The South African Class Action Mechanism: Comparing the Opt-In Regime to the Opt-Out Regime

Keywords: Class action, joinder, notice, opt-in, opt-out, res judicata

Abstract

In Mukaddam v Pioneer Food (Pty) Ltd 2013 2 SA 254 (SCA), Nugent JA stated that, once the class is confined to claimants who choose positively to advance their claims and are required to come forward for that purpose, he can see no reason why they are not capable of doing so in their own names through joinder – they do not need a representative to do so on their behalf. The members who choose to opt in to the class action will thus be identifiable. If that is the case then, according Nugent JA, joinder may be the appropriate procedural device. A problem evidenced by this approach is accordingly that, by suggesting that joinder is the appropriate procedural device where all the claimants are identifiable, rather than a class action, the court essentially attacked the viability of the opt-in regime of class action litigation.

The preferential treatment afforded by our courts to the opt-out class action regime is further reinforced by the finding of Nugent JA that the opt-in class action regime can be utilised only in exceptional circumstances. As exceptional circumstances had not been proved, he found that a class action was not the most appropriate way to pursue the claims. He accordingly suggested that joinder was a viable option to pursue the claims.

The opt-in class action regime requires individual class members to take positive steps to participate in the class action. In other words, class members are required to come forward and opt into the class action, failing which they will not be bound by or benefit from the outcome of the litigation. Support for the opt-in regime is essentially premised on the belief that individuals who are unaware of the litigation should not be bound by its outcome. The opt-out class action regime, on the other hand, automatically binds members of the class to the class action and the outcome of the litigation unless the individual class members take steps to opt out of the class action. Support for the opt-out regime is essentially based on the view that the opting-in requirement could undermine one of the primary purposes of class action litigation, which is to facilitate access to justice.

The Constitutional Court in Mukaddam v Pioneer Foods (Pty) Ltd 2013 5 SA 89 (CC) held that Nugent JA was wrong to find that an applicant in an opt-in class action is required to show exceptional circumstances. However, the court did not provide reasons for its disagreement. The issue relating to exceptional circumstances in opt-in class actions was dealt with in two sentences. The Constitutional Court also failed to deal with the nature and status of the opt-in class action compared with opt-out class actions in South African law.

The note will accordingly consider when, if at all, it is appropriate to use the opt-in class action regime compared to the opt-out class action regime.

 

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References

Literature

ALRC Grouped Proceedings
Australian Law Reform Commission Grouped Proceedings in the Federal Court Report No 46 (Australian Government Publication Services Canberra 1988)

ALRI Class Actions
Alberta Law Reform Institute Class Actions, Final Report No 85 (Edmonton Alberta Law Reform Institute 2000)

Anderson and Trask Class Action Playbook
Anderson B and Trask A The Class Action Playbook (LexisNexis New York 2014)

Australia House of Representatives Debates
Australia House of Representatives Debates (14 November 1991)

De Vos 1996 TSAR
De Vos LR "Reflections on the Introduction of a Class Action in South Africa" 1996 TSAR 639-657

Hensler Class Action Dilemmas
Hensler DR Class Action Dilemmas: Pursuing Public Goals for Private Gain (RAND Institute for Civil Justice Santa Monica 2000)

Klonoff Class Actions
Klonoff RH Class Actions and Other Multi-party Litigation in a Nutshell 4th ed (Thomson West St Paul 2012)

Ministry of the Attorney General, British Columbia Consultation Document
Ministry of the Attorney General, British Columbia Consultation Document: Class Action Litigation for British Columbia (The Ministry Victoria 1994)

Morabito 2003 Tex Int'l LJ
Morabito V "Judicial Supervision of Individual Settlements with Class Members in Australia, Canada and the United States" 2003 Tex Int' LJ 663-728

Ontario Law Reform Commission Report on Class Actions
Ontario Law Reform Commission Report on Class Actions (Ontario Law Reform Commission Ontario 1982)

SALC Working Paper No 57
South African Law Commission Working Paper No 57: The Recognition of a Class Action in South African Law (The Commission Pretoria 1995)

SALC Project 88 – Report
South African Law Commission Project 88 – Report: The Recognition of Class Actions and Public Interest Actions in South African Law (The Commission Pretoria 1998)

Case law
Children's Resource Centre Trust v Pioneer Food (Pty) Ltd 2013 2 SA 213 (SCA)
Linkside v Minister of Basic Education (HC) (unreported) case number 3844/2014 of 17 December 2014
Mukaddam v Pioneer Foods (Pty) Ltd 2013 2 SA 254 (SCA)
Mukaddam v Pioneer Foods (Pty) Ltd 2013 5 SA 89 (CC)
Permanent Secretary, Department of Welfare, Eastern Cape v Ngxuza 2001 4 SA 1184 (SCA)
Robidoux v Celani 987 F 2d 931

Legislation
American Federal Rules of Civil Procedure
Civil Procedure Act, 2005 (NSW)
Class Proceedings Act, 1992
England and Wales Civil Procedure Rules
Federal Court Act, 1976 (Cth)
Federal Court of Australia Amendment Bill, 1991 (Cth)
Supreme Court Act, 1986 (Vic)

Internet sources
Walker 2010 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1491167
Walker J 2010 Class Proceedings in Canada: Report for the 18th Congress of the International Academy of Comparative Law https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1491167 accessed 23 January 2019

LIST OF ABBREVIATIONS
ALRC Australian Law Reform Commission
ALRI Alberta Law Reform Institute
CC Constitutional Court
SALC South African Law Commission
SCA Supreme Court of Appeal
Tex Int'l LJ Texas International Law Journal
TSAR Tydskrif vir die Suid-Afrikaanse Reg
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Published
2019-05-20
Section
Notes