118. Under the opt-in system, victims have to manifest themselves if they wish to
be bound by a collective decision or a settlement.263 Despite that, opt-in participants do usually not technically become parties to the proceedings.264 The opt-in system has the advantage to respect parties’ willingness to sue and makes the size of the collective claim foreseeable for the defendant.265
Nevertheless, opt-in collective actions might not include all victims and thus, the exposure of the defendant could dramatically shrink.266 Another negative aspect of the opt-in regime is that it implies an important investment of financial and administrative resources in order to spot potential victims and organise the group.267 Similarly, this system creates an additional burden for courts that have to take all individual aspects of the claims into account.268 Besides, it is unsure that the participative attitude required by
an opt-in system remains efficient where psychological and economic barriers refrain victims from manifesting themselves and becoming part of the collective proceedings. In this sense, an opt-in based instrument might not sufficiently promote access to justice.269
The Consumer Association v JJB Sports PLC270 case, illustrates the shortcomings of an opt-in collective action. The facts can be summarised as follows: in 2007, the British consumer association Which? sued JJB Sports under Section 47B of the Competition Act 1998. The original version of this provision states that a specified body may bring an action before the Competition Appeal Tribunal, which comprises consumer claims filed or continued on behalf of at least two individuals.271 In order to be included in the
263 R. Mulheron, supra n 29, 29.
264 Ibid, 30; The Study Centre for Consumer Law/Centre for European Economic Law, An Analysis and
Evaluation of Alternative Means of Consumer Redress Other Than Redress Through Ordinary Judicial Proceedings (Leuven, 2007), 288.
265 R Mulheron, “Some Difficulties with Group Litigation Orders – and Why a Class Action is Superior”
(2005) 24 Civil Justice Quarterly 50; European Commission, Communication supra n 253, 12.
266 R Mulheron, supra n 265, 50.
267 R Mulheron, “The Case for an Opt-out Class Action for European Member States: A Legal and
Empirical Analysis” (2009) 15 (3) Columbia Journal of European Law 428-429.
268 Ibid, 428.
269 R Mulheron, supra n 265, 50.
270 The Consumer Association v JJB Sports PLC [2009] CAT 2 (Case No 1078/7/9/07).
271 Until 30 September 2015, Section 47B read: “A specified body may (subject to the provisions of this
Act and Tribunal rules) bring proceedings before the Tribunal which comprise consumer claims made or continued on behalf of at least two individuals”.
proceedings, victims must opt-in. In the case at stake, the lawsuit brought by Which? followed a sanction imposed by the Office Fair Trading, which fined several companies who entered into price-fixing agreements. Due to this unlawful practice, the consumer association estimates that around one million replica football T-shirts were sold at an artificially high price.272 In January 2008, judicial proceedings came to a stall when parties reached a settlement, whereby the defendant would pay “damages to affected consumers of between £5 and £20 per shirt”.273 The settlement was concluded on behalf of only 130 victims.274 Due to the difficulties to gather victims and the costs relating thereto, this claim is the only one that has been brought so far under Section 47B of the Competition Act 1998.275 Today, many collective redress schemes follow the opt-in approach.
119. As for the automatic membership model, it establishes that members are
encompassed in the collective action without any possibility to get excluded. The American experience shows that the interest of the defendant not to have to comply with potentially contradictory decisions dictates such a system. In Europe, automatic membership applies predominantly when a general interest is at stake. For example, this is typically the case when an environmental organisation initiates proceedings against an industrial company whose activities pollute the air of a given geographical area. In this context, an action seeking injunctive relief would usually not allow consumers either to opt-in or to opt-out.276 However, if the organisation wins the case, all people living in the polluted area would benefit from this judgment.
120. Lastly, according to the opt-out system, people are included in a collective
action, unless they manifest their intention not to be bound by the decision or the settlement. Although this system is feared by some, because of its potentially
272 M Murphy, “JJB and Which? settle football shirt case” (10.01.2008) FT.com, available at
https://next.ft.com/content/bd0acca2-bf08-11dc-8c61-0000779fd2ac.
273 The Consumer Association v JJB Sports PLC [2009] CAT 2 (Case nº 1078/7/9/07), para 13. 274 The Consumer Association v JJB Sports PLC [2009] CAT 2 (Case nº 1078/7/9/07), para 7.
275 On the deficiencies of this mechanism, see R Mulheron, Reform of Collective Redress in England and
Wales: A Perspective of Need, Report submitted to the Civil Justice Council of England and Wales (February 2008), 37-46. Because the collective action could not properly tackle rational apathy, the Consumer Rights Act 2015 reformed Section 47B. Henceforth, opt-out collective actions are available under said Section.
276 CI Nagy, “The European Collective Redress Debate After the European Commission’s
Recommendation – One Step Forward, One Step Back?”, (2015) 22 (4) Maastricht Journal of European and Comparative Law 537-538, 541.
unconstitutional character and the abuses it may trigger,277 quite a few Member States
have adopted an opt-out regime, i. e. Bulgaria, The Netherlands, and Portugal. Others have implemented an innovative solution whereby opt-in and opt-out participation schemes coexist (hybrid system). For example, in Norway, Section 35-7 of the Dispute Act 2005 states that opt-out proceedings may be ordered by the court where “amounts or interests (…) are so small that it must be assumed that a considerable majority of them would not be brought as individual actions” and the claims “are not deemed to raise issues that need to be heard individually”. The rationale is to offer access to justice to victims when an opt-out collective action is the only available means to obtain redress. Similarly, Belgium, Denmark and Norway have adopted a hybrid system but different criteria apply in order to determine whether courts should let the action proceed under the opt-in or opt- out regime. In these States, however, no abusive litigation or harm to businesses has been registered.278 This certainly demonstrates that an opt-out regime by itself cannot trigger abusive litigation. In reality, abuses stem from other elements of the legal environment like attractive rules on costs and funding, as well as the presence of favourable substantive laws.279
121. One of the potentially problematic elements of the opt-out model is that it
contradicts the right to be heard, given that absent members of a collective action would eventually be bound by a decision without having participated in the proceedings.280 This argument is partially true: indeed, if absent victims are adequately notified and thus, are offered an opportunity either to intervene or to get out of the collective action, then we argue that their right to be heard is preserved. In this vein, Ervo makes an interesting remark: she states that an opt-out system coupled with adequate notification better
277 European Commission, Communication supra n 253, 11.
278 European Commission, Evaluation of the effectiveness and efficiency of collective redress supra n 262,
78-79; Nagy, supra n 276, 545.
279 L Ervo, “Opt-In is Out and Opt-out is In” in B Hess et al. (eds), EU Civil Justice: Current Issues and Future Outlook, Swedish Studies in European Law vol 7 (Bloomsbury, 2016), 198. The author states that “[t]he possibility to abuse the system is the most traditional argument against class actions generally and especially against the opt-out system. However, this argument does not hold. Because, in such case, substantive law (…) does not change; and collective redress will not do so either. If punitive damages are not allowed according to substantive law or if the threshold for establishing negligence or liability has not been lowered, the fear of this type of negative Americanisation is amateurish. Collective redress is just a procedural tool to realise substantive law like all procedures”.
280 Regarding this argument, see R Gaudet, “Turning a blind eye: the Commission's rejection of opt-out
class actions overlooks Swedish, Norwegian, Danish and Dutch experience” (2009) European Competition Law Review 107-109; J Stuyck, “Class Actions in Europe? To Opt-In or to Opt-Out, That is the Question” (2009) European Business Law Review 491; DPL Tzakas, “Effective Collective Redress in Antitrust and Consumer Protection Matters: A Panacea or a Chimera?” (2011) 48 (4) Common Market Law Review 1144- 1147
respects the right to be heard than a collective redress judgment that would only bind opt- in members but could nevertheless create a precedent or be used as evidence in future proceedings.281 Moreover, when the conflict involves small-value claims, the opt-out nature of the system cannot take away the right to be heard, since the alternative to collective proceedings would be no day in court at all.282
Similarly, the opt-out regime is meant to infringe the right of disposal, given that members are dragged into collective proceedings.283 As adequate notice and opt-out provide an “exit door”, this argument cannot be validly accepted. Taken seriously, this would also mean that automatic membership violates the right of disposal, as well as the right to be heard. However, this model is permitted in the European Union.
On the positive side of the balance, an opt-out regime offers access to justice to small-value claimants and fights against rational apathy.284 Thanks to this mechanism, victims’ negotiation power is enhanced. Furthermore, opt-out collective redress allows defendants to obtain closure and avoid the cost of litigating the same cases several times in distinct locations.285
122. These participation schemes generate various issues from a civil procedure
perspective: to start with, the status of absent parties is unclear. Sometimes they are considered as parties to the proceedings –this entails the respect of certain procedural rights, like the right to present evidence –, and sometimes they are not qualified as such. For example, under the Italian azione di classe that is based on an opt-in system, absent members do not have the right to participate in collective proceedings or to intervene.286
Their role is purely passive. Interestingly, in Sweden, although absent members are not parties to collective proceedings, they may de facto be considered as such under certain circumstances: for example, this will be the case for questions related to lis pendens, joinder –of pending cases or other related group actions–, rules on evidence, and other
281 Ervo, supra n 279, 197. 282 Nagy, supra n 276, 536-537.
283 On this question, see A Higgins and A Zuckerman, “Class Actions come to England – More Access to
Justice and More of a Compensation Culture, but They Are Superior to Alternatives” (2016) 35 (1) Civil Justice Quarterly 3-5; Nagy, supra n 276, 536-538; Tzakas, supra n 280, 1137-1139;.
284 R Mulheron, “Justice Enhanced: Framing an Opt-Out Class Action for England” (2007) 70 The Modern Law Review 556; AL Sibony, “A Behavioural Perspective on Collective Redress” in E Lein et al., Collective Redress in Europe – Why and How? (The British Institute of International and Comparative Law, 2015), 51-56.
285 R Mulheron, supra n 284, 556.
matters submitted to general rules of civil procedure.287 An absent member can also
intervene and exercise the right to appeal. The second issue concerns res judicata. In principle, res judicata only binds parties to the proceedings. However, in collective redress proceedings, the judgment or the settlement covers absent members, who are not parties. The American experience has shown that admitting an ultra partes effect challenged the traditional rules of civil procedure.