The EU’s Collective Redress Directive — Are Collective Redress Suits Already Happening in Some EU Member States?

In this sixth alert in our series regarding the European Parliament’s formal endorsement of a new collective actions legislation titled the Directive of the European Parliament and of the Council on Representative Actions for the Protection of the Collective Interests of Consumers, we contextualize the changes to come on account of the Collective Redress Directive by analyzing the status of collective redress mechanisms in place in EU member states today.

In this series to date, we have considered the procedural history of the Directive. We have analyzed who or what will constitute a trader, also known as the potential targets for collective redress actions under the Directive; and we have analyzed who or what will constitute a qualified entity, or organizations or public bodies that will be able to bring representative actions in accordance with the Directive. We have analyzed the interplay between the Directive and EU General Data Protection (GDPR), and taken a close look at what laws will form potential bases for collective redress lawsuits under the laws enforced pursuant to the Directive.

In order to appreciate the changes coming to collective redress actions in the EU pursuant to the Directive, this alert seeks to provide context by considering at a high level the state of collective redress procedures in the EU today — before implementation of the Directive.

EU Class Action Relief Before the Collective Redress Directive

The Collective Redress Directive’s requirements will be new procedure in some EU member states. Over time, however, collective redress mechanisms have become more common in the EU, even before adoption of the Collective Redress Directive and its eventual implementation in June 2023.

Until recently, Belgium, for example, did not provide for collective redress actions and required all collective claims to be filed in the form of joint actions. In the last decade, Belgium has begun to introduce new procedures by which collective redress may be sought by certain organizations on behalf of consumers in certain conditions (e.g., Ch. 2, Book XVII, Code of Economic Law (2014)). Legal entities now have the right to file representative actions seeking injunctive relief on behalf of unidentified groups in the context of consumer, environmental and human rights interests. Belgium is just one EU member state demonstrating the trend towards collective actions. Even in EU member states where collective redress actions have been fairly well established — such as the Netherlands — recent statutory changes have broadened such relief in these countries.

To provide a summary understanding of what collective relief laws look like in the EU today, and to underscore the changes that the Collective Redress Directive will bring, below are overviews of some of the relevant laws of four EU member states as they stand today: Spain, Germany, Luxembourg and France.

Spain — A Version of Class Actions

Class actions have been permitted in Spain, though they differ from class actions as we know them in the U.S. Two procedures for obtaining collective redress have pre-dated the Collective Redress Directive in Spain, introduced by the Spanish Law of Civil Procedure (CPL) in 2001. Spain’s laws provide for a collective action, which could be brought by an individual claimant that is identified or easily identifiable, to protect a “collective interest” under Article 11.2 of the CPL. Spain’s laws also provide for a representative action, to be brought to protect the common interests of consumers whose identities are unknown or not easily knowable, to protect the “widespread or diffuse interest” of the consumers under Article 11.3 of the CPL. Either procedure may only be commenced by an authorized entity, and both procedures are limited to consumer claims. Under these laws, damages may be awarded on a compensation basis only, and injunctive relief is possible in certain contexts.

Germany — Framework-Specific Collective Actions

Germany has taken a different approach to collective redress, largely established by model case procedures limited to certain areas of the law, and by the statutory authorization of certain associations being permitted to file actions to protect the interests of others. For example, Germany’s Capital Markets Model Case Act (KapMuG) provides for some collective redress procedures. In addition, under Germany’s Musterfeststellungsklagengesetz (Model Declaratory Action Act), qualified associations may file a declaratory action seeking to protect consumer interests. Cases brought pursuant to these schemes have resulted in declaratory relief by Germany’s Oberlandesgericht (Higher Regional Courts). Other specific German laws that permit some form of collective redress include the Unterlassungsklagengesetz (German Act on Actions for Injunctions); and Section 8 of Gesetz gegen unlauteren Wettbewerb (German Act Against Unfair Competition). German laws today do not permit bringing a claim in the name of a group or an unknown claimant.

Luxembourg — Joined Actions

Class actions are not permitted under Luxembourg’s Nouveau Code de Procédure Civile (NCPC), adopted in 1998. The laws of Luxembourg have, however, permitted actions to be brought on behalf of a group of plaintiffs by a qualified organization in the defense of the claimants’ collective interests under article 206 of the NCPC; and the Luxembourg courts have adopted a liberal view of the law in order to join separate cases. In joined actions, damages (compensatory only) and injunctive relief are available; although any representative actions have usually been limited to injunctive relief.

France — Opt-In Collective Actions

In 2017, France introduced a statutory opt-in class action procedure, in which class actions may be filed by authorized associations on behalf of claimants alleging loss as a result of breaches of certain consumer protections (French Consumer Code (Articles L. 623-1 et seq.)), personal data protection (Article 37 of the Law n°78-17 of 6 January 1978 as amended by Order n°2018-1125 dated 12 December 2018) and discrimination laws (French Labor Code, Articles L. 1134-6, et seq.), among others. France’s Public Health Code (Articles L. 1143-1, et seq.) also permits for class actions initiated on behalf of consumers who allege bodily injury against a producer (e.g., pharmaceutical manufacturer), supplier (e.g., pharmacy) or provider (e.g., doctor) of a health product, in addition to against insurers. In class actions, damages may be awarded to individual consumers who opted in. In addition, France’s laws permit other collective redress procedures, such as those that permit authorized organizations to file actions on behalf of their members or affected parties. In these other collective redress procedures, damages have also been awarded, but some awards are only nominal or symbolic amounts.

Change Is Coming — The Collective Redress Directive

Following the European Parliament’s formal endorsement of the Directive, all 27 EU member states are required to translate the Directive into national law by December 25, 2022. These laws must implement effective procedural mechanisms that will allow “qualified entities,” such as consumer organizations and public bodies, to bring representative lawsuits on behalf of consumers against “traders” for violations of a list of 66 EU laws set forth in Annex 1 of the Directive, including those related to general consumer law, data privacy, energy, financial services, telecommunications, travel and tourism, and the environment and health. Enforcement of the Directive by EU member states must commence by June 25, 2023.

The Directive’s specific requirements for qualified entities and traders, and the 66 laws pursuant to which collective redress actions may be filed, may expand class action practice in the EU across the board, both in EU member states where such actions are brand new and in those nations which already permit some form of collective redress. The parameters of such collective redress actions will become clearer as EU member states translate the Collective Redress Directive into national law.

It is possible that the collective redress actions permitted by the Directive may encourage qualified entity litigants to explore the breadth and reach of various EU laws, and perhaps even seek to apply them in ways previously unseen. Although collective redress models are known in some EU member states already, the novelty and publicity around the Directive may inspire novel legal theories. As collective redress suits commence after June 2023, traders facing such suits may be well advised to look to how defendants in the U.S. have managed class action and mass tort litigations — common procedural paradigms of the American legal system — when analyzing how to achieve efficiencies and smart strategies in these new, broader-reaching lawsuits.