Who: French Government
When: 03 December 2013
Law stated as at: 3 December 2013
French law makers are about to create a class action procedure which could have a huge impact on any company advertising its products and services in France.
The bill was originally proposed on 2 May 2013 by Benoit Hamon (Minister for the Social Economy) and has already been approved by the Senate and the Generally Assembly in a first reading. The scope of the class action procedure will be limited to the field of breaches of consumer and competition laws (restrictive practice and abuse of a dominant position) by professionals. Health and environmental related actions are excluded (ecological damage). Specifically, class action lawsuits will be possible in the event of a common breach or failure by a professional to comply with its legal or contractual obligations, “in connection with the sale of goods or services”.
The purpose of the action will be to compensate consumers for financial damage. “Moral damages” and physical injury are excluded.
Moral damages are damages that cannot be related to a person’s financial estate, for instance pain and suffering, mental anguish or suffering, emotional distress etc.. One of the main goals of the bill is to fight against abusive clauses in terms and conditions for which each consumer individually only incurs small damage. Therefore each individual consumer would not have undertaken any judicial proceedings, but consumer associations will now be able to put an end to such practices which cause huge damage on a wider scale. It would for example allow class action lawsuits against companies for misselling and over-charging. In the context of marketing, it would, for instance, allow for actions against abusive clauses included in terms and conditions of a prize draw or actions against misleading or deceptive advertising.
Only Consumer associations can take action to enforce new class right
Consumers who have suffered tangible damage due to the abovementioned breach or failure will be able to ask one of the 16 nationally-accredited consumer associations to act on their behalf.
Only these consumer associations are allowed to commence proceedings. Lawyers are thus excluded from bringing such proceedings on behalf of their clients, despite their strong protests.
Due to the French civil procedure adage “nul ne plaide par procureur” (“no one shall plead by proxy”), the bill provides for an “opt-in” regime, i.e., consumers who have suffered a prejudice must identify themselves to be part of the action. This system differs from the “opt-out” system, which is applied in many countries such as the United States (consumers who fall under the scope of the proceeding are automatically parties to the proceedings unless they opt out).
From a procedural standpoint, firstly, the Judge will decide whether the trader is liable based on the individual cases brought before him by the association. The Judge will have to define the group of consumers to which the trader is liable and define the amount of damages suffered by each consumer and the elements that enable the evaluation of the prejudices.
Then, the Judge makes orders designed to ensure that consumers will be informed of the class action and of the amount of the compensation they are entitled to receive. This will allow them to decide whether they wish to opt-in.
Finally, the trader must compensate each consumer on the conditions set forth in the Judge’s decision. The Judge may lay out the modalities of the liquidation of the damages and decide that the consumer association will be in charge of collecting, managing and liquidating directly toward the consumers the remedies they are entitled to. As a reminder, no punitive damages may be awarded under French law. Also, the bill already states that any provision of a contract that would forbid a consumer from participating in a class-action is deemed null and void.
Why this matters:
The bill, which could be adopted before the new year, would mark a big step in the French civil procedure and protection of consumers.