Sandra Bailey & others v GlaxoSmithKline UK Limited  EWHC 1766 (QB)
On 3 July 2020, Lambert J handed down judgment in the High Court in the Seroxat Group Litigation, bringing to an end 13 years of litigation on the substantive issues.
Following GSK’s success in the Court of Appeal on the question of the scope of the Claimants’ case (Bailey & Ors v GlaxoSmithKline UK Limited  EWCA Civ 1924), GSK applied for judgment on the basis that the claims were legally untenable. Judgment has been entered in GSK’s favour along with an award of costs, in part on an indemnity basis. A payment on account of GSK’s costs was also ordered in the sum of £4.5m, with the question of payment to be adjourned generally with liberty to restore.
Key takeaways from the judgment
- From a product liability perspective, Lambert J's judgment is significant in that it endorses the holistic approach to the assessment of defect under the Consumer Protection Act 1987 (CPA), as applied in the earlier High Court decisions of Wilkes v DePuy International Limited  QB 62753 and Gee v DePuy International Limited  EWHC 1208 (QB). Together with the Court of Appeal Seroxat judgment, all these cases can be taken as the authority on the correct approach to defect.
- This case also serves as a reminder that claimants who continue to prosecute a weak or thin or speculative claim do so at the risk of incurring the penalty of indemnity costs. According to Lambert J, once Andrews J had handed down her judgment in Gee, which underscored the need for a holistic assessment of defect, the Claimants in the Seroxat Litigation "were pursuing a case which was, quite simply, unarguable" (para 66).
- Lambert J's judgment is also a useful reminder to litigating parties of the importance of careful pleading and identifying the list of issues that will proceed to trial. This is particularly important in the case of large group actions, which, as the judgment illustrates, can be successfully defended.
- From a litigation funding standpoint, the judgment also illustrates how third party commercial funders backing individual claimants in the context of large group actions face the risk of significant costs liability being passed on to them if the claims fail to succeed.
This case relates to an action for damages brought by a group of Claimants funded by the Legal Services Commission (LSC) in 2007, arising from their use of a prescription-only antidepressant drug, Seroxat. Seroxat was alleged to be defective within the meaning of section 3 of the CPA because of a single aspect of its adverse event profile, namely symptoms upon discontinuation. The Claimants alleged that Seroxat was "worst in class" for discontinuation symptoms when compared with other drugs in the comparator class. In a Request for Information prior to filing its Defence, GSK asked whether the benefits of the product were material to be taken into account. The Claimants responded that they were not. Accordingly, GSK's Defence asserted firmly that it was not appropriate to assess defect by reference to one characteristic of a product only, and that all relative risks and benefits should be taken into account in that assessment.
Shortly before trial of the claims was due to commence in 2011, the LSC withdrew its funding on receipt of advice by the Claimants' then leading Counsel on the merits of the claim. There was a lengthy stay of proceedings before the Claimants revived the claims in 2015, having obtained the benefit of private funding provided by Managed Legal Solutions (MLS).
The litigation then formed the subject of a series of hearings before case management judge, Foskett J, and later before trial judge, Lambert J. In particular, Foskett J ruled in a judgment dated 1 March 2017 that the characterisation of the Claimants' case as "worst in class" was an accurate one, and that it was too late for the Claimants to (if they were planning to do so) engage in a risk/benefit analysis, which they had previously "expressly disavowed". By this time the judgment in Wilkes had also been handed down, which supported GSK's position that the approach to defect should be a holistic one.
A pre-trial review was later conducted before Lambert J in February 2019, at which time the Claimants sought to argue a 'free-standing defect' case, i.e. that Seroxat was defective because of its effects on discontinuation, irrespective of the relative risks of other SSRIs. Lambert J had little difficulty in rejecting this argument, noting the previous conclusions of Foskett J on the scope of the Claimant's case.
A trial of lead cases, listed for ten weeks, subsequently commenced on 29 April 2019. A list of issues was prepared for the trial, the first of which (Q1) was whether it was "appropriate in principle" to assess whether Seroxat was defective by seeking to establish whether it was "worst in class". If it was not, the claims would fail and it would not be necessary for the Court to consider any of the other issues in the case.
However during the course of the Claimants' opening submissions, an issue arose concerning the scope of the Claimants' pleaded case, which required Lambert J to give an urgent ruling. The Claimants advanced that, in determining whether the safety of Seroxat is such as persons generally are entitled to expect under section 3 of the CPA, the Court should infer or assume that Seroxat has no relative benefits when compared with other drugs in the appropriate comparator class, i.e. the Court should assume "a level playing field" of risks and benefits as between the drugs in the comparator class, save for the single characteristic which was said to constitute the "defect".
GSK reminded the Court that the case had been carefully case managed to trial and that there had been a series of Court rulings in which the Claimants' case had been defined as being that Seroxat was defective because it was "worst in class" for discontinuation symptoms. GSK had maintained from the outset that the Claimants' pleaded case on defect, i.e. a comparative case based on a single adverse event, was the wrong approach and that a holistic approach should be taken in determining the safety of a prescription medicine. Accordingly GSK's view was that Q1 should be answered in the negative and that should be determinative of the claims.
Lambert J gave a ruling on 9 May 2019 as to the scope of the Claimants' case on defect:  EWHC 1167 (QB). In her decision, Lambert J held that the Claimants' case was limited to the "worst in class" case. The Claimants appealed against the ruling, and the ten week trial was adjourned pending determination of the appeal. The Court of Appeal (The Senior President of Tribunals, Hamblen LJ and Jackson LJ) unanimously dismissed the Claimants' appeal, confirming in a judgment of 8 November 2019 that the nature of the Claimants’ case on defect had been clearly and conclusively defined in previous court rulings, both by Foskett J and by Lambert J. The Court of Appeal noted that it had been "plainly impermissible" for the Claimants to seek to open their case in the way they had done at trial, and that they were in "complete agreement" with the analysis of the pleadings as set out in the prior rulings.
The Claimants sought permission to appeal the Court of Appeal's decision, but were refused both by the Court of Appeal itself and subsequently the Supreme Court.
Consequently, GSK applied to the Court for a restored trial of the lead claims at which the Court would:
- Use its case management power under CPR 3.1(2)(j) to hear and determine Q1 before the other questions for trial;
- Determine Q1 in GSK’s favour;
- Enter judgment on all of the claims currently managed as part of the Seroxat Group Litigation in favour of GSK; and
- Make provision for the inter partes costs (i) thrown away by the adjournment of the trial and (ii) of the action at first instance.
Following the rulings of Lambert J and the Court of Appeal, GSK reiterated its position in its skeleton argument for the hearing of its application that the Claimants' case on Q1 was untenable, for the reasons it had consistently previously identified. In light of this, two working days before the hearing, the Claimants finally accepted that their claim had no prospects of success and submitted to judgment in GSK's favour on Q1. GSK's application was heard on 12 and 13 May 2020, at which time the only live issue remaining to be determined was the question of costs.
- Indemnity Costs and the Approach to Defect
Lambert J handed down her judgment on 3 July 2020, ruling that:
- GSK should be awarded its costs in the usual way, as the successful party in the litigation;
- GSK's costs should be awarded on the indemnity basis from 21 June 2018 (see below); and
- The Claimants make an interim payment on account of GSK's costs (to be assessed by way of detailed assessment) in the sum of £4.5 million.
Lambert J held that she had no difficult in concluding that, in this case, the general rule should apply and there should be an order that the Claimants bear the costs of the Defendant. The judge reached this conclusion for the three main reasons advanced by the Defendant:
- The duty to run the Claimants' case rests, and has rested throughout, on the shoulders of the Claimants' legal team.
- There is no authority for the Claimants' proposition that the Defendant should be penalised for failing to make an application for summary disposal of a weak claim. The case law is however replete with authorities for the contrary proposition that Claimants who continue to prosecute a weak or thin or speculative claim do so at the risk of incurring the penalty of indemnity costs.
- There was “more than an air of unreality” to the Claimants’ position at the hearing given their “consistent position” during the litigation that the case should proceed to trial and the Claimants would win: by arguing that GSK should be deprived of its costs by virtue of the weakness of their own case, the Claimants were trying to “have their cake and eat it” (para 50 of the judgment).
Lambert J noted that the decision to award GSK indemnity costs was a "straightforward" one, taking into account the crystal clear nature of the ruling by Foskett J which had defined the Claimants' case, and the lack of any appeal from the Claimants against that decision.
Following the judgment of Andrews J in Gee in which the previous case law setting out the appropriate test for defect under s3 CPA as requiring a holistic approach considering the risk-benefit balance was confirmed, the Claimants were thereafter pursuing a case which was "quite simply, unarguable". Accordingly the Claimants should have discontinued their claim within a short time, or taken steps to compromise the litigation on favourable terms.
After it was clear that no appeal was to be made in Gee, by May/June 2018 a reasonable claimant would or should have therefore concluded that the Claimants' case was so speculative or weak or thin that it should be stopped. The decision to continue the litigation beyond that point was therefore "compellingly" unreasonable to a high degree, and the Claimants' conduct beyond this point was out of the norm.
Lambert J emphasised that this in itself would have been sufficient to warrant an award of indemnity costs, but the Claimants' later conduct also lent itself to such a decision. In particular, the Claimants' attempt to run a free-standing defect case at the pre-trial review in February 2019, and the "eye-catchingly inconsistent" way in which they opened their case at trial, despite the prior rulings. Lambert J added that she was "unable to conclude that the Claimants' approach to the litigation was reasonable, or even understandable, given its history".
The next step will be to seek enforcement of the costs orders against the third-party litigation funders.
Counsel for GSK: Malcolm Sheehan QC, Adam Heppinstall, James Williams (led by Charles Gibson QC) (Henderson Chambers)
AG team: Louisa Caswell, Mark Chesher, Sivan Daniels, Cécile Burgess, Gabriella Coombe, Megan Goodman.