On 10 June 2024, the Court of Appeal granted Wirral Council permission to appeal the High Court’s earlier decision to strike out representative proceedings against claimants in two securities claims. The appeal will be heard on 10 December 2024, and the Court of Appeal’s decision could have significant ramifications for the conduct of securities claims going forward. Partner Lorraine Lanceley, senior associate Charlie Mercer and paralegal Audrey Czernin provide an update on this development.
In a previous article from December 2023, we considered the High Court’s decision in Wirral Council v Indivior PLC/Reckitt Benckiser Group PLC [2023] EWHC 3114 (Comm). This was the Court’s first (and, so far, only) judgment on whether a representative action under CPR 19.8 (previously CPR 19.6) could be used in securities claims brought pursuant to section 90 and 90A/Schedule 10A of the Financial Services Market Act 2000 (“FSMA”) (the “Representative Proceedings”).
The court struck-out the Representative Proceedings against Indivior PLC (“Indivior”) and Reckitt Benckiser Group PLC (“Reckitt”), ordering that Wirral Council (as administering authority of Merseyside Pension Fund) (“Wirral”) may not act as a representative claimant and, as such, that the claims should proceed by way of multi-party actions managed in the usual way.
Wirral applied for permission to appeal the decision of Mr Justice Green. Permission was refused at first instance, but Wirral renewed its application to the Court of Appeal directly and it has subsequently been granted.
Case background
In April 2019, the US Department of Justice publicised details of a federal indictment against Indivior and Reckitt, for engaging in a nationwide scheme to fraudulently market a drug sold to treat opioid addiction. Settlements were reached with the US authorities and certain subsidiaries and individuals pleaded guilty to criminal charges brought against them in relation to the scheme. The indictment and criminal cases resulted in securities claims being brought against Indivior and Reckitt in the US and in England under FSMA.
The English proceedings (both of which were brought by Wirral) were initiated both in the usual way, by way of multi-party proceedings, and also (in parallel) by way of the Representative Proceedings. The multi-party proceedings are currently stayed pending the resolution of whether or not the Representative Proceedings are permitted to proceed.
As noted above, the High Court ruled late last year that the Representative Proceedings be struck out following a hearing on 20 and 21 November 2023. The decision as to whether it was appropriate for the Representative Proceedings to continue was a matter of judicial discretion by reference to the overriding objective.
Mr Justice Green’s decision to exercise his discretion in favour of striking out the Representative Proceedings appears to have been driven by the concern that the court will be deprived of its case management powers, and the perception that investors would be able to control the management of liability issues. The judge was of the view that the courts could be trusted to engage in active, bespoke case management (for example offering solutions to issues raised by Wirral in support of representative actions such as split trials), in order to manage securities claims by way of normal multi-party proceedings.
Next steps
The Court of Appeal will hear the appeal on 10 December 2024. No doubt the decision (once handed down) will be read with significant interest by claimant and defendant firms alike as well as litigation funders.
The decision to allow Wirral’s appeal will also have an impact on the other live securities representative actions currently on foot as interested parties wait to see what the Court of Appeal decide. Indeed, given the significance of the decision, it seems unlikely that the Court of Appeal will have the last word on the issue.
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