Adjournment of Collective Proceedings Orders in the Wake of Merricks v MasterCard: Implications and Legal Reasoning

Introduction

The case of UK Trucks Claim Limited v. Fiat Chrysler Automobiles N.V. and Others ([2019] CAT 15) addressed significant procedural questions regarding Collective Proceedings Orders (CPOs) under the Competition Act 1998 (CA 1998). The case involved two applications for CPOs: one by UK Trucks Claim Limited (UKTC) and the other by the Road Haulage Association Limited (RHA), both seeking to represent classes of claimants against major truck manufacturers including Iveco, Daimler, MAN, and DAF. These applications followed the European Commission's decision in "Trucks" dated 19 July 2016, which had implications for competition law within the automotive sector.

Summary of the Judgment

The United Kingdom Competition Appeals Tribunal (CAT) faced two CPO applications from UKTC and RHA. However, shortly before the scheduled hearing in June 2019, the Court of Appeal ruled in Merricks v MasterCard Inc that the CAT had incorrectly applied the legal standards for certifying CPOs under CA 1998. This appellate decision necessitated reconsideration of the procedural approach for the pending CPO applications. Consequently, the CAT decided to adjourn the June hearing to await the outcome of MasterCard's potential appeal to the Supreme Court. The Tribunal also opted to proceed with preliminary issues concerning the authorization of UKTC and RHA as class representatives based on their funding arrangements.

Analysis

Precedents Cited

The Tribunal referenced several key precedents, most notably:

Merricks v MasterCard Inc [2019] EWCA Civ 674: This Court of Appeal decision critically evaluated the CAT’s approach to CPO applications, advocating for a lower standard of scrutiny akin to that of strike-out applications and rejecting the CAT’s more rigorous "mini trial" methodology.
AB Sudan v Secretary of State for the Home Department [2013] EWCA Civ 921: This immigration case provided guidance on the discretionary power of courts to stay proceedings, emphasizing that courts aim for procedural efficiency unless a significant future event warrants delay.
Gibson v Pride Mobility Scooters [2017] CAT 9: Another CAT decision influencing the Court of Appeal’s stance on the Certification test for CPOs.

These precedents collectively influenced the CAT’s decision to adjourn, underscoring the need for procedural coherence in light of appellate scrutiny.

Legal Reasoning

The Tribunal employed a multifaceted legal reasoning approach:

Standard of Scrutiny: Following Merricks, the CAT recognized that CPO applications should be assessed with a less stringent standard, similar to strike-out motions, rather than the exhaustive processes previously applied.
Procedural Efficiency: Emphasizing the principles from AB Sudan, the Tribunal prioritized the efficient management of cases, avoiding unnecessary delays and excessive costs that could arise from proceeding with CPO applications before the final appellate outcome.
Cost Considerations: The CAT highlighted the substantial financial implications of potentially re-hearing CPO applications, estimating costs upwards of £5 million if the Supreme Court altered the appellate decision.
Funding Arrangements: Addressing concerns about the Applicants' funding mechanisms under the Damages-Based Agreements Regulations 2013, the Tribunal opted to handle these issues separately to streamline the overall process.

These elements collectively justified the adjournment, balancing the interests of judicial economy, fairness to the parties, and the integrity of the evolving statutory framework.

Impact

The Tribunal's decision has several significant implications:

Clarification of CPO Standards: The alignment with the Merricks standard signals a shift towards more accessible collective actions, potentially enabling more claims to qualify for CPOs under less burdensome criteria.
Procedural Precedent: The decision underscores the Tribunal's willingness to adapt procedures in response to appellate guidance, promoting a more flexible and responsive judicial process.
Cost Management: By avoiding premature hearings, the Tribunal mitigates the risk of unnecessary expenditures, setting a standard for cost-effective litigation in collective proceedings.
Future Litigation Strategies: Plaintiffs and defendants may adjust their approaches to CPOs, anticipating a more streamlined certification process but also recognizing the potential for procedural delays pending higher court decisions.

Overall, the judgment fosters a more balanced and practical framework for collective litigation, enhancing the judicial system's capacity to handle complex class actions efficiently.

Complex Concepts Simplified

Understanding this judgment requires a grasp of several legal concepts:

Collective Proceedings Order (CPO): A mechanism under CA 1998 that allows multiple claimants to pursue a collective legal action efficiently.
Certification: The process by which a court or tribunal acknowledges that a class action meets the necessary legal criteria to proceed.
Damages-Based Agreements Regulations 2013: Regulations governing conditional fee agreements (no-win, no-fee), ensuring transparency and fairness in funding litigation.
Limitation Period: The legal timeframe within which a claimant must initiate legal proceedings. For individual claims stemming from the Decision, this was a special two-year period, while standard claims typically have a six-year limit.
Opt-Out vs. Opt-In: In collective actions, opt-out allows class members to be automatically included unless they choose to exclude themselves, whereas opt-in requires them to actively join the proceedings.

These concepts are pivotal in understanding the procedural dynamics and strategic considerations in collective litigation.

Conclusion

The CAT's decision to adjourn the CPO applications by UKTC and RHA, in light of the Merricks v MasterCard ruling, represents a cautious and methodical approach to integrating appellate court guidance into ongoing proceedings. By prioritizing procedural integrity, cost efficiency, and adaptability to evolving legal standards, the Tribunal ensures that collective actions under CA 1998 are both accessible and just. This judgment not only clarifies the application of CPO standards post-Merricks but also sets a precedent for how future collective proceedings will be managed amid potential legal uncertainties. The emphasis on separating funding issues and addressing preliminary objections further streamlines the process, fostering a more effective judicial system for handling class actions in the UK.