Mexico joins the ranks of other Latin America countries such as Brazil and Argentina that recognize class or collective group claims or legal actions. The first class action law in Mexico’s history came into effect on March 1, 2012 after several amendments to various federal statutes were adopted by Mexican Congress to allow “class actions” or “acciones colectivas.” These amendments were originally published in Mexico’s Federal Official Gazette on August 30, 2011. The new class actions regulations have many lawyers — particularly in Mexico and the Unites States — worried about the potential implications to their clients. Below is a brief summary of the highlights:
The new class action laws gives standing to classes that number at least 30 people and are limited to general consumer-related and environmental claims. The new amendments to the Federal Code of Civil Procedure identified three different categories of class actions:
- “Diffuse Actions” or actions seeking protection to society in general;
- “Collective Actions in the Strict Sense” or actions seeking to protect rights held by a certain or determinable group which share common circumstances and have a statutory right or legal relationship with the defendant; and
- “Individual Homogenous Actions” or actions seeking to protect individual rights of a group of people that have the same contractual relationship with the defendant.
Unlike similar class action legislation adopted in other countries in Latin America, Mexico’s class action recognizes a U.S.-style class certification in which the court will decide if the class has standing to sue the defendant in the first place. However, the new law affords a very short period of time for the defendant to gather information and challenge a class certification (i.e., five days after service of process of the complaint, which could be extended for an additional five-day period). In addition, once the answer to the complaint is filed, a judge will have only 10 or up to 20 days to issue or deny certification. Even though the resolution granting or denying certification could be appealed by the parties, it seems to indicate that there won’t be too much scrutiny exercised by the judge and may actually have the effect that judges could routinely grant certifications, especially since the same law provides that certifications can be subsequently modified if justified by new evidence or facts during litigation. Among the different parties that have standing to bring class actions or serve as representatives of class actions in Mexico, are individuals who are members of a group, certain consumer protection agencies of the Federal Government, non-profit organizations and the Attorney General.
- Statute Of Limitations
The applicable statute of limitations is limited to 3½ years beginning on the day when a damage was caused or, if the damage is of a continuous nature, it will start after the last day when such damage was caused.
The amendments allowing for class actions in Mexico do not incorporate the common law concept of jury trials and/or punitive or exemplary damages. Generally speaking, the relief sought in these class actions is limited to individual or collective direct or consequential damages, specific performance or injunctive relief. In addition, the law permits the creation of a fund administered by Mexico’s Federal Judicial Council to hold monetary awards not paid out as individual damage awards and may also be used for environmental remediation or clean up costs to pay fees and to promote class actions in general.
- Other Considerations
Unlike in U.S. class actions which have an “opt out” mechanism should an individual not want to be subject to the terms of a class action settlement or judgment, in Mexico, the new legislation provides for an “opt in” mechanism in which members of a class must affirmatively opt in and they can do so within 18 months after a settlement or judgment is reached. Even though this post judgment or settlement opt-in approach may limit the class size, it could give rise to significant concerns and uncertainties to defendants as they won’t know exactly the class size and therefore, if condemned or settled, the exact amount of the award they will have to pay.
Finally, it is worth noting that Mexico’s rules of civil procedure, do not have the concept of pre-trial discovery in which the parties can seek and obtain information from the other prior to trial. This will materially limit the information that both plaintiffs and defendants can use to present their case. It will be interesting to see how this information can be obtained during trial if at all.