Hot on the heels of James Sharpe’s engaging article on the trial split ordered by Michael Green J in California State Teachers’ Retirement System v Boohoo Group PLC [2026] EWHC 335 (Comm), the Court (Trower J) was required to grapple with the same issue at the first CMC of Various Claimants v Entain plc [2026] EWHC 1622 (KB). This decision marks a return to what had become, with some exceptions, the usual approach that so-called claimant-side issues are deferred until Trial 2, with Trial 1 being confined to defendant-side issues (although see below as to the Court’s resistance to the idea of a one-size-fits-all split).
Background
Between 2011 and 2017, the Entain Group operated Turkish-facing gambling businesses. In November 2019, HMRC commenced an investigation into the Turkish businesses. That investigation ultimately led, in December 2023, to Entain entering into a Deferred Prosecution Agreement with the CPS (DPA). The DPA related to Entain’s alleged failure between July 2011 and December 2017 to prevent bribery occurring in respect of the Turkish businesses, contrary to section 7 of the Bribery Act 2010 (Misconduct).
Claims under ss.90 and 90A of FSMA have been brought against Entain by two Claimant groups: one represented by Morgan, Lewis & Bockius LLP, and the other by Fox Williams LLP. Entain are represented by Clifford Chance LLP.
Certain Claimants bring claims under s.90 on the basis that: (i) prospectuses published by Entain in 2013, 2015, and 2018 contained untrue or misleading statements relating to the Misconduct and omitted matters required to be included in them; and (ii) those Claimants acquired shares to which the prospectuses applied and have suffered loss as a result of such misstatements and omissions.
Certain Claimants bring claims under s90A on the basis that: (i) information published by Entain contained untrue or misleading statements relating to the Misconduct and omitted matters required to be included in the published information; (ii) persons discharging managerial responsibility within Entain (PDMRs) knew or were reckless as to such misstatements and knew the omissions to be a dishonest concealment of material fact; and (iii) the Claimants acquired, held and/or disposed of Entain shares in reasonable reliance on the Published Information and have suffered loss as a result.
All Claimants further bring claims under s90A on the basis that: (i) Entain delayed publishing information to which Schedule 10A FSMA applied relating to the Misconduct; (ii) PDMRs acted dishonestly in delaying the publication of the information; and (iii) the Claimants have suffered loss as a result.
Entain either denies or does not admit the constituent elements of the Claimants’ claims.
Split trial
The key issue between the parties which arose at the first CMC of the claims concerned trial split. The parties agreed that (as with all previous s.90 and 90A cases) two trials were required, but they disagreed about which issues should be dealt with in Trial 1 and which in Trial 2. In particular, whilst it was common ground that all ‘defendant-side’ issues (going to liability) should be for Trial 1, and that matters of quantum should be for Trial 2, the parties disagreed about when the claimant-side issues of reliance and causation should be addressed. Entain argued that these should be dealt with in Trial 1, and the Claimants argued that they should be deferred to Trial 2.
In determining the dispute, Trower J agreed with the general propositions arising from Boohoo that it is wrong to say that there is an “orthodox” approach to trial splits in securities claims: “this is not an issue in which one size fits all” (at [29]). In Boohoo, the Court ordered that causation and quantum should be determined in Trial 2, but that reliance should be determined in Trial 1.
In this particular case, the Court concluded that the correct case management approach was to defer issues of reliance and causation to Trial 2.
As regards causation, the Court emphasised the number of different counterfactual permutations that the Claimants would need to address if that issue fell to be determined in Trial 1 (at [64]-[67]). In essence, this would require the Claimants to estimate (by reference to expert evidence) what the price of Entain shares would have been in the counterfactual, and what disclosures Entain would have made to the market, throughout the 12-year period in which they traded in Entain shares. Such an approach may well lead to redundancy and a waste of costs “in adducing evidence on permutations based on what turns out to be the wrong counterfactual” (at [68]). The preferable approach was for findings of liability first to be made in Trial 1 before matters of causation are addressed.
As to reliance, the Court concluded that issues of causation and reliance ought, in principle, to be determined at the same trial, together with matters of quantum. That is because there is no clean split between (on the one hand) an investment manager ‘relying’ on an annual report (in the sense of reading it and taking information contained in it or omitted from it into account) and (on the other) ascertaining how the investment manager would have behaved if the annual report had been free of misstatements and material omissions, i.e. causation: “I consider that, in the present case, there is what can properly be called a continuum in the impact on the claimants of what has occurred, which is not demarked by a bright line” (at [70]); and “the inquiry as to what the claimant did in reliance on the misstatement (or the omission) will be intimately interrelated to what the claimant would have done if the misstatement had not been made (or what was omitted had been disclosed)” (at [71]).
Discussion
This decision marks a return to the kind of split that has been ordered or approved in previous securities claims, including Various Claimants v G4S Ltd [2022] EWHC 1742 (Ch), Allianz et al v RSA Insurance Group Limited (Unreported 28/2/22), Various Claimants v Serco Group [2022] EWHC 2052 (Ch) and Aabar Holdings SARL et al v Glencore Plc [2024] EWHC 1556. It also contains a principled examination of the difficulties that the Court would likely encounter if it were to seek to determine matters of causation (and, by extension, reliance) in Trial 1 prior to the making of any findings of liability.
The Court did not, in its judgment, draw any express distinctions between the facts of the present case (or those of the decisions mentioned above) and the facts of Boohoo. However, in Boohoo, the Court appears to have been heavily influenced by the relatively modest scale of the proceedings, with fewer claimants/funds and fewer contested issues than other ss.90 and 90A cases: see [6], [33], [40] and [44]. To give one example, in Boohoo the alleged untrue or misleading statements and omissions spanned a period of only c.3.5 years, in comparison to 12 years in this case (with comparable periods in G4S (8 years), Serco (8 years) and Glencore (13 years)).
Whilst there is no “one size fits all” approach, for securities claims where the alleged misconduct is said to have taken place over a lengthy period of time (thereby giving rise to a very large number of permutations in the non-breach counterfactual), the Court will naturally be drawn to a form of split that hives off issues of reliance, causation and loss, with those issues being determined after the landscape of liability has been established.
Philip Hinks KC act for the MLB Claimants, together with Peter de Verneuil-Smith KC, Dominic Kennelly and Amy Gregg.