CAT issues stark warning on communicating with class members

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The Competition Appeal Tribunal (CAT) has made clear its opinion on defendants communicating with class members, further reinforcing the role of collective proceedings in accessing justice.

In May 2022, a claim against five major shipping companies was given approval to proceed by the CAT. “This claim demonstrates how legal action can hold companies accountable and secure access to justice for affected consumers and businesses” said Mark McLaren, class representative for the collective proceedings.

Indeed, this latest case provides further demonstration of the rising appeal of class action. More recently, however, it has led to a decision on communication between parties that, if anything, further outlines the CAT’s willingness to present a more claimant-friendly jurisdiction for class representatives and class members.

Cars, carriers, and deep sea cartels

The application for a Collective Proceedings Order (CPO) was first made in April 2020 by Mark McLaren Class Representative Ltd (the applicant) against various defendants in the shipping industry. It alleged that the defendants were involved in a cartel concerning deep sea car and van carrier services between 2006 and 2012.

According to the application, the defendants engaged in anti-competitive and collusive arrangements during this period, including sharing confidential information, rigging tenders and prices, and reducing overall capacity on the car and van shipping market. The result, the applicant’s dedicated website stated, was that customers who bought a new car or van between 18 October 2006 and 6 September 2015 were likely to have overpaid through a delivery charge.

This is not the first time that the alleged cartel had faced anti-competition claims. In February 2018, the same defendants were found in violation of EU competition law by the European Commission, for which they were fined more than €395m (£339m).

A warning

In May 2022, the CAT authorised the applicant to act as a class representative and pursue its claim against the defendants to recover the extra charges received from the shipping companies.

It was certified on an opt-out basis for class members domiciled in the UK, and an opt-in basis for those domiciled outside the UK.

In July 2022, however, solicitors for several defendants sent letters directly to class members, rather than the applicant, purporting to warn them of several potential issues. According to the letters, the addressees’ claim would automatically be in the proceedings if they did not “opt out”. Furthermore, they warned of the likelihood that the defendants would apply for disclosure against the addressees if they remained party to the proceedings, which would require an addressee to dedicate “time, effort and cost”. Any disclosure orders would also extend to “finding and disclosing documents which are confidential”.

In response, the applicant made an urgent application to the CAT for directions in August 2022. It also sought an order prohibiting the relevant defendants from communicating directly with actual or potential class members, as well as requiring them to provide all relevant communications – including responses – to the applicant. In addition, the applicant applied for costs caused by the application on an indemnity basis.

Not proper conduct

The CAT’s ruling was unanimous: defendants to collective proceedings are precluded from communicating with class members where a class has been certified. Communication is also not permitted between proposed defendants and proposed class members during the application stage of a CPO.

“The respondents should not have written the Letters to the class members,” the CAT stated in its ruling. “That was not proper conduct on the part of the Respondent’s representatives; and although we have received assurances from the Respondents’ representatives that there will be no repetition of this conduct, we consider that the Applicant should have the benefit of an order that the Respondents should not further communicate with class members concerning the collective proceedings, as an indication of our views of the conduct of the Respondents.”

Freedom of speech

In their defence, the defendants relied on the right to freedom of expression under Article 10 of the European Convention on Human Rights.

This was rejected by the CAT, however, which concluded that freedom of expression is a qualified right. With civil litigation largely involving controlled communications between the parties, the class representative is given a special position and role that is specifically recognised in the Tribunal rules.

As such, requiring defendants to communicate with that representative, and preventing communication with individual class members, were not considered capable of being sensibly attacked on Article 10 grounds by the CAT.

Accessing justice

In addition to its unanimous decision, the CAT also referenced several key findings. First, it confirmed that the whole point of the collective proceedings regime is that represented persons are represented by a class representative. Communications regarding the collective proceedings should, therefore, be between the parties to those proceedings, not the represented, or putative represented, persons.

It also highlighted the importance of collective proceedings in enabling claims to be brought collectively for circumstances in which doing so individually would not be efficient or cost-effective. The point of the regime is for the class representative to incur one set of costs, thus protecting individual class members from adverse cost orders.

Ultimately, this is a robust decision that should give confidence to class representatives and class members whose claims are being pursued in the CAT.

The CAT’s ruling confirms that defendants to collective proceedings should not communicate with actual or potential class members – at least not without the consent of the CAT or the class representative. It also, however, reinforces the important role collective proceedings play in supporting access to justice.