Effect of class actions is potentially dramatic
With new legal rules coming into force, more Scots than ever before are coming together to form movie-style 'class actions' to seek claims, but what – asks Stephen Goldie, partner and head of litigation, Brodies LLP – does that mean exactly for Scottish b
MANY people will be familiar with the concept of class actions through Hollywood movies such as Erin Brockovich. This was a dramatisation of a class action lawsuit against an energy company accused of contaminating a rural Californian town's groundwater. Another movie, Dark Waters, focuses on one lawyer's efforts to raise a class action against a chemical manufacturer accused of dumping 'forever chemicals' into landfill.
More recently, in the world of sport, high profile class actions have been raised against sports bodies in relation to the impacts of head injury and concussion.
But class actions are not just the preserve of blockbuster movie cases and indeed they often extend well beyond the sporting world. Here in Scotland, where we refer to group proceedings rather than class actions, new rules came into force in July 2020, under the Civil Litigation (Expenses and Group Proceedings) (Scotland) Act 2018.
These allow groups of two or more people to raise proceedings together in a single action in the Court of Session.
The aim is to make it easier to bring claims together that could not economically be brought to court individually due to their low value – thus ensuring their efficient progression through the Scottish Courts.the principal requirement to join a group is that the members must each have claims that raise issues of fact or law which are the same as, similar, or related to each other.
The rules are framed on an 'opt in' basis, as opposed to the US style 'opt out' system.
Potential class members must elect to join the group, as opposed to being automatically included unless they elect to opt out.
The potential impact for businesses across all sectors is significant. Any organisation providing goods or services to consumers, or whose operations may interact with the public, will certainly be at risk. Beyond that, even a non-consumer facing business employing more than one member of staff could still be susceptible to group claims raised by its workforce.
In the past, potential pursuers with claims for sums of lower value might have been reluctant to spend money and energy on litigation.
Now, those perceived economic barriers are lifted and individuals can group together to share the expense and time in progressing their claims.
WHAT'S COMING DOWN THE TRACK?
A RECENT report suggests that the number of group proceedings raised against UK companies continues to increase.
Over the last year there has been a 10% increase in the number of class action lawsuits raised around the world against FTSE 100 companies.
The report, produced by Thomson Reuters, details that the UK'S leading companies have faced 170 class actions over the last year, as compared with 155 class actions in the previous year.
Our leading corporates operate in a global marketplace.
The FTSE 100 companies operating in the United States will no doubt be familiar with class action culture in many countries around the world. In the last year, 67% of all class action claims raised globally were brought before US Courts.
For more information, or to contact Stephen Goldie, partner and head of litigation, Brodies LLP in person, go to brodies.com or scan the qr code below