Class formation

Standing

What are the standing requirements for a class action?

Types A and B group actions can be brought by individuals. Type C group actions must be brought by an incorporated non-profit association, while Type D group actions must be initiated by an incorporated non-profit association or a foundation.

Group members must have a right to claim under the law owing to damage to their property or personality rights or owing to the death of their parents, spouse or children.

Participation

Do members of a class have to opt in or opt out of the action? Are class members notified that an action has been commenced on their behalf and, if so, how?

The members have to opt in for a group action. Because it is an opt-in system, the court will not notify the members that any action has been instituted on their behalf, nor will the members be bound by any court decisions on any group actions they do not opt in to. But where a Type B group action is filed, with all the requirements under article 44-2 of the Code of Civil Procedure (CCP) met, the court will notify potential group members of the pending action. The notice should be posted on the court’s bulletin board and published in official gazettes, newspapers or other similar means of communication for a minimum of 20 days.

Certification requirements

What are the requirements for a case to be filed as a class action?

Article 53 of the CCP provides that two or more persons may be a party to the same lawsuit in certain situations, namely:

  • where the rights or obligations that are the claims of the suit are common to them;
  • where the rights or obligations that are the claims of the suit are based on the same factual or legal grounds; or
  • where the rights or obligations that are the claims of the suit are of the same type and the factual or legal grounds on which the claims are based are also the same type; provided, however, that the domiciles of the defendants must be located in the jurisdiction area of the same court or the suit must be subject to a common court as provided by articles 4 to 19 of the CCP.

 

According to article 41 of the CCP, multiple persons with a common interest may appoint one or more persons from among themselves as the appointees to institute a lawsuit on behalf of the appointees and appointers.

Pursuant to article 44-1 of the CCP, members of the same incorporated non-profit association who have a common interest may appoint such association to institute a lawsuit to the extent consistent with the purpose of the association as stated in its charter documents.

Article 44-3 of the CCP provides that, with the approval of the competent authorities and to the extent consistent with the purpose stated in its charter documents, an incorporated non-profit association or foundation may institute a lawsuit against a person who has infringed upon the rights of multiple persons to seek injunctive relief prohibiting specific acts. 

Similar to article 44-2 of the CCP, article 54 of the Consumer Protection Act provides that when multiple persons who have suffered damage owing to the same consumer relationship appoint one or more persons to institute a lawsuit pursuant to article 41 of the CCP, the court may, after obtaining the consent of the appointees, publish a notice requesting other victims to join the suit by submitting an application to the court specifying the facts, evidence and relief sought.

Articles 49 and 50 of the Consumer Protection Act provide that a qualified consumer protection organisation may institute a lawsuit in its name after at least 20 consumers who have suffered from the same factual grounds assign their rights to claim to such consumer protection organisation.

Article 53 of the Consumer Protection Act states that a consumer protection officer or qualified consumer protection organisation may petition the court for injunctive relief for a material violation of consumer protection regulations by business operators.

With regard to securities investments, according to article 28 of the Securities Investors and Futures Traders Protection Act (SIFTPA), to protect public interest, the Securities and Futures Investors Protection Centre, a ‘protection institute’ established under the SIFTPA, may initiate a lawsuit or arbitration in its name after receiving authorisation from 20 or more securities or futures investors who have suffered damage owing to the same cause.

There is no requirement on the minimum number of persons to be included in the group actions brought forth under the CCP. For group actions initiated based on article 50 of the Consumer Protection Act and article 28 of the Securities Investors and Futures Traders Protection Act, the nominee claimants (the consumer protection organisation or the Securities and Futures Investors Protection Centre) must have received assignment of claims from or been authorised by at least 20 people to institute the group action.

How does a court determine whether the case qualifies for a class action?

It is the court’s responsibility to examine whether the group action satisfies the necessary elements under the law. Article 249 of the CCP provides that if there is any procedural defect of the complaint (eg, the elements of a group action are not met), the court may ask the plaintiff to rectify these defects first. The counterparty may also challenge whether the group action meets the legal requirements. The nominal party representing the group bears the burden to prove that its claim qualifies for a group action. The court may or may not hold a hearing just for discussing this issue. More often than not, this issue will be addressed together with other disputed issues in the judgment, unless the court finds it appropriate to make an interim decision as the suit progresses or decides to dismiss the suit altogether because the procedural requirements of a group action are not met.

Consolidation

Is there a process for consolidating multiple class action filings?

A Type A group action by its nature is a consolidation of claims. There are no rules requiring the consolidation of two or more separate suits with the same factual bases but pending in different courts.

In addition, when the alleged victims of public nuisance, traffic accidents, product defects or persons who have a common interest owing to the same factual grounds appoint one or more persons to initiate a Type B group action, the court may, with the consent of the appointees or at the motion of the appointees that the court finds appropriate or the motion by a person with a common interest, publish a notice requesting other people with a common interest make a written submission specifying the facts, reasons, evidence and relief sought in order to apply for joining the suit.

A similar mechanism is included in the Consumer Protection Act. Article 54 of the Consumer Protection Act provides that when multiple persons who have suffered damage owing to the same consumer relationship appoint one or more persons to institute a lawsuit pursuant to article 41 of the CCP, the court may, after obtaining the consent of the appointees, publish a notice requesting other victims to join the suit by submitting an application to the court specifying the facts, evidence and relief sought.