In a handful of group claim decisions in the last few months of 2024 a body of cases favouring early or broad disclosure to claimants has emerged, although the Courts nevertheless remain rightly mindful of the need to ensure that claimants are not assisted in fishing expeditions for claims they do not yet have a proper basis for advancing. (There remains a separate story of disclosure by claimants in group claims. In particular, in securities claims there is a growing tendency to require particularity or disclosure from claimants prior to trial one even of issues put off to trial two. But that is for another blog.)
Disclosure in relation to wrongdoing that is admitted: Glencore
The first decision up for discussion arose at the second CMC in the huge Glencore securities claim. In the competition arena (which this was not), a ‘follow-on claim’ is one brought by private parties for damages on the back of a finding by a competition authority of an infringement. But many group claims, including that in Glencore, are in a sense ‘follow-on claims’ in that they are funded and brought in reliance on findings of wrongdoing by, or plea bargains with, public enforcement or regulatory authorities such as the UK Serious Fraud Office or US Department of Justice. Indeed, this is almost always the case for securities claims.
A fairly novel disclosure issue for such follow-on claims crystallised recently in the Glencore claim, as follows:
In a normal fraud claim, the corporate defendant denies the underlying wrongdoing (corruption say, or perhaps false accounting in one part of the global business). Similarly, where a claimant alleges wrongdoing on the back of allegations made but not yet resolved in other proceedings (see Persons v Standard Chartered plc [2024] 1 WLR 4589 (CA)), there too the wrongdoing is a matter of dispute between the claimants and defendants and becomes an issue for disclosure accordingly.
But in Glencore, as in other follow-on claims where there are public enforcement findings, the claimants plead the wrongdoing published in the plea agreements almost exactly as recorded there (because the claimants have little or no underlying detail or documents going beyond that), and the defendants then admit that wrongdoing as they have to given the public findings, whilst denying that the relevant senior defendant personnel were aware of it. Liability remains very much in issue.
The claimants then seek to prove the fraudulent knowledge of senior individuals. To do this, they need the detailed underlying fraud documentation that would give them circumstantial evidence from which to build a web that supports the inference of the senior individual having that knowledge—the dates and amounts of payments, documents showing the sorts of reporting made to who, evidence of who was in what office when, minutes of meetings and evidence of compliance and accounting systems and reporting, mention of which defendant or foreign individuals were involved.
But the defendants respond with some justification that there is no need for general disclosure of the documents relating to the admitted conduct, because the underlying conduct itself is not an issue for disclosure as it is admitted. Defendants argue, further, that giving disclosure of documents relating to the underlying conduct that do not have a direct nexus to any of the senior knowledge individuals would be to require the defendants to disclose confidential irrelevant material and give in to a speculative claimant fishing expedition designed to give the claimants new things to plead, when the burden falls on claimants to plead out their case before disclosure.
This came up for consideration at the first Glencore CMC in June 2024, and the second CMC in November 2024 (continued at a hearing in December), given that most of the wrongdoing in the Glencore claim is admitted. At the first CMC, the defendants made the arguments above, that documents in relation to matters which are admitted are not an issue or matter for disclosure. The debate was noted by Bryan J at the first CMC, but the precise scope of disclosure was not in issue then, although the overall model for disclosure was. The defendants agreed to give disclosure (as to the agreed issues for disclosure, including knowledge) from a broad pool of documents and on a Model D narrative basis (under PD 57AD), so the court noted that this may partly solve the issue and it was a matter for a later hearing (Aabar Holdings Sarl v Glencore plc [2024] EWHC 1556 (Comm) [146]-[153]).
The issue arose more directly at the second CMC, at which custodians and search terms were due to be resolved. The defendants argued that documents had to be directly relevant to senior individuals’ knowledge to be disclosable, given that their knowledge was the issue for disclosure, and that many documents evidencing the underlying admitted fraudulent conduct would not be. The claimants argued that, when proving fraudulent knowledge and applying the ‘with narrative documents’ test of relevance, most documents going to the underlying conduct would be relevant to proving knowledge and the claimants should not be at the mercy of the level of detail that happens to be included in a plea bargain or similar document.
There is no judgment on the point, because the debate before Picken J led to agreement by the defendants that they would disclose from the 46 million documents that had been produced to investigating authorities all documents “relevant to the ‘Admitted Conduct’” (to quote the order). In other words, for that large pool of documents the defendants would not apply the test of relevance only to the issues for disclosure i.e. the issue of knowledge, which would be a difficult test to apply and may have merely put off disputes until later. Instead, for that pool of documents, the documents relevant to the admitted conduct itself would be disclosed, even though whether the conduct took place was not an issue between the parties and so an issue for disclosure, on the basis that such documents would be sufficiently likely to be relevant to knowledge and that this provided an easier test for the (often junior) disclosure personnel reviewing the documents to apply.
Whether this approach will be taken in future quasi-follow-on cases, and the extent to which the outcome turns on the defendants having previously agreed that the model for disclosure included narrative documents, remains to be worked out in future cases.
The asymmetry of information and disclosure to enable further particularisation by claimants: Shell
A theme in some of the recent case law has been recognition of the asymmetry of information that group claimants face in the early stages of litigation. (See the diesel Pan-NOx emissions litigation [2023] EWHC 3099 (KB) and subsequent rulings; and the Standard Chartered decision above [49].)
This sympathy found expression in the Court of Appeal decision in Alame v Shell [2024] EWCA Civ 1500. This is a group claim against Shell for pollution in the Niger Delta. The claimants from the fishing village community alleged damage resulting from a hundred oil spills, but in the 13,000 schedules of information they were for the most part unable to identify which particular spills caused each particular claimant harm, although maintained that their case would involve and require such causation in due course and they were not seeking to advance a ‘global claim’. In this context a global claim meant a claim based on loss being caused by some of a set of events for all of which the defendant is responsible, without showing which specifically caused the loss. May J declared that as the claimants did not have a sufficiently pleaded case on specific causation, they had to pursue their claims by a global claim. The Court of Appeal disapproved (at [78]) of this forcing of the claimants to pursue a particular type of claim.
Moreover, the question of when or whether disclosure can precede particularisation arose. As summarised by the Court at [80]:
In an essentially circular procedural wrangle, the Claimants say that they cannot progress the pleading of their case to a point of sufficient particularity without further information from the Defendants; and the Defendants say that they cannot be required to provide further information unless the Claimants first achieve greater particularity about their case.
Given the inequality of information and of funding, the Court of Appeal (through the leading judgment of Stuart-Smith LJ) ruled that this “impasse” (their word) should be broken by the ordering of further disclosure required to further particularise the case and select test claimants: [82]-[83]. This was because “the Court should strive to ensure that the parties are on an equal footing in relation to access to relevant information”: [86]. After that disclosure, the onus would shift to the claimants properly to particularise their case.
This is likely to be relied on heavily by claimants in future cases, although one might expect to see some correction or clarification that emphasises that the premise for this approach is that the claimants could not have realistically obtained the documents to progress their pleading from any other source without the disclosure, and that the case must itself have merit
Disclosure of contemporaneous documents that support an expert-led case of objective unlawfulness: Diesel NOx emissions
Another disclosure issue arose in the Diesel NOx claims. The core issue for the PDD trial to be held in autumn 2025 is the lawfulness or otherwise of various software and other devices in the vehicle engines (which reduce the operation of certain NOx-reducing processes in certain circumstances) under the Emissions Regulation and associated law. This includes issues of what the software actually did to the emissions of the vehicles and when, and whether there were dangers the avoidance of which necessitated such software and could not have been dealt with in any other way.
The claimants contended at the September CMC in the Mercedes claim that documents contemporaneous to the design and testing of the engines by the manufacturers would be relevant, as their own documents showing what they thought their devices did, whether they thought they were ‘defeat devices’ under the legislation, and what dangers they were or were not responding to, would be of some weight alongside the retrospective expert evidence.
The defendants, however, relied on the agreed position that the questions for the autumn trial were objective ones as to facts at the time. It was no part of the test that the defendant manufacturers knew that the software was unlawful, or even that they knew of a particular danger and intended to meet that danger. The key evidence at trial would therefore be expert evidence, based largely on examination and testing of the software and vehicles. Questions of wrongdoing (for the tort of deceit, for example) were for a later trial.
Constable J agreed with the claimants that, while the weight of the contemporaneous documents such as meeting minutes or communications was a matter for trial, they were potentially relevant and should be disclosed. Subjective evidence could help to show the objective position. The order at that CMC therefore recited the following ruling:
AND UPON the Court’s ruling at the September 2024 CMC (the “Ruling”) that certain contemporaneous documents as to the technical engineers’ intention or knowledge, in respect of why certain functions were put into place is potentially probative of issues at the PDD Trial.
The point was accordingly not disputed as a matter of principle by the other manufacturers at the October CMC, although of course the particular scope and search terms remained very much in dispute.
This issue, unlike those higher up in this blog, may be largely unique to the diesel dispute, but it nevertheless shows that one cannot always predict the scope of disclosure that will be required even where tight apparently legal and objective preliminary issues have been set down.
Disclosure: the author acts for the claimants in the Glencore and Diesel NOx emissions disputes