Evans v Barclays: Further Developments in Opt-Out Collective Actions in England & Wales

At a Glance

• The overturning of Evans provides added impetus for wider use of collective actions, given the approval of the “opt out” mechanism.
• The guidance found in Evans is latest in a line of cases that develop the thinking around procedural operation, of an opt-out proceeding, particularly in the competition arena.
• The Evans case will now proceed as an opt-out collective action and will be remitted to the CAT for case management.

Recently the English Court of Appeal (CoA) in Evans v Barclays & Ors¹ overturned a decision of the Competition Appeal Tribunal (CAT), allowing a follow-on damages claim against various international banks to proceed on an “opt-out” basis. The decision provides added impetus for wider use of collective actions, given the approval of the “opt out” mechanism — a tool that has long been resisted by defendants in the U.K. courts.

An “opt-in” procedure is a claim where every claimant, in order to be a part of the case, has to take proactive steps, such as issuing proceedings or authorising another individual to bring a claim on their behalf. An “opt-out” claim allows a party to bring a claim on behalf of an entire class without an express mandate or even knowledge of each member of the class (similar to familiar U.S. proceedings). A person will be a member of the class unless proactive steps are taken to “opt-out” and any remedy or award will be binding on and available to all class members.

Of the dozen or so applications made to the CAT in 2022 and 2023 for collective actions, all have included an application for the actions to proceed on an opt-out basis (though some have made the application for either an opt-out or opt-in action). The guidance found in Evans is just the latest in a line of cases that both reaffirm the availability, and develop the thinking around procedural operation, of an opt-out proceeding, particularly in the competition arena.

Previous Developments in “Opt-out” Claims

The last two years have been significant for the development of case law in opt-out proceedings. In Lloyd v Google,² the U.K. Supreme Court (UKSC) restricted the availability of opt-out actions where each of the claimants did not share the “same interest”, particularly with regard to damages. This is because, although Lloyd sought damages for Google’s alleged breach of data protection laws, the UKSC found that such damage would be inherently personal to each claimant and there was no means by which to collectively identify the damage.

However, in the competition sphere, the UKSC ruled in Merricks v Mastercard³ that collective actions could proceed where: (1) the claims were more suitable to be brought as collective claims rather than individual claims; and (2) damages could be awarded on an aggregate basis without the need to quantify individual loss. The CAT subsequently granted permission for the U.K.’s first ever case to proceed on an opt-out basis.⁴

Last year, the CoA in BT Group plc v La Patourel⁵ ruled that, where the CAT had to decide whether proceedings were to advance as either opt-in or opt-out actions, they must do so by weighing up various factors relevant to the choice between the two, particularly since there is no legislative pre-disposition towards opt-in or opt-out. The analysis is all fact dependent on what path forward is most practical, and most likely to achieve justice in any particular circumstance.

The Evans Claim

Philip Evans, a former Inquiry Chair at the Competition and Markets Authority issued a claim in December 2019 to commence opt-out collective proceedings under the Competition Act 1998 against Barclays, Citibank, JP Morgan Chase, RBS and UBS (among others) (Defendant Banks). A similar (competing) claim was issued by Michael O’Higgins on the same topic.

The proposed collective action attempted to combine follow-on claims for damages, which were a result of the Defendant Banks’ competition infringements as determined by the European Commission in May 2019.⁶

The Commission’s decisions found that FX traders from the banks exchanged sensitive information and trading plans, and occasionally coordinated their trading strategies through various online professional interbank chatrooms. All the banks admitted that they were involved in the cartels and the decisions were reached under the cartel settlement procedure. The claims are currently valued around £2.7 billion.

The CAT Decision

Although the Defendant Banks did not bring an application to do so, the CAT (of its own volition) considered whether there were grounds for the claims to be struck out. It concluded that the level of generality of the pleadings, and other questions around the issue of causation would mean that the applications could be struck out. Although it decided as stated, it did not exercise that jurisdiction as it believed that the claims raised novel and difficult questions and the parties should be allowed to amend the pleadings.

Importantly, the CAT also ruled that the claims could not be certified on an opt-out basis. There were factors, such as practicability, that weighed heavily in favour of the proceedings being certified on an opt-in basis. The majority of the CAT decided that the applications should be stayed, and the parties should have permission to submit a revised application for certification on an opt-in basis.

The Court of Appeal Decision

The original CAT decision was appealed by both Evans and O’Higgins. The Court of Appeal overturned the CAT’s decision on the opt-in/opt-out issue. The Court of Appeal determined that the CAT was wrong in treating its preliminary view of the merits of the case as definitive in deciding against an opt-out action. The CAT also erred in choosing the opt-in basis for these proceedings, because the (largely unchallenged) evidence showed an opt-in action would have been impractical.

The appeals on the lawfulness of the CAT considering a strike out application on its own accord was not allowed and the Court dismissed all appeals on the questions of permission to apply for judicial review.

Additionally, Evans was chosen as the correct class representative to bring these claims forward.

The Evans case will now proceed as an opt-out collective action and will be remitted to the CAT for case management.