5 April 2017Print This Post

Competition tribunal rejects bid to throw out first opt-out class action application

Roth: no fundamental obstacle on human rights or EU law grounds

The Competition Appeal Tribunal (CAT) has rejected strenuous attempts to dismiss the first application to certify an opt-out class action under the new collective proceedings procedure.

However, it has not yet granted the collective proceedings order (CPO), as it is formally known, having adjourned the case to allow the claimant to reconsider issues raised during the hearing about the proposed methodology to assess damages.

Providing pointers for future CPO applications, the tribunal, led by CAT president Mr Justice Roth, also said the fact that the impetus for the action came from the claimant’s solicitors, Leigh Day, was not objectionable

Leigh Day represents Dot Gibson, the general secretary of the National Pensioners Convention, over the action against Pride Mobility Products, the largest supplier of mobility scooters in the UK.

She is looking to bring the class action to recover compensation for around 30,000 consumers whom she alleges were overcharged for a Pride scooter as a result of Pride’s breaches of competition law between February 2010 and February 2012.

The claim follows on from a 2014 decision of the Office of Fair Trading that Pride breached competition law by banning retailers from advertising prices online below Pride’s recommended retail prices for its scooters. Ms Gibson claims this made it harder for consumers to shop around for the best price and caused them to be overcharged.

The average loss, depending on the model purchased, is said to be either £40 or £195 before interest.

There are two statutory conditions which must be satisfied for the CAT to make a CPO: the claims must raise the same, similar or related issues of fact or law and be suitable to be brought in collective proceedings; and the proposed class representative must be authorised on the basis that it is just and reasonable for that person so to act in the proceedings.

Pride challenged the application on several grounds, including that it would infringe the company’s human rights and/or EU law, with the key argument being that, at the time of the infringements, the collection actions procedure was not law.

The CAT rejected this: “While such new procedures or mechanisms generally apply only from a specified date, the cause of action forming the basis of the claim subject to that procedure or mechanism could have arisen prior to the legislative or procedural innovation coming into force. These developments therefore involved no retrospective imposition of liability…

“It follows that there is no fundamental obstacle on human rights or EU law grounds to the making of an opt-out CPO in this case.

The tribunal was clear that the CPO application was “not a mini-trial”, and at this stage of the proceedings it was not its role to choose between the approaches of each side’s expert economists.

However, with a potentially more complex economic analysis to be undertaken by the claimant, the CAT said the question of suitability of the case for a CPO had to be deferred.

“The costs of pursuing the proceedings may increase; and in limiting the claim to the losses resulting from the infringements, the aggregate damages estimate may decrease.

“Rule 79(2)(b) of the CAT Rules 2015 provides that in determining whether claims are suitable to be brought in collective proceedings, one consideration to be applied is ‘the costs and benefits of continuing the collective proceedings’…

“Until a revised approach to assessment is carried out, it is impossible to assess what the total damages might be. We therefore only observe that the question of suitability may need further consideration.”

Though Ms Gibson herself was not a claimant, the CAT found her to be a suitable person to lead the claim, saying she would “act fairly and adequately in the interests of the represented class”.

She was an experienced campaigner and spokesperson supported by staff at the National Pensioners Convention,; Leigh Day has extensive experience of group litigation and had brought in counsel with competition law expertise, along with a US company, Signal Interactive Media, that has “extensive experience of class action administration”.

The CAT added: “Finally, in this regard, we do not regard the fact that the impetus for the collective proceedings came from Leigh Day as objectionable. This seems to us almost inevitable with collective proceedings in particular for consumers, most of whom would be unaware that it was practicable to bring proceedings of which the cost vastly exceeds the individual loss they suffered.

“The relevant question is whether the class representative is able to ensure that the proceedings are then conducted in the interests of the class and not of the lawyers.”

There was also a question about the ability to cover Pride’s costs. Ms Gibson has arranged, through Burford Capital, after-the event insurance underwritten by Great Lakes Reinsurance, for Pride’s costs up to £1.08m and her own disbursements in the event that the claim is unsuccessful.

Leigh Day confirmed that in the event that the indemnity in the policy was exceeded, it would give priority to payment of Pride’s costs over recovery of its own disbursements.

Pride has filed two detailed costs budgets: the first, for the CPO application, totals £477,000 (excluding a provision for costs of an appeal); the second, from the grant of a CPO to trial, totals £951,000. It argued that the fact this exceeded the ATE cover meant the CPO requirements were not met.

An application for costs management has been made and, without prejudging that, the CAT noted that Ms Gibson’s budget amounted to just under £1m. “It is not evident why the costs of Pride should exceed those of the applicant, particularly when Pride’s lawyers have already done a great deal of work in gathering documentation and responding to the inquiries made in the course of the OFT’s investigation, and the applicant’s solicitors are in London whereas Pride’s solicitors are based in Coventry where rates should be lower.

“Pride itself observes that at this stage there is ‘a high degree of uncertainty’ as to how the proceedings will develop. The applicant’s solicitor states that the chief risk officer of Burford has told him that Burford/Great Lakes are able to increase the insurance indemnity, depending on their assessment of the value and merits of the claim.

“Most immediately, the cost budgets are likely to be affected by any orders for costs that may be made following this judgment.

“Taking all this into account, we do not at this stage consider that the question of her ability to pay Pride’s recoverable costs is a basis for refusing to authorise Ms Gibson to act as class representative. This particular aspect can, if necessary, be considered further at the renewed application for a CPO.”

By Neil Rose


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