It was reported today that staff made redundant when News International shut down the News of the World are considering launching a class action against their former employers for compensation for the stigma of having been employed by the now defunct title – http://bit.ly/qqvav9 . This is based upon the House of Lords’ decision in the case of two former BCCI employees who sought similar damages in the aftermath of the collapse of
that dishonest and corrupt bank (http://bit.ly/rub7eC ).
However, unlike in the BCCI case, it does not look like this is going to be an easy case for former NotW employees to win. It is worth looking at a couple of key quotes from the two members of the Court in the BCCI case to see why.
Lord Nicholls of Birkenhead said:
“Claims of handicap in the labour market, …may give rise to lengthy and costly investigations and, ultimately, litigation…
…one of the assumed facts in the present case is that the employer was conducting a dishonest and corrupt business. I would like to think this will rarely happen in practice… there are many circumstances in which an employee’s reputation may suffer from his having been associated with an unsuccessful business, or an unsuccessful department within a business. In the ordinary way this will not found a claim of the nature made in the present case, even if the business or department was run with gross incompetence. A key feature in the present case is the assumed fact that the business was dishonest or corrupt. Finally, although the implied term that the business will not be conducted dishonestly is a term which avails all employees, proof of consequential handicap in the labour market may well be much more difficult for some classes of employees than others. An employer seeking to employ a messenger, for instance, might be wholly unconcerned by an applicant’s former employment in a dishonest business, whereas he might take a different view if he were seeking a senior executive.” (my highlighting)
The Murdochs have accepted that the NotW did unacceptable things and the decision to close the title was clearly taken because of a belief that this had irretrievably tarnished the reputation of the paper. However, this is some way off from an admission that the business was dishonest or corrupt. It may be that the Leveson inquiry will ultimately come to this conclusion, but it is more likely that blame for particular criminal acts will be limited to specific individuals (albeit potentially rather more of these than originally apparent) and the failures within the business being attributed more to failures of governance rather than intentional executive dishonesty and corruption. At the very least, unlike BCCI, it is pretty certain that News International would contest any allegation that the whole NotW business was dishonest and corrupt, potentially by saying that were it to have been so, the executives and senior journalists in the group being represented in the reported class action would have been likely to be complicit in that.
The delay that waiting for the Leveson inquiry to run its course will involve also will have an impact. If in fact some or many of the members of the class action manage to secure alternative comparable employment in the interim, factually it will be much harder for them to demonstrate that they have been stigmatised by their association with the NotW. If the Leveson inquiry finds more broad-based criminality amongst journalists in a range of publications it will be exceptionally hard to support that there is any specific stigma from being employed blamelessly by the NotW. Why would there be any stigma in having worked for the NotW when approaching the Mirror for a job if it is found to have engaged in similar practices while Piers Morgan was editor, as is currently being alleged? The report by the Information Commissioner’s Office a few years ago implicated most of the major newpaper groups in the illegal procurement of personal information so it is unlikely that the NotW will stand out from its peers in the same way that BCCI did.
In any case, the facts that would need to be established are difficult to prove. In the BCCI case many of these facts had been assumed or admitted to be true. Again, it is not likely that News International will be admitting anything very much beyond what is found by the Leveson inquiry.
Lord Steyn set out the difficulties of proof in bringing such cases thus:
“the implied mutual obligation of trust and confidence applies only where there is “no reasonable and proper cause” for the employers conduct, and then only if the conduct is calculated to destroy or seriously damage the relationship of trust and confidence. That circumscribes the potential reach and scope of the implied obligation. Moreover, even if the employee can establish a breach of this obligation, it does not follow that he will be able to recover damages for injury to his employment prospects. The Law Commission has pointed out that loss of reputation is inherently difficult to prove: Law Commission, Consulation Paper No. 132 on Aggravated, Exemplary and Restitutionary Damages, p. 22, para 2.15. It is, therefore, improbable that many employees would be able to prove “stigma compensation”. The limiting principles of causation, remoteness and mitigation present formidable practical obstacles to such claims succeeding. But difficulties of proof cannot alter the legal principles which permit, in appropriate cases, such claims for financial loss caused by breach of contract being put forward for consideration. “ (my highlighting)
In practice it is likely that a number of the redundant NotW staff will immediately move to one of the jobs set out in the Guardian article (that some of the jobs on the list are in Siberia or are not identical to the roles made redundant is not unusual for a large multinational). Many others may find jobs rather than waiting around for protracted litigation to end. Most of them and the rest will negotiate settlements. Ultimately, the greatest stigma will probably attach to any rump who remain to fight out the battle to the bitter end and at least part of that stigma will come from continuing to be identified with the whole sorry affair by still being in litigation years after everyone else has moved on. Who is going to volunteer to see out martyrdom to the end?