In response to an application to bring collective proceedings on behalf of almost 20 million iPhone and iPad users in the UK, Apple requested that the class representative’s after-the-event (ATE) insurance premiums be revealed to them.
The Competition Appeal Tribunal (CAT) refused the request on 21 December 2021, ruling that the disclosure “might give rise to an unfair tactical advantage” for the tech giant by “reflecting the insurer’s assessment of the merits”.
In Kent v Apple Inc and Apple Distribution International Ltd the CAT did not conclude that the premiums were subject to legal advice privilege, but did suggest the information “may possibly attract legal advice privilege and require redaction on the basis that it might allow the reader to work out what legal advice had been given the reader”. This conclusion may have consequences for future cases of this kind.
Julian Chamberlayne, KM and Compliance Partner, said: “The CAT’s decision to refuse Apple’s bid is sensible. As part of its ruling, the CAT noted that the amounts of the ATE insurance premia and the detail of a litigation funding agreement provision for solicitors to undertake work beyond the funder budget on an unfunded basis were not relevant to the questions considered at the Collective Proceedings Order (CPO) hearing.
“The CAT’s secondary reason for declining disclosure was that the information had clear strategic sensitivity. Apple had already tacitly accepted that principle by rightly withdrawing its earlier request for disclosure of the conditional fee agreements of solicitors and counsel.”
Background to the application
In May 2021 Dr Rachael Kent, as the proposed class representative, made an application for a CPO to the CAT pursuant to section 47B of the Competition Act 1998 on behalf of some 19.6 million Apple App Store customers that may have suffered losses as a result of Apple’s alleged unlawful anticompetitive operation of its App Store.
Apple is alleged to have exploited its ownership of the App Store platform, imposing restrictive terms on app developers. The class action also alleges that blocking users from paying for many services through methods other than the Apple App Store payment system, the process of which includes commission paid to Apple, constitutes abusive conduct and an unlawful monopoly. As part of her application Dr Kent served the Litigation Funding Agreement (LFA) and after-the-event insurance policy (ATE Policy), a litigation plan, and a budget to trial. However, certain parts of these documents were redacted on the grounds of commercial confidentiality, strategic sensitivity and/or privilege.
Apple objected to the redactions, but an agreement was reached in respect of all bar two redactions: the premia payable under the ATE Policy, and the solicitor’s excess provision (the percentage of any budget overrun that the solicitors had agreed to undertake on an unfunded basis). Apple had also sought disclosure of the conditional fee agreements (CFAs) of solicitors and counsel but dropped that request prior to the hearing of this application. The CPO hearing is due to be heard in May 2022, which will decide whether Dr Kent can be authorised to act as the class representative on behalf of the proposed class.
Basis for the ruling
The CAT referred to multiple cases as precedent for dealing with disclosure of litigation funding agreements, including Excalibur Ventures LLC v Texas Keystone and others  and Hollander: Documentary Evidence (14th edn). Though admitting that case law has not established a firm rule for dealing with these issues, the CAT noted that “in principle, disclosure may be refused as a matter of discretion where disclosure might give the opposing party a tactical advantage in relation to various aspects of the conduct of litigation. Such tactical advantage may be derived from matters wider than knowledge of legal advice and might include, but is not limited to, knowledge of the assessment of merits risk on the part of funders and insurers.”
The CAT noted that a party’s funding arrangements are not subject to litigation privilege but may be subject to legal advice privilege “if disclosure gives an indication of the legal advice sought or given”, and that discretion may be granted where an unfair tactical advantage may be gained, as established in Excalibur . Similarly, the premium payable under an ATE policy may “possibly” merit legal advice privilege, and disclosure could be refused to prevent unfair tactical advantage.
On this basis, the CAT concluded that the value of the ATE premia and the solicitors excess provision were not relevant to the issues to be determined at the CPO hearing in May 2022, and should both therefore remain confidential. The CAT’s approach is a by-product of the fact that it will only make a collective proceedings order if it considers that it is just and reasonable to do so (Competition Appeal Tribunal Rules 2015, Rule 78), which includes providing a satisfactory plan for managing the costs and fees of the litigation. This is a unique feature of collective proceedings in the CAT which would not have direct application to individual claims nor to claims in the Commercial Court where the authorities concerning security for costs will be more relevant.
Stewarts has launched a ground-breaking after the event (ATE) insurance facility with Arthur J. Gallagher Insurance Brokers Limited. ‘Stewarts Litigate‘ is designed to work alongside our alternative funding agreements. The facility provides our commercial disputes clients with rapid access to comprehensive ATE insurance at pre-agreed market leading rates. The facility can provide coverage of up to £4 million in three business days and up to £18 million within ten business days.
Find out more about Stewarts Litigate here.
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