The European Parliament gave final approval on 24.11.20 to the new class action directive. Consumer organizations-and public bodies delegated for this purpose by the member states-will thus be able to sue in the interests of consumers for injunctions and damages in a wide range of cases.
New Deal for consumers
The European Commission had launched the ‘
New Deal for Consumers.
‘ in April 2018 to modernize and ensure the effectiveness of rules to protect them. A package of measures that included strengthening the rights of web users, tools to enforce rights and indemnities, penalties for violation of consumer rights in the EU, transparent business conditions. (1)
Confindustrial lobbies had, moreover, prevented a reasonable agreement on the class action from being reached by organizing close opposition from member states. But the Dieselgate scandal showed how full the pot was, prompting new thinking. Thousands of judicial investigations and compensation actions have exposed the total inadequacy of the tools available to protect European citizens, highlighting the urgent need for reform. (2)
‘This directive was our response to transnational violations of consumer rights by rogue companies. Consumers did not have all the right tools to seek justice-until now’ (Věra Jourová, European Commission, Vice-President with responsibility for values and transparency)
Class action lawsuits, US – EU compared
The European collective redress scheme-approved on 11/24/2020 by the European Parliament-has little to do with the U.S. class action model. At a glance, the limitations of the old continent’s approach are noted:
– scope is focused on breaches in areas such as data protection, financial services, travel and tourism, energy, telecommunications, environment and health. As well as the rights of air and train passengers and more generally ‘every consumer right‘. In an essentially private dimension, albeit referring to collective rights, that seems to neglect administrative judgments. Which are relevant not only for actions against the public administration, but also for appeals against decisions of public bodies (e.g., administrative appeals to the Lazio Regional Administrative Court, and possible appeals to the Council of State, on Antitrust rulings),
– standing in class actions is reserved for ‘qualified entities’ designated by member states. With the obvious risk of undermining the initiatives of small associations engaged in the protection of the generality of consumers or their individual categories (e.g., those with disabilities or rare diseases and their family members), which do not enjoy the representativeness requirements prescribed in Italy as elsewhere to come exempt from administrative burdens related to actions (3,4).
Key principles
The directive on representative actions introduces a harmonized class action scheme in all member states, with the following features:
– at least one collective action procedure , for injunction and redress measures, must be made available to consumers in each EU member state,
– at least one consumer organization or public body representing their interests should be appointed by each member state to initiate class actions. These entities will be authorized and receive financial support to initiate legal actions on behalf of consumer groups to ensure their access to justice,
– the criteria for designating such bodies vary depending on whether they handle domestic or international cases. At the national level, it will be up to the member states to establish appropriate criteria consistent with the objectives of the directive. At the international level, such entities must demonstrate (and make available on their websites) at least 12 months of public activity in protecting consumer rights, a legitimate interest in protecting consumer interests, no profit motive, and independence from third parties with opposing economic interests,
– to avoid frivolous or abusive litigation, and to establish a balance between access to justice and protecting businesses from abusive lawsuits, the ‘loser pays’ principle is introduced (Art. 12). The costs of losing may also be extended to individual consumers, exceptionally, in cases of their willfulness or negligence, (5)
– member states should provide effective, proportionate and dissuasive penalties. To be applied in case of failure or refusal to comply with injunctive relief or obligations under the actions.
Entry into force and application
The directive will enter into force within 20 days of its publication in the EU Official Journal. Member states will have 24 months to transpose it into their national laws and an additional 6 months to implement it.
As of its implementation, the ability to bring class actions on behalf of citizens by other than authorized parties will be eliminated. This is in spite of even recent legislation-such as Law 31/19, which most recently amended the class action regulations in Italy-that instead provided for such possibilities.
A step forward, or a step backward?
Dario Dongo and Giulia Torre
Notes
(1) EU Dir. 2019/2161 for better enforcement and modernization of Union rules on consumer protection and the proposal for a directive of the European Parliament and of the Council on representative actions for the protection of the collective interests of consumers and repealing Directive 2009/22/EC https://eur-lex.europa.eu/legal-content/IT/TXT/?uri=CELEX%3A52018PC0184
(2) Volkswagen admitted in 2015 that it had artfully modified its diesel car engines to disguise pollutant emission levels. While U.S. consumers have obtained generous compensation through various class actions, European consumers have had to refer to variously ineffective means of protection, in the legal systems of the different member states
(3) European Commission. New rules to allow collective EU consumer action. Press release. 24.11.20, v. https://www.europarl.europa.eu/news/en/headlines/society/20200630STO82384/new-rules-to-allow-collective-eu-consumer-action#:~:%20collective%,%80%.
(4) Directive of the European Parliament and of the Council on representative actions for the protection of the collective interests of consumers, and repealing Directive 2009/22/EC. V. https://data.consilium.europa.eu/doc/document/ST-9573-2020-REV-1/en/pdf
(5) This is without prejudice to the possibility of dismissal of manifestly unfounded cases, already at the first stage of the proceedings, in accordance with national laws (Article 7.7 of the Directive). Hypothesis already provided for, in Italy, by Law 31/19 on class actions
Dario Dongo, lawyer and journalist, PhD in international food law, founder of WIISE (FARE - GIFT - Food Times) and Égalité.
Graduated in law, master in European Food Law, she deals with agro-food, veterinary and agricultural legislation. She is a PhD in agrisystem.
