Evans v Barclays Bank & Others: understanding the impact on group legal claims

A recent UK Supreme Court decision is making waves in the world of group legal actions. The case, Evans v Barclays Bank Plc & Others, is a landmark ruling. It changes how a specific type of group claim, known as "opt-out" collective actions, will be handled in the future. 

This decision is as important as the Supreme Court's 2020 ruling in Mastercard v Merricks. While the Merricks case made it easier for group claims to get started, the Evans case adjusts the rules for when these claims can proceed on an "opt-out" basis. It clarifies the court has discretion to say no to an opt-out claim if the case looks weak. 

What are opt-out and opt-in claims? 

In the UK, the Consumer Rights Act 2015 introduced a US-style "class action" system. This is called an "opt-out" collective action. 

• Opt-out: A representative can bring a claim on behalf of a whole group of people. Individuals are automatically included unless they choose to "opt-out." 
• Opt-in: This is more like traditional group litigation. Each person must actively choose to "opt-in" and join the claim. 

The story behind the Evans case 

The Supreme Court was asked to review a decision by the Competition Appeals Tribunal (CAT). The CAT had refused to let a claim, brought by a Mr Evans, proceed on an opt-out basis. Instead, they said it could go ahead as an opt-in claim subject to clarifications. The Court of Appeal disagreed with the CAT, and the case went to the Supreme Court. 

Mr Evans's claim was a "follow-on" damages action. This means he was seeking compensation after the European Commission had already found that several banks had broken competition law. The banks' traders had illegally shared sensitive information about foreign currency trading, impacting the prices in the trading market. 

Mr Evans proposed to represent a large, mixed group of around 40,000 people and companies. This group included both direct customers of the banks and other financial institutions. The value of their individual claims varied greatly. A few large financial institutions made up most of the total claim's value, while thousands of smaller claimants had claims of less than £3,500 each. 

A key problem was that the CAT had serious doubts about Mr Evans's case. They described the claim as being "so weak that it was liable to be struck out". The issue wasn't whether the banks had broken the law—the Commission had already established that. The problem was the lack of a clear, well-argued link between the banks' actions and the financial losses the entire group claimed to have suffered. 

The Supreme Court's decision 

The Supreme Court focused on the CAT's rules for deciding between opt-in and opt-out claims. Two factors are said to be relevant under the rules: 

• The strength of the claim. 
• Whether it is practical for the claim to be brought on an opt-in basis. 

The CAT had decided that both these factors pointed away from allowing an opt-out claim. The Supreme Court agreed and supported the CAT's judgment. It stressed that higher courts should not interfere with the CAT's discretion on how to manage these cases unless there is a clear error in law. 

The practicality of opt-in claims 

The Supreme Court acknowledged that the claim was unlikely to go ahead on an opt-in basis. However, this did not automatically mean it should be an opt-out claim. An opt-out claim is not a "last resort." 

Mr Evans had shown that building an opt-in group would not have been viable. The Supreme Court viewed this as a commercial decision by sophisticated companies, not as proof that an opt-in claim was impossible. 

While many smaller claimants would find it impractical to join an opt-in claim, the CAT was allowed to give less weight to their interests because their claims made up only a small part of the total value. 

This part of the ruling is significant for access to justice. The Supreme Court stated that access to justice applies to defendants too. The system should not be used as "a stick with which anyone who claims, however implausibly, to have suffered loss can beat infringing undertakings into paying them." 

The strength of a claim matters 

The Supreme Court's view on the "strength of the claim" is a central part of its judgment. It rejected the idea that this factor is usually neutral. Instead, it works on a sliding scale: the weaker a claim is, the harder it is to justify allowing it to proceed as an opt-out action. An opt-out claim gives the claimant side significant leverage and therefore this should not be weighted lightly. 

This decision means that claimants and their funders will have to prepare their cases much more carefully from the very beginning. This is especially true for claims that allege widespread market harm. 

Caution on using evidence from other cases 

The Supreme Court also warned against trying to strengthen a weak case by using findings from unrelated regulatory decisions. It criticised the Court of Appeal for relying on the European Commission's Sterling Lads decision, stating that a later decision following the CAT’s judgement could not be relevant or admissible. 

What this means for future cases 

The Evans case might seem like a restrictive decision that resulted from a particularly weak claim. However, it's better seen as a move to reinforce the CAT's role as a gatekeeper for opt-out claims. It does not reverse the general principle from the Merricks case that the merits assessment at certification should be a low bar to meet. 

The message is clear for anyone wanting to bring collective action. Opt-out claims are not off the table. But weakly argued cases, especially those with vague theories about market-wide damage, will find it very difficult to gain the powerful advantage of being an opt-out collective action.