The potential introduction into French law of class actions is a recurrent topic both in legal reviews and in national newspapers. Every Member of the French Parliament has an opinion on this question, meaning that, over the years, countless bills have been prepared without ever being adopted. This high level of interest in class actions probably results from the fact that they are promoted by French consumer associations as miracle actions that they can easily use to defend the rights of consumers against big companies. However, introducing this new type of action into French law may not be the only solution to this issue. The combination of existing concepts and the use of electronic means of communication might achieve the same goals.
A financial scandal involving 350,000 individuals
One case currently pending before the Paris Court of Appeal gives an interesting example of plaintiff creativity to circumvent the lack of class actions in French law. In 1976, the French retirement and savings association AFER was created. The idea was to offer individuals the possibility to benefit from grouped life insurance contracts. The life insurance contract was subscribed with an insurance company by the association itself, which acted on behalf of its members. It turned out that, alongside this association, the founders of AFER created a secret company whose purpose was illegally to receive "kickbacks" paid by the insurance company. After several years of investigation, a complaint was filed and, in 2009, two of the founders of the association were found guilty of breach of trust. The Paris Court of Appeal ruled that, from 1987 to 1997, the two founders had misappropriated around €128 million. In its decision, the Court notably ordered the seizure of a sum of €92 million. However, only €24.5 million was actually seized.
Under French law, when an item or a sum of money is confiscated by a court following a criminal conviction, the owner of the item can ask for its restitution. If the money confiscated is not claimed, it will eventually be attributed to the State. In the present case, the individual members of AFER could ask for the restitution of a relatively small amount of between €25 and €3,000 each. However, individual legal actions would be difficult to implement or not be financially profitable for them.
French mandate contract and electronic means of communication: a winning combination?
A group of specialists, including the current Chairwoman of the Paris Bar Association, who assists AFER in this case, tried to find a way to enable the members of AFER to request restitution of the seized amount, bearing in mind that the loss suffered by each AFER member might be higher than the returned amount. They decided to use a well-known French contract, the mandate (mandat), defined by Article 1984 of the French Civil Code as follows: "the mandate or power of attorney, is a transaction by which a person gives to another the authority to do something on his/her behalf and in his/her name. The contract is formed only by the acceptance of the agent". AFER's President informed all the members and gave them a three-week time period to decide whether or not they wanted to join this "collective claim". Each member of the association who agreed had to conclude a mandate with AFER requesting the association to represent him/her in Court in order to obtain the money seized.
Ten months after the start of the process, at the end of December 2011, a request for restitution was filed by AFER before the Paris Court of Appeal on behalf of 55,114 of its members (out of a total of 355,000 members). This is the first time that so many individuals have been represented by the same person in a simultaneous claim. Newspapers have referred to this procedure as being "the first French class action", but that is far from being the case. Despite the fact that it looks like a class action, because thousands of individuals are acting collectively, these two procedures are legally very different. In the mandate, the victims expressly ask the association to represent them. As a consequence, contrary to a real class action system, the victims on behalf of whom the association acts are clearly and precisely identified.
If the use of a mandate is obviously tempting for potential plaintiffs, several drawbacks have to be pointed out. First, collecting all the mandates executed by the members before filing a claim obviously takes a very long time compared to a class action. In the AFER case, it took 10 months for the 55,000 members to sign their documents. Secondly, the choice of the mandate might be challenged. In the October 2011 edition of the Class Actions Bulletin, we wrote on a ruling of the French Supreme Court dated 26 May 2011 which considered that a mandate given by consumers to a French consumer association for it to play the role of intermediary between them and their lawyer should be qualified as a joint representation action which breached the provisions governing this type of action (prohibition to solicit mandates through public appeal). This reasoning can be transposed to the present case. One could also assert that AFER is not an accredited association and, therefore, could not bring a joint representation action. Thirdly, under French law, even though the plaintiffs are represented by the same person, they remain individual plaintiffs, which means that 55,000 files had to be created. As all these files could not physically be communicated to the Court, the whole procedure had to be dematerialised. As a consequence, the Court received an external hard drive containing all the files instead of traditional paper files. The dematerialisation of the French civil procedure, which started in 2009, was, therefore, key in having this case brought before the Court.
The end of the idea of a French class action?
This matter shows that, despite the lack of class actions in France, plaintiffs can find ways collectively to defend their rights with the legal tools currently available. It should, however, be pointed out that the debate on the opportunity to create a class action à la française is far from over as the newly elected French President, François Hollande, expressed, during his campaign, his wish to create such an action. Therefore, the controversy about class actions in France is probably not over yet.