An extract from The Class Actions Law Review, 4th Edition
As indicated above, group actions were introduced to the French legal system progressively, one industry sector or type of prejudice at a time. It follows that the provisions that govern the various available group actions are spread out over various corresponding legal corpuses (the Consumer Code, the Code of the Environment and the Labour Code). As a consequence of the approach chosen by the French legislature, the procedures applicable to the different types of group actions may vary slightly, although they all share common fundamental characteristics, listed below.i Types of action available
For a group action to be filed, various individuals need to have suffered identical or analogous prejudices as a result of a defendant's breach of its statutory or contractual obligations. Although most group actions can only be brought against a single defendant, group actions based in consumer law and competition law allow more than one defendant.
Not all types of prejudice can be indemnified under every available group action. In certain cases, damages may only be awarded for financial losses, such as in consumer and competition group actions. In contrast, in healthcare group actions, claims can only be brought as a result of personal injuries. Other types of group actions, however, such as environmental group actions, can allow damages to be awarded for both physical injuries and financial losses. Finally, in group actions relating to discrimination and data protection, damages may be awarded for moral harm or financial losses.
Given the fact that certain types of group actions only allow claims for specific types of prejudice, but not all types of prejudice, one could conceivably expect situations to arise whereby two distinct group actions are initiated so as to enable claimants to seek compensation for the various types of damage suffered as a consequence of a single, common breach (i.e., victims could, for instance, participate in both a healthcare group action and a consumer law group action if a given drug has caused them to suffer personal injuries and financial losses, as healthcare group actions only allow claims for personal injuries, whereas consumer law group actions only allow claims for financial losses). A scenario of this kind, which has not occurred yet, would have clear disadvantages for both the claimants and the defendants because of the duplication involved. It could be avoided altogether if the scope of the various group actions were extended, but as far as we are aware no plan to do so is currently being considered by the legislature.
The limitation period that applies to group actions is the standard five-year period that applies in French civil law, which starts to run from the date the victim became aware or should have become aware of the facts that gave rise to its right of action. If a group action is initiated and the defendant is found liable at the end of the first phase of the proceedings, the time limitation applicable to individual actions that could be brought in the context of the group action (during the second, opt-in phase) is suspended. The applicable time limitation resumes its course when the court's decision on the group action has become final or after a settlement agreement has been approved by the court.ii Commencing proceedings
As mentioned above, only specific entities can introduce class actions:
- for consumer and competition law group actions: only consumer associations accredited at a national level can initiate proceedings, of which there are only 15 at the present time;
- for healthcare group actions: only associations devoted to consumers of the healthcare system accredited at a regional or national level (and whose activities do not encompass commercialising health products) can initiate proceedings;
- for discrimination and handicap group actions: only associations dedicated to fighting discrimination or disabilities that have been in existence for a minimum of five years or more can initiate proceedings (provided their stated aims encompass the defence of rights or interests that may be the object of discrimination);
- for group actions relating to discrimination in the workplace: only labour unions and associations with the stated purpose of fighting discrimination or disabilities (that have been in existence for five years or more) can initiate proceedings;
- for group actions relating to environmental law: only accredited associations devoted to the protection of the environment or accredited associations with the stated purpose of defending their members in relation to physical or financial prejudice can initiate proceedings; and
- for group actions relating to data protection: proceedings can only be initiated by associations with the stated purpose of protecting privacy and personal data (that have been in existence for five years or more), or accredited consumer associations when the data processing at issue affects consumers and labour unions when the data processing at issue affects the workers whom the union protects.
Prior to introducing a group action, by serving a writ, the accredited association or labour union that wishes to do so must first serve a formal notice on the defendant to request that it end the breach or indemnify the losses for which the group action is envisaged. The action may be initiated only four months after this notice. In matters regarding discrimination at the workplace this period is increased to six months to allow for a discussion process to take place between the claimant, unions and employee organisations.
French law does not impose a requirement that the class or group of claimants be defined from the inception of the proceedings, in the writ itself; it is for the court to do so in the decision it will hand down at the end of the first phase, wherein it will rule on both the admissibility of the claim and the defendant's liability (there is, however, an exception to this rule is the derogatory regime of the simplified group actions relating to consumer law).iii Procedural rules
As mentioned above, group actions in France were created progressively, in an incremental fashion, and according to a sectorial approach. Because of this approach, the procedural framework for the different possible group actions is not entirely homogeneous, although it shares certain fundamental characteristics.
Depending on the type relied upon, group actions can seek to obtain indemnification for loss arising out of a wrongful act, or to bring an end to such an act.
When a group action is initiated, proceedings are organised in a two-phase fashion.
During the first phase, the judge on the merits will consider the admissibility and the merits of the case. If he or she holds that the defendant is liable, the judge on the merits will then determine the criteria defining the group of victims entitled to compensation, the types of losses that can be indemnified, the amount of corresponding damages that can be claimed, and the deadline before which the victims will have to opt in following the decision. To enable victims to come forward, the court will also indicate how its decision is to be published (at the costs of the defendant). If the initial claimant so requests, the judge on the merits may also order that negotiations be undertaken with the defendant regarding the level of compensation.
The second phase of the proceedings is devoted to the indemnification of individual claimants who have opted in after the initial judgment on liability handed down by the court. During this phase, individual claimants who wish to opt in send their claims for damages (either to the defendant or the claimant) and the defendant proceeds to the compensation on an individual basis, according to the criteria set out by the judgment on liability. If the court ordered a negotiation, any possible settlement agreement requires the court's approval before it can give rise to compensation of individual claimants. If issues arise regarding the compensation of individual claimants, the matter is referred to the court that handed down the decision regarding the defendant's liability.
It should be noted, however, that the above two-tiered process does not apply to all group actions relating to consumer law, which have their own, simplified procedure. Pursuant to this streamlined process, in such group actions, when the identity and the number of consumers affected is known and when they have suffered similar or identical losses, the court can, after having held the defendant liable, order compensation to be paid directly to the individual consumers according to the conditions set out in the judgment. In a case of this kind, the defendant must then contact the affected consumers so that they may accept the compensation they are owed.
Decisions handed down in group actions have res judicata authority, but only towards the parties that participated in the proceedings. The decisions do not, however, have res judicata effects in relation to claims that fall outside the scope of the court's decision.
If the group action has been brought to obtain an injunction, so as to end a wrongful act by the defendant, be it in breach of a statutory or a contractual obligation, the court will consider the merits of the case. If it is satisfied that such an act is taking place and that the defendant must be compelled to cease, the court will render a judgment wherein it orders the defendant to cease the harmful act by a specific deadline, beyond which date it may be ordered to pay fines that will be awarded to the Public Treasury.iv Damages and costs
As alluded to above, various types of group actions can allow claimants to seek different kinds of remedies:
- in consumer law and competition law group actions, damages can only be sought in relation to financial losses (where appropriate, the judge may order reparation in kind);
- in healthcare group actions, damages can only be sought in relation to personal injuries;
- in discrimination-related group actions (including those that relate to discrimination in the workplace), damages can be sought in relation to financial losses and moral prejudice;
- in environment law group actions, damages can only be sought for personal injuries and financial losses; and
- in personal data-related group actions, damages can only be sought in relation to financial losses and moral prejudice.
Obviously, the nature and quantum of the damages that could effectively be awarded, in a given group action, will depend upon several factors, including the remedies sought in the initial writ and the decision as to the defendant's liability handed down by the judge on the merits at the end of the first phase.
Punitive damages may not be awarded under French law.
At the time of writing, and to the best of our knowledge, none of the group actions initiated to date have resulted in damages being awarded by the courts (although in three instances, the parties settled the dispute).v Settlement
Group actions can give rise to settlements either before proceedings are initiated or during the proceedings themselves.
If a settlement agreement is reached in principle, before a group action is effectively initiated (such as, for instance, after the defendant receiving the pre-action letter specific to group actions), it will nonetheless require the court's approval before it can be enforced. This necessity is to ensure that the terms of the agreement are in line with the interests of the victims represented by the certified entity. The court's decision ratifying the settlement agreement will indicate how the defendant is to inform potential victims that an agreement has been reached, as well as the steps that must be followed for individual victims to opt in and receive the compensation they have been awarded under the settlement agreement.
Courts can, at the claimant's request, order the parties to participate in settlement talks after the initial judgment on liability has been handed down. This is only possible in group actions for environmental, data protection and discrimination matters (excluding discrimination at the workplace). In instances such as these, settlement negotiations have a narrow scope that is set by the court and relates only to the quantum of compensation to be paid out, and not to the principle of the defendant's liability, which has been established. For the settlement agreement to be enforceable, it must be ratified by the court, which must be satisfied that its terms are in line with the interests of the victims represented by the claimant. If, however, the court finds that the envisaged agreement is not compatible with the interests of the victims, it may refuse to ratify it and order a new negotiation period. If no settlement agreement is reached, the court will decide on the level of compensation, as it would normally have done, had no settlement discussions been ordered. If, however, the court finds that one of the parties objected to the conclusion of a settlement agreement in a vexatious or dilatory manner, it can fine the offending party for up to €50,000.
At the time of writing and to the best of our knowledge, there have only been three group action settlements to date:
- The first settlement, which was agreed upon before the group action was introduced and related to claims that the public housing office of the city of Paris had unlawfully charged tenants to pay for their estates' video surveillance costs, provided for the payment, by the defendant, of a total sum of €2 million, to be shared among 100,000 tenants.
- The second settlement, which was reached after the judgment on liability and related to service disruptions suffered by customers of a mobile phone network when it upgraded to 3G service, provided that the defendant pay each of the 141,000 users €12 of compensation (amounting to a total sum of circa €1.7 million).
- The third settlement was reached in connection with a group action initiated by a consumer association against a rental company, because of unfair clauses in the rental contract for mobile home parking plots, including an obsolescence clause preventing renewal and access to the land for vehicles over 15 years old. After several negotiations that took place between December 2017 and March 2018, the association announced on its website that an agreement had been reached with the company, with the result that the disputed clauses had been amended in exchange for the termination of the group action.