Reality television

'The class action will never catch on over here'. Or will it? On 18 July 2007 the House of Lords ruled that HM Revenue and Customs (HMRC) was liable to repay advance corporation tax over-charges in a case ostensibly won by test claimant Sempra Metals (who themselves will receive back over-charges at a compounded rate for years 1974 to 1988), but practically on behalf of hundred of companies grouped together in the ACT Group Litigation Order (ACT) Sempra Metals v HMRC & Anor [2007] UKHL 43.

The Group Litigation Order (GLO) is still a relatively new concept, and while decisions like Sempra Metals v HMRC may not open the floodgates wide enough to attract the US private-jet flying brigade, it might offer practitioners (and judges alike) here an insight into how this relatively new practice area might be used in the future. An example considered below is the recent scandal involving hundreds of thousands of phone calls placed by television viewers; induced by broadcasters on the false premise of participating in a competition the participant has a chance of winning. If many corporations can group together and reclaim over-paid tax with compound interest, the procedure may be open to assist a large group of deceived television viewers. There are true distinctions between the GLO and the class action, but should the practice continue and become more popular, it may be possible to reduce these differences.

Group litigation

The concept of group litigation (GL) was introduced by the Woolf reforms and arose out of an acknowledgement that prior to its addition there was a limit to the weight which a representative action could bear. The procedures for cases involving multiple parties, or claimants to the same cause of action, were previously considered too 'difficult to use' and had proved 'disproportionately costly'.

A GLO allows for the parties involved to be dealt with on a collective basis, as opposed to the previous one-to-one basis, laborious in nature because it compromised effectiveness, and drew out proceedings. There is no minimum number of parties required to make a GLO, and both claimants and defendants can request it.

Opportunity for justice

The overriding aim of a GLO is to create an opportunity for justice to be served in circumstances which would previously have proved a stumbling block, and at the time of inception, several key objectives which correspond to the fulfilment of this aim were laid out. The first of these objectives was to provide an opportunity to seek justice when multiple parties are affected by another's conduct in situations where individual losses are minimal to the extent that legal proceedings would be economically unviable otherwise.

The second was to provide 'expeditious, effective and proportionate methods of solving cases' in cases where individual damages justify an entry into legal proceedings but where the sheer number of claimants involved requires a service unable to be provided in the context of standard procedure.

The third and final objective was to manage the case in a whole and effective manner, pursuing both claimants and defendants individually, while handling the case in the context of a GL procedure.

The prerequisites for a class action in the federal courts of the US are set out in Rule 23 of the Federal Rules of Civil Procedure. Subsection (a) explains that: 'One or more members of a class may sue. . . as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law or fact common to the class, (3) the claims or defences of the representative parties are typical of the claims or defences of the class, and (4) the representative parties will fairly and adequately protect the interests of the class'.

Subsection (b)(3) also requires that the court be satisfied that 'the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy'. A court hearing is usually convened to decide whether or not to 'certify' the class, and thereafter the present leaders or representatives of the class undertake to provide the best notice possible to all potential members of the class, to invite them to participate in, and benefit from, the action.

Many commentators on the class action praise the process as providing a way of handling and vindicating individual claims in situations where the claims are too small to bring economically if asserted individually (see John Bronsteen and Owen Fiss, The Class Action Rule, 78 Notre Dame L Rev 1419 (2003). This is the very same justification behind the introduction of the GLO in England and Wales.

Different procedures in England

It is true to say that the procedures are very different, and that the class action is embedded in US legal culture. The GLO is brand new, even though it is seven years old. In England, the class action is looked down upon with some suspicion and disdain, more closely associated with Hollywood movies than to their legal practice. However, with the basis behind the introduction of the GLO echoing the underlying basis of the class action US style, it is only a matter of time before intolerance eases and the concept is embraced.

For example, why should not other companies benefit from the action of Sempra Metals and other companies, if they paid too much tax? It is true to say that companies notified of the Sempra Metals decision may now bring an action of their own and rely on the precedent, but what if their over-payment does not justify the expense of separate legal fees (which is very often the case)? It is wrong for the legal world to frown upon advertisements inviting potential members of a class of victims of civil wrongs to get involved in a collective action, when many industrial claims have successfully been brought using public advertisement, and the advertisement is a common medium for other legal procedures, such as to notify creditors of a pending insolvency.

Television competitions

It is in this context that one looks for further examples of how the GLO can effectively be used, and how and why it may lead to a similar concept to the class action.

One topic in the news is the debacle involving telephone lines used by broadcasters for participation competitions. It seems clear that the television viewer has been induced to participate in a competition which he or she believed was capable of winning. In fact, it was not. In many of the instances, there was no chance of winning the competition.

The decision was rigged, and members of the production crew deceived the viewers at large (and participants) that a genuine competition had decided a genuine winner. Each claimant in any action against the broadcaster would have to establish a loss, and would also have to establish, inter alia, that there was: (a) a representation; (b) that the representation was relied upon; and (c) that it suffered this loss as a result of the reliance.

The principles of the tort of deceit and misrepresentation are straightforward enough, but how would they apply here to help a deceived viewer? It is very likely in this case that there are a large number of television viewers who very often engage in telephone participation competitions at a disproportionately higher level than, say, one-time users. It is this 'class' of people for whom the availability of the GLO may be worthwhile.

Indeed, the range of media texts affected by the scandal covers a broad spectrum of programming output. Not only are a certain number of charities (based around television events) facing intense public and professional scrutiny, but other outputs such as the radio stations have also been compromised.

Only a handful of broadcasters have come forward, but there is very likely to be many other instances. Broadcasters must be aware of the civil backlash that attracts to practices like this, and the possibility that the wide class of viewers induced into the deception can have an effective remedy against them, no matter how small the liability. There is no reason why this should be any different to the case of, for example, hundreds of businesses claiming en masse that they are owed money by HMRC (or perhaps even customers burnt by hot coffee in a well-known fast food restaurant).

Before the introduction of the GLO, individual claims were brought and usually consolidated upon application following pleadings. If there were a large number of claims against one party, there were instances where the defendant agreed to group together the claims for administrative purposes (for example, the building society and surveyor negligence cases in the 1990s, such as the Bristol & West Building Society actions), but this depended upon the defendant accepting the consolidation and was not decided in any predictable manner. The existence of a new procedure, similar to the concept of a class action but without many of the procedures necessary to help expand the concept beyond identifiable sets of claimants or defendants, may help encourage courts and practitioners alike to help make parties responsible for civil wrongs accountable to a wide number of otherwise unidentifiable people unaware of their civil law rights.

Copyright & permissions