Germany doesn’t offer claimants a true U.S. or UK style class action regime. Claimants will therefore seek alternative ways to join forces and bundle their claims using the so-called assignment-model as a favoured solution. Oftentimes such assignments are made to dedicated commercial legal services providers. Their respective SPVs will then act as claimant and sue for damages in their own name. This business model is particularly popular in the cartel damages space.
In recent times, various German courts have revisited the legality of this business model. We note two particularly relevant judgements below – for a more in-depth review we also include links to case reviews our team has published in the Concurrences Bulletin.
In July 2021 the cartel damages community paid close attention to a ground-breaking ruling of the Federal Court of Justice (FCJ, case reference number: II ZR 84/20): after some lower courts had previously held cartel damages assignments to be invalid where the SPV was a legal services provider, the FCJ decided – in a non-cartel damages context – that, in general, the bundled enforcement of claims by an SPV is not contrary to German law. This FCJ judgement, albeit rendered in an insolvency law context, was widely considered to impact numerous other mass claims scenarios – especially cartel damages claims.
January 2022 then brought two judgements of the Regional Court of Stuttgart, which evidenced that the legal situation is however still uncertain when it comes to cartel damages claims (case reference numbers: 30 O 176/19 and 53 O 260/21). The Regional Court of Stuttgart found the assignments of cartel damages claims to a legal services provider to be once again invalid. The court refers on the one hand – and in fairly general terms – to the scope and complexity of the factual and legal issues in cartel damages cases. According to the court they exceed the level of difficulty typical and acceptable for commercial debt collection services. On the other hand the court found that cartel damages scenarios specifically lend themselves to create conflicts of interest irreconcilable with an assignment to a debt collection legal services provider – especially regarding the often raised passing-on-defence.
Despite the seemingly strong judgement by the FCJ regarding the bundling and asserting of assigned claims in an insolvency context, the recent decisions out of Stuttgart, again, create uncertainty for the bundling of cartel damages claims. It remains to be seen how the higher courts – and ultimately the FCJ – will deal with this important issue going forward.