Here come the US-style class actions

The Consumer Rights Act 2015 came into force last October, allowing for ‘US-style class action lawsuits’ for the first time in the history of English justice.

The legal market expected a flurry of class action claims as lawyers rushed to cash in on the legislation that allowed them to bring a mass action with just one claimant. But so far there has just been one such claim.

Leigh Day, famous for bringing personal injury and medical negligence claims, launched an action in March representing the National Pensioners Convention on behalf of people who claim they paid too much for a mobility scooter from the manufacturer, Pride.

Pride had already been subject to a regulatory decision, with the Office of Fair Trading (OFT) finding it guilty of competition law breaches in 2014. Because of this, and because liability had already been established, Leigh Day’s claim is a follow-on damages claim, during which the court will assess causation and quantum.

The value of the claim is currently estimated to be around £7.7m after the OFT estimated 34,000 Pride customers may be entitled to around a £200 refund.

Pride is fighting the claim and has instructed Coventry firm Band Hatton Button for its defence.

Should Leigh Day win, all members of the class of affected consumers are automatically covered by the claim – though class members need to come forward to claim their compensation. Leigh Day is hoping to make people aware through a series of social media campaigns.

If the claim is unsuccessful, Leigh Day has secured third-party funding and ATE (after the event) insurance to cover costs. Plus, all Leigh Day lawyers and counsel are acting on conditional fee arrangements, so the client is not liable to personally shoulder the bill.

The class action regime: the facts

  • Consumer Rights Act 2015 comes into force on 1 October.
  • Among other changes, it introduces “opt out” collective actions, where everyone affected is automatically a member of the class bringing the claim.
  • The reforms increase the exposure of companies found to have infringed competition law to claims for compensation.
  • Claimants wishing to bring a class action under the new regime need to apply to the Competition Appeal Tribunal (CAT) for permission.

Why has there only been one?

Some criticised the new regime as the ‘Americanisation’ of UK court process. This could have hindered its popularity, though many lawyers say fears it will lead to a flood of unmeritorious claims are unfounded. This is because adverse cost rules in the UK, where the loser pays the other side’s costs, provide a substantial check on frivolous claims. That there was already a regulatory decision against Pride means the claim arguably has merit. It is likely a regulatory finding will become a necessary precursor to consumer-driven class action disputes.

Leigh Day say it has taken six months to prepare its claim and follow basic process for launching a class action under the new rules.

The mobility scooter case dispute could become a test case with a successful result for the claimant leading to more collection action cases in the future.