Delictual Class Actions: tenable claims?

Publication April 22, 2016

Civil litigation, like a sports game has fitness criteria for who qualifies as a player. For a right of entry into the field of litigation, prospective litigants must comply with the rules of legal standing. There are specific rules applicable to litigation involving a class action for damages for injury or damage in a delictual claim. In particular, where a class presents a novel question of delictual law, the certification question is whether the usual standard of proof to establish a valid cause of action is appropriate. This is a necessary consideration given the important yet preliminary nature of certification. Has a prima facie case or plausible case be made out? This is the very question that arose from the litigation emanating from the class certification application in Mukaddam v Pioneer Foods (Pty) Ltd1(Mukaddam 1) and Mukaddam v Pioneer Foods (Pty) Ltd2(Mukaddam 2).

Class Action Procedure

Class action procedure enables the claims of a number of persons against the same defendant to be determined in one legal action. One or more persons, representative plaintiffs, may sue on their own behalf, and on behalf of a number of persons, called the class.3If the representative plaintiffs are acting in their own interests, and in the interests of the class, the class must have a claim to a remedy for a similar alleged wrong or similar rights infringement to that alleged by the representative. The class members’ claims share questions of fact and/or law with that of the representative plaintiff, referred to as the common issues. If the representative plaintiff is only acting in the interests of the class members without his or her own rights being affected, then only the claims of the class are represented. In both instances only the representative plaintiffs are parties to the legal action. The other class members are not litigants before the court and are not identified as individual members in the litigation, but are merely described in the pleadings in their commonality to be identified as a class.4The class members do not actively participate in the proceedings, but may be bound by the outcome of the litigation on the common issues.

Certification

In the absence of statutory procedures5or practice directives, the courts in exercising their inherent jurisdiction to accommodate class actions, direct a class to apply to have the action certified6as a class action relating to the breach of rights. The Supreme Court of Appeal (SCA) in The Trustees for the Time Being for the Children’s Resource Centre Trust v Pioneer Foods (Pty) Ltd7(Children’s Resources Centre Trust 2) specified the following requirements for certification: the definition of the class; a common claim or issue; a valid cause of action; a suitable representative; and appropriateness of proceeding as a class action. The Constitutional Court (CC) in Mukaddam 2 approved these requirements. An applicant seeking class certification bears the burden of proving that these certification requirements are met. The courts have however remained opaque on the standard of proof.

Evidentiary burden and certification of a delictual class action

Wallis JA in Children’s Resources Centre Trust 2 confirmed that, at certification, the court only considers the facts alleged in order to determine prima facie standing. With regard to certification of a delictual class action whereby a novel cause of action is advanced, would the court similarly consider the alleged facts to determine prima facie standing?

To succeed with advancing a delictual class action, the representative plaintiff must satisfy the certification requirements. Of these requirements, a valid cause action is established by satisfying the delictual elements that give rise to a delictual action: conduct or harm8, wrongfulness9, fault10, causation11, from which the plaintiff suffered damage. The criterion employed in determining whether a particular infringement of interests is unlawful, is public policy. Conduct is only wrongful if it either infringes a legally-recognised right of the plaintiff or constitutes a legally-recognised duty owed by the defendant to the plaintiff. The public policy criterion is therefore a merits-based analysis12 of what society considers to be just, equitable, in good faith and reasonable.13 With this is mind, certification of a delictual class action is thus about ascertaining whether the claim has legal foundation, recognition and enforceability within the legal convictions of the community embodied by the courts.14

Novel claims in delict

Where a representative applicant makes out a case founded in delict, of which the determination of wrongfulness appears novel, the prima facie standard cannot suffice. The court cannot prima facie grant or refuse certification on the facts without first determining whether or not public policy gives legal foundation, recognition and enforceability to the alleged cause of action. A preliminary application of the public policy criterion to determine wrongfulness at certification is therefore required.

In Mukaddam 1 and 2 the representative applicants in the certification application, advanced a delictual claim for damages in which they alleged that they and a class of approximately 100 other distributors of bread suffered a loss of profits as a result of anti-competitive price-fixing by the respondent bread producers. According to Nugent JA in Mukaddam 1 the representative applicants sought to establish a novel cause of action. This leads me to two emergent approaches when the courts are confronted with novel causes of action at certification. These are the strict and the broad approaches.

Broad approach

Wallis JA in Children’s Resources Centre Trust 2 directed that at certification stage the court requires evidence to be presented by the parties before it in order to be fully informed of public policy.15 The broad approach requires the court to preliminarily look into the merits where a novel claim arises. Unlike with Nugent JA’s strict approach, the court considers all the evidence of the circumstances presented at that stage, and every other relevant factor it deems necessary.16 This, Wallis JA pointed out, must be undertaken in order to determine whether a novel claim is legally plausible.17

Strict approach

Nugent JA in Mukaddam 1 like Wallis JA in Children’s Resources Centre Trust 2 directed that representative applicants must satisfy a court “where a novel cause of action is sought to be established, that the claim is at least legally tenable, albeit that the court is not called upon to make a final determination as to the merits of the claim.”18

Nugent JA adopted a strict approach in dismissing the application on the basis that the representative applicants did not provide any evidence to suggest that public policy calls for the recognition of the claim. The question arises as to how the court then arrived at a determination that the class has no legally tenable claim? The CC considered both approaches.

Tenable or plausible: what’s in a name?

The CC in Mukaddam 2 criticised Nugent JA’s strict approach. Jafta J pointed out that in the absence of evidence on the policy considerations, Nugent JA should have followed Wallis JA’s broad approach. Wallis JA approached the matter on the footing that it was not necessary to determine whether the claims were good in law or that on the papers as they stood then, there was sufficient evidence showing a prima facie case. Wallis JA held that, although there may have seemed to have been a potentially plausible claim, those issues were not ripe for determination due to the novel nature of the claim. Nugent JA, like Wallis JA, should have referred the matter back to the High Court and directed the parties to present evidence on policy considerations. The High Court would then apply the public policy test to ascertain whether a legally plausible or tenable claim exists for certification.19 The CC thus confirmed the broad approach.

The recent case of Pretorious v Transnet Second Defined Benefit Fund20 demonstrates that a court will certify a class action where prior courts have discussed in passing the recognition of a novel claim, but left it open. The applicants advanced claims based on the failure by the respondents to implement pension fund increases. The respondents argued that a claim founded on substantive reasonable benefit expectation, an English legal doctrine, had no recognition in South African law, thus raising no legally tenable claim. In this instance, there is some precedent to show that there is a legally plausible or tenable claim where at least there has been some consideration of public policy. Although not a delictual matter, this judgment is illustrative of how a court at certification stage resolved a dispute over the recognition of a novel cause of action without engaging on a determination of the merits prematurely. Makgoba J found that such claim could plausibly found a cause of action for certification.21

The ‘legally tenable or plausibility test’ is therefore best suited when novel claims arise, unlike the limited prima facie legal standing standard, which considers the legal interests of the parties within an established framework. This test seeks to situate novel claims by initially weighing up the interests of the community with those of the parties to potentially develop new causes of actions and remedies for classes. This development in our law has been informed by class action jurisprudence from the United States of America (U.S).22

Rigorous analysis

The class certification requirements resemble those of the U.S class action:23 numerosity; commonality of law and fact; typicality; and adequacy of representation.24 The legally tenable or plausibility test draws from the U.S. “rigorous analysis standard.” According to this standard, the U.S courts have acknowledged at certification that considerations arise which are enmeshed in the factual and legal issues comprising the applicant’s cause of action. In these circumstances the courts will to the extent necessary, look behind the pleadings, to issues overlapping with the merits of the underlying claims to form a reasonable decision on certification. For this purpose, the court may request the parties to supplement the papers with sufficient evidence.25

These developments show how South African law is evolving to accommodate collective classes of players in the field of litigation. Where these classes present novel challenges, the umpire, in the absence of established rules, must look beyond the field of litigation to determine the new rules of participation. In the absence of certainty, the umpire may at least plausibly determine, based on society’s norms, who the players are.


Footnotes

1
1 2013 (2) SA 254 (SCA).
2 2013 (5) SA 89 (CC).
3 Children’s Resources Centre Trust v Pioneer Food (Pty) Ltd 2013 (2) SA 213 (SCA) para 16.
4 N Kirby “South Africa” in PG Karlsgodt (ed) World Class Actions: A Guide to Group and Representative Actions Around the Globe (2012) 386.
5 In 1995 the South African Law Commission prepared a report for Parliament which included a draft bill proposing statutory procedures for instituting class actions: South African Law Commission Project 88: The Recognition of Class Actions and Public Interest Actions in South African Law http:www.justice.gov.za/salrc/reports/r_prj88_classact_1998aug.pdf (accessed on 1 June 2013). Parliament has not actioned this report.
6 E Hurter “Certification: the procedure, its role in class action proceedings in Ontario and the proposed South African certification procedure” 2000 XXXIII CILSA 45.
7 2013 (2) SA 213 (SCA) para 23.
8 JC van der Walt and JR Midgley Principles of Delict 3 ed (2005) 43; J Neethling et al Law of Delict 5 ed (2006) 23.
9 Van der Walt and Midgley Principles of Delict 67; Neethling et al Law of Delict 31.
10 Van der Walt and Midgley Principles of Delict 155; Neethling et al Law of Delict 109.
11 Van der Walt and Midgley Principles of Delict 196; Neethling et al Law of Delict 159.
12 Neethling et al Law of Delict 33-34.
13Neethling et al Law of Delict 69.
14AC Cilliers, C Loots and HC Nel Herbstein and Van Winsen The Civil Practice of the High Courts and the Supreme Court of Appeal of South Africa 5 ed (2009) 185.
15Imraahn Ismail Mukaddam v Pioneer Food (Pty) Ltd 2013 (2) SA 254 (SCA) para 71.
16Children’s Resources Centre Trust v Pioneer Food (Pty) Ltd 2013 (2) SA 213 (SCA) para 37.
17Children’s Resources Centre Trust v Pioneer Food (Pty) Ltd 2013 (2) SA 213 (SCA) para 71.
18Mukaddam v Pioneer Foods (Pty) Ltd 2013 (2) SA 254 (SCA) para 4.
19Imraahn Ismail Mukaddam v Pioneer Food (Pty) Ltd 2013 (2) SA 254 (SCA) para 50.
20(25095/2013) [2014] ZAGPPHC 526 (31 July 2014).
21Meyer v Iscor Pension Fund 2003 (2) SA 715 (SCA) paras 27-30; Duncan v Minister of Environmental Affairs and Tourism 2010 (6) SA 374 (SCA) para 13; TEK Corporation Provident Fund v Lorentz 1994 (4) SA 884 (SCA) para 47.
22Children’s Resources Centre Trust v Pioneer Food (Pty) Ltd 2013 (2) SA 213 (SCA) para 42.
23Federal Rule of Civil Procedure, Title 28, United States Code.
24Karlsgodt World Class Actions 22, 23 and 30.
25Karlsgodt World Class Actions 22, 23 and 30; In re IPO Secs. Litig., F.3d 24 (2d Cir.2006); In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305 (3d Cir.2008); Honda Motor Co. Inc. v Allen, 600 F.3d 813 (7th Cir. 2010); Dukes v Walmart Stores, Inc., 603 F.3d 571(9th Circ.2010); Walmart-Mart Stores Inc. v. Dukes 564 US_(2011).


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