August 23, 2022
Towards the end of 2022, Europe will likely see a wave of class action legislation. Many member states of the European Union (“EU”) will have to either devise new class action regimes or amend their existing provisions on collective redress. They have until Christmas Day 2022 to implement the EU Directive on Representative Actions into national law. The new procedural rules must be applied to new collective claims raised by 25 June 2023.
So far, only the Netherlands has voted to amend its class action regime to comply with the Directive. Most other EU countries will have to take legislative action in the fall. The EU directive, once implemented, will allow for more cross-border mass litigation throughout Europe. Some states will use the opportunity to strengthen their jurisdiction by incentivizing plaintiffs to file cross-border representative actions in their courts, paving the way for cross-border forum shopping in Europe.
1. The EU’s Directive on Representative Actions and Its Core Requirements
In 2020, the European Union issued a Directive on Representative Actions (EU Directive 2020/1828), which obliges all EU member states to amend their respective national rules of civil procedure to allow qualified entities to file collective actions for a class of consumers.
The member states enjoy considerable leeway to transfer the Directive’s broad requirements into their national legal system. For example, member states are free to implement either an opt-in or an opt-out mechanism for consumers to join the collective action. Consequently, national provisions on collective actions will still differ from country to country. However, for the first time, all of Europe will have some form of collective redress to allow consumers to directly claim compensation from a defendant. Still, the Directive does not change the current European law on cross-border jurisdiction or conflict of laws.
The core requirements under the Directive which each member state must implement at a minimum are:
2. The Netherlands Set the Tone with a Plaintiff-Friendly Interpretation of the Directive
Many European countries either remain hesitant to approach legislation on collective redress or are still debating how to allow consumers to effectively resolve their grievances without inviting the specter of a US-style “class action industry” into European courtrooms.
The Netherlands, on the other hand, have already embraced the new procedure and have taken a leading role in its implementation. The Dutch parliament already passed class action legislation in 2020. In June 2022, as the first country in the EU to do so, the Netherlands amended this regime to fully comply with the EU Directive. Rather than simply implementing the Directive’s core requirements, the Netherlands have used the legislative leeway afforded by the EU to create a plaintiff-friendly class action regime which will strengthen the position of Dutch courts to resolve cross-border collective disputes. The main staples of the new Dutch representative action are:
Some significant differences to US class actions still remain. The Netherlands have not introduced US-style discovery into their representative action, which the Directive would have allowed for. Plaintiffs will also not be able to sue for punitive damages.
3. Outlook: A Diverse Litigation Landscape in Europe with Opportunities for Plaintiffs
The European landscape for collective redress will remain diverse even after 2023. Not all EU member states will implement the Directive as broadly as the Dutch. For example, the German Attorney General has already indicated he will propose legislation that will be more narrowly tailored to the underlying EU Directive instead of overhauling Germany’s collective redress mechanisms in one legislative swoop.
However, following the example set by the Netherlands, some countries might try to incentivize plaintiffs and litigation funders to sue multi-national companies in their own courts by devising plaintiff-friendly procedural rules.
Even if such a competition among member states will not ensue, any reform of Europe’s collective redress system will present new opportunities for plaintiffs, in particular if last-minute legislation to meet the deadline of 25 December 2022 results in loopholes or unprecise statutes. Companies, courts, and law firms will have to adapt to the ensuing new legal challenges. With no or little case law on the books after the reform, plaintiffs have particular incentives to file creative lawsuits.
The following Gibson Dunn lawyers prepared this client alert: Markus Rieder, Patrick Doris, Alexander Horn, Kahn Scolnick, and Christopher Chorba.
Gibson Dunn lawyers are available to assist in addressing any questions you may have regarding these developments. Please contact the Gibson Dunn lawyer with whom you usually work in the firm’s Class Actions, Litigation, or Appellate and Constitutional Law practice groups, the authors, or any of the following leaders and members of the Class Actions Group:
Markus Rieder (+49 89 189 33 162, email@example.com)
Alexander Horn (+49 89 189 33 161, firstname.lastname@example.org)
Eric Bouffard (+33 (0) 1 56 43 13 00), email@example.com)
Jean-Pierre Farges (+33 (0) 1 56 43 13 00, firstname.lastname@example.org)
Pierre-Emmanuel Fender (+33 (0) 1 56 43 13 00, email@example.com)
Christian Riis-Madsen (+32 2 554 72 05, firstname.lastname@example.org)
Susy Bullock (+44 (0) 20 7071 4283, email@example.com)
Patrick Doris (+44 (0) 20 7071 4276, firstname.lastname@example.org)
Osma Hudda (+44 (0) 20 7071 4247, email@example.com)
Ali Nikpay (+44 (0) 20 7071 4273, firstname.lastname@example.org)
Philip Rocher (+44 (0) 20 7071 4202, email@example.com)
Deirdre Taylor (+44 (0) 20 7071 4274, firstname.lastname@example.org)
Doug Watson (+44 (0) 20 7071 4217, email@example.com)
Theodore J. Boutrous, Jr. – Los Angeles (+1 213-229-7000, firstname.lastname@example.org)
Christopher Chorba – Co-Chair, Class Actions Practice Group – Los Angeles (+1 213-229-7396, email@example.com)
Theane Evangelis – Co-Chair, Litigation Practice Group, Los Angeles (+1 213-229-7726, firstname.lastname@example.org)
Lauren R. Goldman – New York (+1 212-351-2375, email@example.com)
Kahn A. Scolnick – Co-Chair, Class Actions Practice Group – Los Angeles (+1 213-229-7656, firstname.lastname@example.org)
Bradley J. Hamburger – Los Angeles (+1 213-229-7658, email@example.com)
Lauren M. Blas – Los Angeles (+1 213-229-7503, firstname.lastname@example.org)
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