Why will class actions in France never achieve an American-style success?
Published on : 04/07/2017According to the European Consumer Centre (ECC)1, the collective action procedure implemented in the Netherlands in 2005, in the Distilbene case, made joint compensation in the field of healthcare possible. ECC noted that the procedure is certainly the “most adaptable and liberal type of group action in Europe, like the American “class action”. In the United States, class actions have been part of the judicial system for decades and are a well-accepted concept. They have not met with the same success in France, and we believe they will never achieve the same level of success as in the United States. Why is this?
1. Punitive damagesThe main reason is, in our view, connected to the existence of “punitive damages” in the United States. These involve very significant levels of compensation.
In its recommendation dated March 11 2013, inviting the Member States to introduce a class action mechanism into their legal systems, the European Commission provided that, to avoid abuse, punitive damages – involving an award of compensation to the claimant which exceeds the harm suffered - should be prohibited(2).
In France, bodily harm is less well compensated; compensation must be justified, objectively documented and above all, proportionate to the harm and prejudice suffered.
By way of illustration, in a “grouped” action concerning Lyme’s Disease(3), lawyers have demanded 500,000€ in damages per patient, based on the American model, since they consider that application of traditional compensation principles would not result in compensation equivalent to the harm suffered(4) However, this ‘convoluted’ reasoning will not prevent application of the restrictive compensation rules provided under French law...
2. Role of the lawyerIn the United States, attorneys can initiate the lawsuit. However, such attorneys can also look forward to very high result fees and therefore be substantially remunerated on the basis of a percentage of the total amount awarded to the group. Given the existence of punitive damages, said amounts can be extremely high. As such, it may be in the attorneys’ interests to advance the costs of the action and to “carry” the procedure on behalf of the claimants; above all, they are financially in a position to do so, thanks either to earlier result fees earned, or through bank financing arrangements, which are accessible where the chance of success of the action is considered to be favorable.
This is not the situation in France, where the professional councils governing attorney behavior strictly limit the possibilities of result fees(5). A result fee of 10 to 15% applied to a frequently modest sum of damages simply does not amount to remuneration of the cost of “carrying” several years of legal action and those who have already tried the exercise once, having done their accounts at the end of the process, are all the less likely to try it again.
It should be noted that in order to prevent remuneration of attorneys and the method of such remuneration creating any encouragement to initiate legal action which is not required in the interests of the parties, the European Commission specifically recommends not allowing payment of result fees(6).
In France, initiation of legal action is reserved to associations, who may hire attorneys to assist them(7). The claimant association thus must have sufficient cashflow to advance the costs of the legal action(8), or ask the persons or users to advance the costs of the action. Although the “Touraine” law provides for the possibility of the Judge ordering the respondent to pay a provisional amount(9), this is provided for when the Judge rules on liability, i.e. once the procedure is well underway. However, class action is governed by the rules provided by the Civil Procedure Code(10). The preliminary affairs judge therefore has competence to allocate a provision for the costs of the action(11), should the association so request, before judgment on liability is handed down.
3. “Discovery”The American procedure of “discovery” is the pre-trial stage in a lawsuit in which each party is required to disclose to the adverse party documents and other evidence relevant to the dispute, even those elements unfavorable to it(12). The claimants therefore have relatively easy access to evidence that they require to prove their allegations. However, the European Commission recommends avoiding "intrusive pre-trial discovery procedures (…), most of which are foreign to the legal traditions of most Member States"(13).
In France, in fact, the party making the allegation is required to provide proof of it. It may, however request a Court order for communication of a piece of evidence held by a third party or another party(14); however "an investigative measure cannot be ordered with a view to supplementing the party’s failure to provide evidence“(15).
4. “Opt-out system”The American system of class actions is based on an "opt-out" system, which signifies that all persons concerned are represented in the class action, even without their knowledge, and those not wishing to be involved must let it be known.
The French system is an "opt-in" system in which the potential victims can only, on the contrary, be included in the group (within a period provided by the Judge), following a voluntary and individual approach once the decision upholding the respondent’s liability is final.
The "opt-out" system, does not in fact comply with the requirements imposed by the Constitutional Council to preserve the freedom of the individual to take legal action(16). This system is also recommended by the European Commission: "The claimant party should be formed on the basis of express consent of the natural or legal persons claiming to have been harmed (‘opt-in’ principle)“(17).
Yet, the "opt-out" system, contrary to the "opt-in" system, makes it possible, from the start of the proceedings, to include the maximum number of persons concerned and thus to ensure effectiveness of the procedure.
Thus, none of the mechanisms which have made ‘class action’ such a powerful tool in the United States exists in our legal system: no punitive damages, strictly limited result fees, no “discovery” procedure and a system of inclusion which is the contrary of the “opt-out” system.
And yet, failure of class action in France is not inevitable. For analysis of the future of class action in the field of healthcare, see our article: “What prospects for class healthcare actions in France? A means of putting pressure to achieve settlement or a genuine choice?”
Esther Vogel : email@example.com
Alain Gorny : firstname.lastname@example.org
1 Class action in France, the will of Europe, European Consumer Centres, December 19 2013.
2 Commission Recommendation n° 2013/396/EU dated June 11 2013 on common principles for injunctive and compensatory collective redress mechanisms in the Member States concerning violations of rights granted under Union Law, whereas 15 and point 31.
3 See our article: “What prospects for class healthcare actions in France? A means of putting pressure to achieve settlement or a genuine choice?”
4 Lyme Disease: "We demand 500,000€ on behalf of each of our clients", L’Obs, 18 October 2016.
5 Article 11 of the National rules of procedure for the legal profession (RIN) prohibits an attorney’s overall fees being fixed on the basis of the legal result of the case. In case law, result fees are on average limited to 10 to 15% of the amount granted to (and in fact cashed) by the Client.
6 Aforementioned Recommendation n° 2013/396/EU, points 29 and 30.
7 Article R 1143-3 of the Public Health Code. The aim was specifically to avoid the excesses of the American system.
8 Decree of 26 September 2016 moreover states that the remit given by the user to the association for the purposes of
compensation "involves the association advancing all costs and expenses connected to the proceeding and representation of users during any potential investigative measure and throughout the legal proceeding"- art. R1143-10 Public Health Code.
9 Article R 1143-5 of the Public Health Code.
10 Article 1 of decree n° 2016-1249 of 26 December 2016 relating to group concerning healthcare – Art. R1143-1 Public Health Code.
11 Art. 771, 2° of the Civil Procedure Code
12 An obligation to communicate a large number of documents and information about the company may have a strong impact with regard to trade secrecy and may therefore lead to the company reaching a settlement.
13 Recommendation n° 2013/396/EU, aforementioned, whereas 15.
14 Articles 132 to 142 Civil Procedure Code: order to communicate evidence.
15 Article 146 of the Civil Procedure Code.
16 Impact assessment of the bill for implementation of the measures relating to justice in the XXIst century, 31 July 2015, 3.4.4 of book V concerning class actions.
17 Recommendation n° 2013/396/EU, aforementioned, point 2.
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