New Legislation Expands Class Actions in France

There's a catch for plaintiffs lawyers: Only consumer groups can file the new class actions.

, Focus Europe

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Class action lawsuits in France ove r the past two decades can be counted on one hand, but a law passed by the French parliament in September and awaiting government approval aims to both streamline the procedure and mold a so-called U.S. practice into the French legal system. But there's a catch: Most lawyers can't file them.

The legislation, one of President François Hollande's election campaign promises, states that only accredited consumer groups can file class action suits, with claims to be limited to violations of consumer and competition law. The new law also has a court evaluate a case before trial, deciding whether the case can be admitted, how consumers will be contacted, and what the individual compensation would likely be.

France has always followed the legal adage that "no one shall plead by proxy," so class actions will continue under the new law to use an "opt-in" system. That means consumers must still join a suit using their names; they cannot be added automatically with an "opt-out" choice like in the United States.

The new law is designed to accommodate elements of French law that previously hampered class-action lawsuits. For instance, advertising legal services is illegal in France, which made it near impossible to find potential plaintiffs. In 2005, a Paris court ordered the closure of a class action website that aimed to bring together lawyers and potential class-action clients, for example. The new bill allows consumer groups to advertise per the instructions given during the court's preliminary evaluation. Since punitive damages are not allowed in France, a court can grant only the direct compensation for the cost of the faulty product or service. Class action compensation in France also excludes moral and bodily injuries.

While the new law focuses only on competition and consumer law matters, lawyers say it could be reformed in the future to include other sectors. "Success [of the new law] will depend on the first months in force and how the consumers groups use it," says Ozan Akyurek, a partner at Jones Day in Paris who specializes in commercial litigation. "If there are several successful cases, I think the government will have no choice but to extend the law into other fields such as health and the environment."

One bone of contention among French lawyers—at least, those not working for the accredited consumers groups—is their exclusion from filing claims. (Lawyers are allowed to appear for the defense.) The French National Council of Bars lobbied against the exclusion without success, and the incoming vice chair of the Paris bar, Laurent Martinet, says that lawyers will continue to push for inclusion.

"In addition to the ethical rules for lawyers in France that already prevent abusive practices, the new law would strictly regulate lawyers' actions," says Robert Saint-Esteben, head of the competition team at Bredin Prat in Paris. "This regulation would have the judge assess the admissibility of the lawsuit before deciding its merits. The adopted solution [of exclusion] appears to have been one of convenience, which, like all solutions of this nature, may be hindered by its bluntness."

The French government has said on its website and in statements to the press that it excluded lawyers to prevent abusive claims. Lawmakers also appear to be reflecting popular opinion against U.S.–style fishing expeditions that could collapse the system, despite the evaluation system that would in theory quell a bogus claim before it took shape. According to an online survey conducted in November 2012 by the French Ministry of Economy and Finance, 59 percent said that consumer groups should have exclusive rights to present legal actions.

But how the law will fare in practice is hard to predict. "I'm not sure how French people will react," Akyurek says. "These cases might take years, and the end result might be very little compensation. Would you join a class action suit if you are awarded only the price of a chocolate bar?"

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