Court of Appeal refuses to extend boundaries of representative action procedure to create English class action

The Court of Appeal has today dismissed the claimants' appeal in Emerald Supplies Ltd and another v British Airways PLC [2010] EWCA Civ 1284, refusing to allow the action to proceed as a representative action under Civil Procedure Rule (CPR) 19.6.

The judgment confirms the strict test that applies where a claimant seeks to bring proceedings on behalf of others who have the same interest in the claim. Unless the Supreme Court grants permission for a further appeal, the judgment means that any extension of the procedures for bringing class actions in England and Wales is likely to be left to Parliament rather than the courts.

Summary

The claimants brought a representative claim against BA on behalf of all those who paid inflated prices for air freight services as a result of an alleged price-fixing cartel. The High Court refused to allow the action to proceed as a representative claim, finding that the represented class did not have the "same interest" in the claim at the time it was issued, as required under the applicable rule – see post.

The Court of Appeal dismissed the claimants' appeal on essentially the same grounds as the High Court's decision, concluding as follows:

• Although membership of the represented class may fluctuate, it must be possible at all stages of the proceedings, and not just when judgment is given, to say of any particular person whether or not they qualify for membership of the class. It could not be right that, as here, the case on liability had to be tried and decided before it could be known who was a member of the represented class and therefore bound by the judgment. The court commented that Emerald could not be permitted to pursue the proceedings "with Micawberish optimism" that "in due course it may turn out that its claims are representative of persons with the same interest".
• Members of the represented class did not have the same interest in the action if a defence was available in answer to some but not all class members' claims, for example if BA could successfully run a defence that some class members had passed on the alleged inflated price. If there was a liability to some class members but not others, they would have different interests in the action, not the same interest. Indeed here the interests were not just different but conflicting, as some indirect purchasers would want BA to raise the pass on defence to claims by direct purchasers.

The claimants sought permission to appeal to the Supreme Court, arguing that the scope of CPR 19.6 is a matter of general public importance that ought to be considered by the highest court. The defendant resisted the application, including on the basis that the law on class actions should be dealt with by Parliament, not by "stretching the boundaries" of CPR 19.6 beyond all recognition. The Court of Appeal refused to grant permission, saying that it was a matter for the Supreme Court to decide.

Key points

• Representative actions under CPR 19.6 are the closest thing we have in this jurisdiction to the US "opt-out" model of class action in which a claim can be brought on behalf of parties who do not take any positive action to be included in the claim. However, representative actions have not been widely used in English litigation, largely because of the courts' strict interpretation of the requirement that represented parties have the "same interest" in the action.
• This decision confirms the courts' unwillingness to expand the boundaries of the "same interest" requirement so that such actions can be brought more widely.
• Unless the Supreme Court agrees to hear an appeal on the question, it seems that any expansion of the procedures for collective litigation in this jurisdiction will be a matter for Parliament to decide. It remains to be seen whether the coalition government will renew moves to introduce new forms of collective action, following the withdrawal of proposals for financial services sector just before the end of the last Parliament – see post.