Defendants in consumer class actions could in future decide to settle thanks to an incentive built into the collective redress regime, a pioneer of such actions has predicted. Walter Merricks CBE, the former solicitor and financial ombudsman who is leading an opt-out claim against Mastercard on behalf of 46 million people, was speaking at a London International Disputes Week conference discussion on the future of collective redress.

Opening the debate, Sarah Abram KC of Brick Court Chambers observed that recent decisions in claims against maritime car carriers and Facebook's parent company Meta had slightly raised the threshold for collective claims after years of it 'going down, down, down'. 

Merricks agreed that 'things are beginning to settle down a bit’ - but he noted that the sector is anxiously awaiting the Supreme Court's ruling in an appeal brought by DAF Trucks. The company is arguing that a collective claim following findings that manufacturers operated a price-fixing cartel should fail because the litigation funding agreements amount to damages-based agreements.

Walter Merricks

Merricks: 'I would think very hard about settlement'

The Supreme Court's ruling could determine the legitimacy of litigation funding, Merricks said. 'We're all a little bit nervous.'

In another development in the collective redress sector, Merricks revealed that class representatives have formed a network to exchange experiences and contribute to the policy debate. The Class Representative Network's website lists 14 members, including the representatives in claims against BT, Google and train operators. 

Merricks also noted that the current collective redress regime provides an incentive for defendants to settle: in a settled claim, part of any unclaimed damages can revert to the defendant, he said. However in a case that went to trial, the unclaimed share of any awarded damages would go to a government-nominated charity.

Given that incentive, 'I would think very hard about settlement,' he said. 'Perhaps we'll see some settlements when the doors of the court loom.'

 

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