The UK Competition Appeal Tribunal recently approved donating large amounts of unclaimed damages from collective actions to charity, especially the Access to Justice Foundation (ATJF), because of the low participation rates by class members. The case is Gutmann v Stagecoach South West Trains.
In November 2023, the Amsterdam District Court decided in the TikTok case that defendants are only liable for damages that have been explicitly claimed in the case. This means any damages not claimed should be refunded to the defendant.
In my view, this is the incorrect approach. The defendant caused the damage, was legitimately required to pay compensation, and no longer has a right to that money, even if the claimants do not seek their damages.
Sometimes these damages are minor, such as 25 euros or less, and claimants simply don’t bother to fill out the necessary forms, but that shouldn’t matter. It would be fair and justified to allocate this leftover money to help victims of corporate misconduct. One way to do this is to allow foundations to keep a certain amount for future cases, reducing their dependence on external funding.
I am aware that similar suggestions have been made, such as allowing foundations to allocate small amounts for operational costs to be paid from damages; however, this proposal goes further by addressing actual funding for future litigation.
Litigation funding would not become obsolete because the requested amounts would not fully cover all costs. WAMCA cases can cost several million euros. However, it would promote co-funding and risk sharing, leading to more cases being brought to court. Foundations are, of course, non-profit organizations, so any profits generated would have to be reinvested into their own “fund.”
To persuade courts to adopt this idea, foundations might also pledge that one of their next three cases will be an “idealistic” case focused on protecting the environment or other collective interests, rather than prioritizing immediate financial gains for victims. Courts understand that securing funding for these cases can be very challenging.
Hopefully, foundations will work together on this issue and convince courts that distributing at least some of the unclaimed damages in collective actions this way is fair and promotes justice.
Maybe for another time, but in my view, foundations should be allowed to set aside some funds for future cases regardless of unclaimed damages. Several scenarios, especially when a case is settled early, show that the foundation can receive (and should have the right to) enough money from the defendant(s) to cover damages owed to harmed parties, pay the litigation funder, cover operational costs, pay deferred law firm fees (not necessarily in this order), and still have leftover funds for future litigation.
