanisms, depending on their national procedural law.

Group Litigation Orders (GLOs) (England and Wales)

In the UK, GLOs allow multiple claims with common issues to be managed together. Each claimant must register their case under the GLO, and the court manages the proceedings collectively. Opt-in mechanism allows claimants with common or related issues of fact or law to bring their cases collectively, while each claim remains individually pleaded.

Legal Framework and Procedures

United States

Class Actions

• Governed by Rule 23 of the Federal Rules of Civil Procedure.
• Requires class certification by the court, ensuring commonality, adequacy, numerosity, and typicality.
• Operates on an opt-out basis, and judgments bind all class members who do not opt out.

Mass Torts

• Often consolidated through Multidistrict Litigation (MDL) for pretrial proceedings under 28 U.S.C. § 1407.Plaintiffs retain individual claims, unlike in class actions, and must prove their own damages.

European Union

Representative Actions

• Governed by the Directive on Representative Actions (Directive 2020/1828).
• Allows qualified entities, such as consumer organisations, to bring collective actions on behalf of consumers.
• Member States may adopt opt-in or opt-out mechanisms, depending on national legislation.

National Mechanisms

• Each member state has its own procedures for collective redress, such as Germany’s model declaratory actions as well as the Abhilfeklage and the Netherlands’ collective settlement procedure.
• Individual Member states had already developed their own national versions of collective redress mechanisms, such as the “Austrian-style class action”, Sammelklage österreichischer Prägung, which is an uncodified, by practically recognised collective redress regime in Austria.

United Kingdom

Group Litigation Orders (GLOs)

• Governed by Part 19 of the Civil Procedure Rules (CPR).
• Requires claimants to opt in by registering under the GLO.
• Allows multiple claims with common issues to be managed collectively, requiring claimants to register under the GLO.

Representative Actions

• A representative claimant brings an action on behalf of others with the same interest. This mechanism is narrow, rarely used, and typically arises in cases like shareholder or trust disputes, rather than functioning as a U.S.-style class action.

Benefits of Group Litigation

Access to Justice

Group litigation allows individuals with smaller claims to seek justice collectively, making it feasible to litigate against large corporations. The rise of third party funding has dramatically enhanced this benefit by removing financial barriers and enabling claimants to pursue complex litigation without bearing upfront costs or ongoing financial risk.

Efficiency

Consolidating similar claims streamlines the legal process, reduces costs, and ensures consistent rulings on common issues. This efficiency is further enhanced when combined with case management techniques and ADR procedures for resolving common issues or facilitating global settlements.

Leverage

The collective strength of numerous plaintiffs can provide greater leverage in negotiations and settlements with defendants. This leverage is amplified when backed by professional litigation funders who can bring (depending on the specific regulatory framework in the respective jurisdiction) not only financial resources but also expertise in case strategy and settlement negotiations.

Comprehensive Discovery

Consolidated proceedings allow for more efficient and comprehensive discovery processes, where applicable, enabling plaintiffs to build stronger cases. Litigation funding ensures that groups have the resources necessary to conduct thorough investigations and retain top-tier experts.

Risk Management

Through litigation funding arrangements, claimants can pursue valid claims without personal financial exposure, while funders assume the risk of adverse costs orders in jurisdictions where these apply.

Challenges of Group Litigation

Complexity

Managing numerous individual claims with common and unique issues can be complex and resource-intensive.

Jurisdictional Issues

Group litigation can involve plaintiffs from multiple jurisdictions, leading to conflicts of law and varying procedural requirements.

Individual Differences

While cases share common issues, each plaintiff has unique circumstances and damages, complicating the resolution and settlement processes.

Settlement Distribution and Complexity

Ensuring fair and equitable distribution of settlement funds among numerous plaintiffs can be challenging and contentious. The involvement of multiple stakeholders – claimants, lawyers, and funders – can complicate settlement negotiations. There is an increasing need for experts in this field to navigate these complexities and achieve fair outcomes for all parties.

Funding Considerations

While litigation funding addresses financial barriers, it also introduces considerations around funding terms, control of litigation, and distribution of recoveries between claimants and funders. Transparency and fair funding arrangements are essential for maintaining claimant confidence.

Key Cases

United Kingdom

• Post Office Horizon IT Scandal (2019): Group litigation involving over 500 sub-postmasters wrongly accused of theft due to faulty IT systems, resulting in significant settlements and legal reforms. In 2019, the Post Office reached a £58 million group settlement. Subsequently, many convictions were overturned on appeal, and debates over legislative reform began.
• Lloyds/HBOS Shareholder Litigation (2019): Group litigation by shareholders against Lloyds Banking Group over the acquisition of HBOS during the financial crisis, alleging misleading statements and financial losses.

Conclusion 

Group litigation is an essential mechanism for addressing widespread harm and ensuring access to justice for individuals with similar claims. By consolidating numerous claims into a single legal process, group litigation promotes efficiency, reduces costs, and offers leverage in negotiations and settlements. However, it also presents challenges, including complexity, jurisdictional issues, and fair distribution of settlements. Understanding the legal framework, benefits, and challenges of group litigation is crucial for effectively navigating this important area of civil litigation and ensuring that plaintiffs receive fair and timely compensation for their injuries. Third party funders can assume the financial costs and risks of particularly such cases to lower the threshold for damaged parties to actively pursue claims they would individually not bring to court. 

Reviewed by:  Dr. Malte Stübinger, General Counsel Germany 

Disclaimer: The sole purpose of this article is for general information, and its contents should not be considered as legal advice, as legal frameworks / systems vary from country to country. The article is based on publicly available information and while care is taken in compiling this, no warranty, express or implied is given, nor does Deminor assume any liability for the use thereof.