An online article from Responsible Investor is causing waves for suggesting that a number of UK pension funds and other institutional investors excluded from a US class action against RBS might file a class action in the High Court in London.
Interesting as the article may be, there is a subtle, but important distinction between this potential UK action and a true class action.
The article notes that "a group of 25-30 institutional investors could 'co-ordinate' their legal actions," and also notes "that in contrast to the US class action system, each plaintiff in the UK would maintain autonomy and control over their individual legal case."
The proposed action, as spelled out in the article, is more aptly described as a "mass" or "group" action, and is not a true class action. Indeed, most US securities class actions are brought with the express disclaimer that the true identities of the majority of class members are unknown to counsel at the outset. These are generally known as "absent class members," and the identities of all members of the defined class may never be known. Only those class members that file a claim will become "known," whereas in the proposed action, there is no ambiguity about the identity of the group.
Also, in a class action, the named or lead plaintiffs certainly have some control over their individual claims, but every other absent class member has little control over the overall litigation strategy, and certainly not "autonomy and control over their individual legal case," unless they opt out of the class action.
The potential UK action would be brought by Coughlin Stoia Geller Rudman & Robbins and two UK based partners - Bates Wells & Braithwaite and UK barrister Christopher Brown. One feature of US class action litigation will be incorporated into the potential claim - according to the article, the law firms have said that they will represent "the UK pension funds on a no-win, no fee basis and insure the funds against any potential costs if the legal action is unsuccessful," taking 25% of any compensation paid to the funds if the case is successful.
Stay tuned for more developments...