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The McLaren case – A Step Forward, or a Step Backward for the UK Class Action?

The McLaren case – A Step Forward, or a Step Backward for the UK Class Action?

The following article was contributed by Mikolaj Burzec, a litigation finance advisor and broker. He is also a content writer for Sentry Funding. The Competition Appeal Tribunal, London’s specialist competition court, has confirmed that a special purpose company led by Mark McLaren, formerly of The Consumers’ Association, will act as the Class Representation. McLaren represents millions of motorists and businesses who bought or leased a new car between October 2006 and September 2015 against five shipping companies that imported cars into Europe. The European Commission has already found that the car carriers fixed prices, manipulated bids, and divided the market for roll-on roll-off transport by sea. According to the Commission, the carriers had agreed to maintain the status quo in the market and to respect each other’s ongoing business on certain routes, or with certain customers by offering artificially high prices or not bidding at all in tenders for vehicle manufacturers. The class action follows the EC decision. It is one of the first actions of its kind in the UK and damages for car buyers are estimated at around £150 million. The class representative Mark McLaren has set up a non-for-profit company – Mark McLaren Class Representative Limited – specifically to bring this claim. Mark is the sole director and only member of the company and therefore has full control over it. In a collective action, the class representative is responsible for conducting the action on behalf of the class. His duties include:
  • instructing specialist lawyers and experts
  • deciding whether to proceed with the claim and, in particular, deciding whether to refer an offer of settlement to the Competition Appeal Tribunal for approval
  • communicating with the class and issuing formal notices to class members by various means, including posting notices on this website.
An independent advisory committee will be appointed to assist in the decision-making process. The claim From 2006 to 2012, five major shipping companies were involved in a cartel that affected prices for the sea transport of new motor vehicles, including cars and vans. During the period of the cartel, the shipping companies exchanged confidential information, manipulated tenders and prices, and reduced overall capacity in the market for the carriage of cars and vans. The cartel resulted in car manufacturers paying too much to transport new vehicles from their factories around the world to the UK and Europe. Customers who bought a new car or van between 18 October 2006 and 6 September 2015 probably also paid too much for the delivery. This is because when a manufacturer sets the price of its new cars or vans, it takes into account the total cost of delivery, including shipping costs. For simplicity, car manufacturers usually divide their total delivery costs equally among all the cars and/or vans they sell. When a customer buys a new car or van, he pays for “delivery”, either separately or as part of the on-road price. Although the car manufacturers themselves have done nothing wrong, customers who bought a new car or van between 18 October 2006 and 6 September 2015 are likely to have paid an increased delivery charge. The European Commission has already decided to impose fines of several hundred million euros on the shipping companies. The lawsuit seeks to recover these extra costs from the shipping companies who were involved in the cartel. The Competition Appeal Tribunal’s decision The Tribunal has authorised the claims to proceed as a class action. This means that millions of motorists and businesses could be entitled to compensation and these individuals and companies will now automatically be represented in court unless they choose to leave (opt-out) the claim. McLaren is the first Collective Proceeding Order judgment in which the Tribunal has explicitly considered the position of larger corporates within an opt-out class with the defendants having argued that big businesses should be removed and treated on an opt-in basis. The Tribunal’s refusal to treat larger businesses in the class differently to smaller corporates and consumers is noteworthy, and these aspects of the judgment will no doubt be of interest for the future proposed collective actions which feature businesses. McLaren further explored the appropriate legal test applied to the methodology in order to establish a class-wide loss at the certification stage. The Tribunal denied the defendants’ strike out request, which was based on purported inadequacies in the claimant’s methodology. The Tribunal concluded that its job at the certification stage is not to analyse the expert methodology’s merits and robustness; rather, the Tribunal will determine whether the methodology provides a “realistic chance of evaluating loss on a class-wide basis.” It further stressed that this does not imply that the Tribunal must be convinced that the approach will work, or that the methodology must be proven to work. The Tribunal emphasized the critical role of third-party funding in collective actions, as well as confirmed that the potential take-up rate by the class is not the only measure of benefit derived from the proceedings, with another benefit being the role of collective claims in deterring wrongful conduct. Despite the fact that the sums involved per class member may be little, the Tribunal focused on the fact that the total claim value is significant and that the majority of class members would be able to retrieve information about vehicle purchases. In the end, the Tribunal managed two issues that have been discussed in earlier decisions: inclusion of deceased consumers in the class and compound interest. Corresponding to the previous, McLaren was not allowed to change his case to incorporate potential class individuals who had died before procedures being given, because of the expiry of the limitation period. Regarding the latter, in contrast to the judgment in Merricks last year, the Tribunal was ready to certify compound interest as a standard issue even though it is common just to a part of the class who had bought vehicles using finance agreements. The Tribunal’s decision is conditional upon McLaren making adjustments to his methodology to account for the ruling on these points, and any determination as to the need for sub-classes. Case name and number: 1339/7/7/20 Mark McLaren Class Representative Limited v MOL (Europe Africa) Ltd and Others The whole judgment is available here: https://www.catribunal.org.uk/judgments/13397720-mark-mclaren-class-representative-limited-v-mol-europe-africa-ltd-and-others

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LITFINCON Europe Sets Amsterdam Agenda With Burford, Therium, WTW and Susman Godfrey on the Bill

Siltstone Capital has released the full programme for the first European edition of LITFINCON, which opens in Amsterdam on 7 October with eleven panels and a speaker roster drawn from funders, brokers, insurers and the plaintiff bar.

As reported by PR Newswire, the two-day conference runs 7 and 8 October at the Rosewood Amsterdam, the former Palace of Justice on the Herengracht, with VIP programming including a dinner and canal cruise the evening before. This is the seventh LITFINCON edition and the first held in Europe, following events in Houston, Beverly Hills and Singapore that have drawn more than a thousand attendees between them.

The theme is "The Claim Is the Asset: IP, Arbitration, Class Actions & the Investors Who Know It." Confirmed speakers include Philipp Leibfried, Managing Director and Head of Europe at Burford Capital; Neil Purslow, Co-Founder and Managing Partner of Therium Capital Advisors; Max Tribble of Susman Godfrey; Dan Kesack of WTW; Nick Moore of CAC Specialty; Jamie Molloy of Ignite Specialty Risk; Tets Ishikawa of LionFish Capital; and Till Schreiber of Cartel Damage Claims.

Panels cover pricing in European collective actions, enforcement of arbitration awards, Unified Patent Court strategy, artificial intelligence in litigation finance, insurance structures for legal assets, and the divergent regulatory positions taking shape in the UK, EU and United States. The programme closes with a 75-minute unscripted session billed as "Candid Conversations."

Jim Batson, Chief Investment Officer of Legal Finance at Siltstone Capital, said: "Every deal in this industry starts with a conversation between people who trust each other."

Padronus Funds Three German Collective Actions Over Streaming Price Rises, Capping Its Fee at 9.9%

Austrian funder Padronus is financing three new German collective redress actions against Netflix, Apple TV and WOW, structuring its return just below the statutory ceiling that governs funder participation in the country's collective redress regime.

As reported by Digital Fernsehen, the Verbraucherschutzverein filed the three Abhilfeklagen on 15 September, two before the Kammergericht Berlin and one before the Bayerisches Oberstes Landesgericht. The claims allege that the providers raised subscription prices unilaterally on the basis of clauses that do not meet German standards for consumer contracts. Cited increases include WOW from €35.99 to €44.99, Apple TV+ from €4.99 to €9.99, and Netflix from €11.99 to €19.99.

The funding terms are the notable feature for the market. Padronus, operating through Vienna-based Prozessfinanzallianz GmbH, carries the entire cost risk and takes 9.9% of any proceeds, deliberately set beneath the 10% cap imposed on funder remuneration by the German legislation implementing the EU Representative Actions Directive. Where a participant holds legal expenses insurance that responds, Padronus waives its share altogether. Consumers pay nothing regardless of outcome.

Expected individual refunds run from roughly €200 to €700 per provider, and Padronus chief executive Richard Eibl has said a subscriber to all four services could recover close to €800. At the participation levels the funder is targeting, aggregate exposure would reach nine figures.

The German courts have not settled the question. The Kammergericht Berlin held comparable Netflix and Spotify clauses invalid in 2023, and the Bundesgerichtshof declined to disturb that outcome. But the Bayerisches Oberstes Landesgericht dismissed a parallel claim over Prime Video in July, and an appeal is pending.

CAT Approves £260M Google Settlement, the Largest Class Payout in the Regime’s History

The Competition Appeal Tribunal has approved the £260 million settlement of the opt-out collective action brought against Google on behalf of thousands of UK app developers, clearing the way for the largest distribution to class members the Tribunal has sanctioned since the UK's collective proceedings regime began in 2015.

Of the total, £160 million is earmarked for eligible developers, including sole traders and small businesses that sold apps or digital content through the Play Store from August 2018 onwards. The remaining £100 million covers the funding, insurance and legal costs of running the case. Individual payouts will be calculated on each developer's qualifying Play Store sales during the relevant period, and eligible businesses are being directed to the claim website to register ahead of the claims process opening.

As reported by City AM, the claim alleged that Google abused a dominant position by imposing unfair and excessive commissions on developers distributing through the Play Store. Google settled without any admission of liability or wrongdoing, saying it was pleased to reach agreement subject to court approval.

For the funding market, the approval resolves the question hanging over the case since August. Bench Walk Advisors financed the proceedings, and the professional parties agreed to forgo £34 million of their contractual entitlement, bringing their combined return down to the £100 million the Tribunal has now approved. The Tribunal's willingness to sanction a settlement of this size, with costs and funder returns disclosed and reduced in advance, gives funders a concrete benchmark for what the CAT will treat as just and reasonable.

Neil Purslow, Chairman of the Executive Committee of ILFA, said: “This landmark settlement vindicates the opt-out collective actions regime at an important moment for its future. Thanks to the regime and the litigation funders who underpin it, thousands of small businesses with no realistic alternative to take on a corporate wrongdoer will now be awarded compensation they could never have won on their own.”

“As the Government considers the future of the regime, this case is proof the system can deliver. This is a young regime that should be nurtured and expanded, not constrained, so more consumers and small businesses can hold powerful defendants to account.”