Plaintiffs could use US courts for class actions

A recent court case in the US could encourage UK claimants to bring class actions using the US legal system, claimed Browne Jacobson.

Nichola Evans, specialist insurance lawyer at Browne Jacobson, said disgruntled investors may adopt US law to bring cases against UK businesses over claims of financial mismanagement.

He cited the recent case of flower importer, Emerald, which sought damages from British Airways, claiming it operated a cartel with other airlines.

Evans said the UK legal system is not ready to accommodate US-style group actions.

She said: ‘In the Emerald case, the business wanted to bring what was effectively a group action against BA, along with other businesses it claimed were affected by the alleged cartel. The judge struck out the representative part of the claim as he felt that the difficulty in this case was that the ‘criteria for inclusion in the class depends on the outcome of the action itself’. In other words, he was unwilling to hear a case, where the definition of the class rested on the eventual outcome.’

‘This is a complex area of the law and rests on CPR Rule 19.6, which governs the situation where claimants seek to bring a representative claim. The case shows a reluctance to allow representative actions in accordance with this section of the CPR Rules. The judge in this case commented that this matter might better be dealt with by Parliament rather than stretching the meaning of the current rules.’

The English system is not developing in the same way as in the US for representative claims, she said.

Adding: ‘Group claims arising from the credit crunch are more likely to be brought in the US and the news last month that Cherie Booth QC was to represent two local authorities trying to bring a case in the US adds weight to this argument.’