France’s National Assembly has enacted a new consumer class actions regime, referred to colloquially as the “Hamon Law”. The bill, which modifies the French Consumer Code (“Code de la Consommation”), was passed on February 13, 2014 and will come into effect at the same time as a decree of the Conseil d’État, which will provide further details on the mechanics of the legislation.
The Hamon Law contains several unique features that differ from Canadian class action regimes.
Under the Hamon Law, individuals cannot start consumer class actions; only nationally accredited representative consumer protection associations have that right. Currently, the bill applies only to actions against “professionals” in relation to the sale of goods, supply of services or anti-competitive practices. “Professionals” includes people and companies in manufacturing, distribution or service provision. The new law defines “consumers” as any natural person who is acting for purposes which are outside his/her trade, business, craft or profession.
Plans to expand the regime to apply to environmental and health claims will be considered within 30 months following the promulgation of the Hamon Law.
The Hamon Law allows for the compensation of consumers for “material damages” caused by breach of contract or breach of statutory duty by the same professional(s) in connection with a sale of goods, supply of services or as a result of certain anticompetitive practices prohibited by the French Commerce Code (“Code de Commerce”) or the Treaty on the Functioning of the European Union. Material damages are damages suffered by a person in his patrimony, such as economic harm or damage to physical goods. Moral damages, such as pain and suffering, are not compensable under this regime.
Certification Hearings Are Decided Together With the Merits
In Canada, courts exercise a screening function by determining whether or not a claim meets the criteria for certification or authorization of a class action prior to examining the merits of the claim. The Hamon Law contemplates a very different sort of procedure, whereby a first hearing will deal with both the criteria for the institution of a class action and the merits of the “test case(s)”, resulting in a judgment that decides the following issues:
- Whether the criteria for the institution of a class action have been satisfied;
- Whether the professional is liable, in light of the individual “test case(s)” presented;
- The definition of the consumer class and the criteria for class membership;
- A determination of what prejudice can be compensated and either a quantification of damages or a method for quantifying damages;
- The appropriate time period (between two and six months) within which class members must opt in to the class; and
- If the professional is found liable, a determination of a means of notifying the class members of the decision.
The same judge who renders the first judgement may make further ruling(s) in relation to difficulties in implementing the first judgment.
Contrary to the class action statutes in North America, France has chosen to implement an “opt-in” regime, which requires class members to take positive steps to join the class.
Following the first judgement, if the professional is found liable, the identity and number of class members is known and the damages that each class member suffered are either:
- of the same amount;
- of an identical amount per service rendered; or
- of an identical amount with reference to a specific time period,
the court may order that the professional directly compensate individual class members in accordance with time limits and other conditions determined by the court.
The association that instituted the class action can participate in a mediation. Any settlement agreement reached in the name of the class is subject to approval by the judge, who must ensure that it is in the interest of the class members. Class members must opt in to the settlement agreement to be bound by it.
Although it is difficult to predict whether the Hamon Law will open the proverbial floodgates, French companies can expect more piggyback class actions related to competition authorities’ investigations, which adds another wrinkle when companies are considering whether to plead guilty to charges of anti-competitive behaviour. It will be interesting to see whether the Hamon Law also leads to more product liability litigation, as we saw in the U.S. and Canada after class action legislation was introduced.