Group Litigation Order granted in the Mercedes emissions litigation

March 23, 2023

By Gareth Shires

Gareth Shires, instructed by a Steering Committee comprising Pogust Goodhead, Leigh Day, Hausfeld, Keller Postman, Slater & Gordon, and Milberg, acted for claimants bringing at least 300,000 claims against Mercedes-Benz and its subsidiaries in an application for a Group Litigation Order (“GLO”) in the High Court on 9 and 10 February.

The claims arise out of the long-running diesel emissions scandal, with a similar group claim against Volkswagen having settled last year (a matter in which Gareth was also instructed).  The draft pleadings allege that Mercedes and its subsidiaries deceived customers by placing vehicles on the market containing a variety of defeat devices, which it is alleged operate in a way that means that real-world diesel emissions from the vehicles exceed the statutory limits and are therefore far more polluting than advertised.  Claims have been intimated in deceit, for breach of contract, claims for redress under the Consumer Protection from Unfair Trading Regulations 2008, unfair relationship claims under the Consumer Credit Act 1974, and breach of statutory duty.  It is also alleged that Mercedes operated as part of a cartel with other manufacturers to delay the roll-out of technology that would have resulted in cleaner vehicles, and damages are sought for breach of Article 101(1) TFEU and/or the Competition Act 1972.

Judgment was handed down on 8 March 2023 (Cavallari and others v Mercedes Benz Group AG and others [2023] EWHC 512 (KB)), with the Senior Master confirming that she would recommend to the President of the King’s Bench Division that a Group Litigation Order be granted.  If granted, it would be the largest GLO brought before the Courts to date.

Whilst most issues were agreed between the parties prior to the hearing, the Senior Master ruled on a number of relatively minor points of disagreement between the parties and one point of wider importance to group litigation.

The Senior Master considered the question of contributions towards funding the litigation.  In group claims, there has been a long-standing concern about “free riders” – individuals or groups who wish to be part of the litigation but are unwilling to contribute towards its funding (see, for example, The RBS Rights Issue Litigation [2014] EWHC 227 (Ch) at [51] to [55])  – a concern that the lead firms sought to meet by seeking an order that, before claimants could pursue the litigation, they would first have to agree as to how they would contribute towards its funding.

The Senior Master found (at [24]) that it would be inappropriate to make such an order as a matter of principle, as it was inappropriate to prevent a claimant with a claim falling within the scope of the GLO to be prevented from joining the group simply because they could not reach agreement on costs contribution.  This was because such claimants would be forced to pursue unitary actions, which would be unsatisfactory and an inefficient use of resources.  Nevertheless, she indicated that where any claimant did not reach agreement on their costs contribution, the lead firms could seek a “pay as you go” order from the court, ordering such claimants to contribute to common costs during the course of the litigation.

It is anticipated that the first CMC will take place in early 2024.