FRANCE – Until 2014, class and collective actions were almost inexistent in France. As from October 1, 2014, French consumers have been provided with a new class action à la française – Statute n° 2014-344 of March 17, 2014, and Decree n° 2014-1081 of September 24, 2014, entered into force on October 1, 2014. No doubt that French consumers are now more serein…and companies far less. The following are some key aspects of the new law.
1. A limited scope of application
The French class action allows individuals to get compensation for damages they suffered personally as consumers.
According to the introductory Article to the French Consumer code, a consumer is: “any individual acting for purposes which are primarily outside his trade, business, craft or profession”. Legal persons are therefore excluded from class actions.
The damage suffered must be subsequent to the purchase of goods or services or to antitrust practices, to the exclusion of health or environmental provision of goods or services. Emotional disturbance or physical injuries fall outside French class action’s scope. Likewise, and contrary to US law, French law does not allow punitive damages.
2. Who can initiate a class action in France?
The French class action is not directly accessible to consumers. As of today, only 15 appointed-by-law national consumer organizations are entitled to engage in class action proceedings. A group of two consumers in a similar or identical situation as regards the violation by a company is sufficient.
3. How to join a class action as a consumer? OPT-IN system only.
Consumers get involved in the class action only by opting-in to it. As for the “when” and the “how” they can opt-in, this depends on the type of class action concerned. Unlike its fellows, the French class action does not provide for an opt-out system.
4. Jurisdiction: court of the company’s head office location
If the company is located outside France, the Paris Civil Court shall have jurisdiction.
5. Class action results in the extension of time-barring periods
As regards civil claims, it interrupts their statute of limitations (i.e., reset the statute of limitations). As for consumers other claims (outside the class action), they are suspended during the class action. Under French law, interruption resets the statute of limitations, by erasing the time elapsed and restarting the computing upon final decision of the court. Suspension, on the contrary, does not erase the time elapsed, which shall resume at its point of suspension upon final decision of the court. However, upon resuming, the statute of limitations may not be of less than 6 months.
6. Three different types of class action in France: ordinary, simplified, antitrust.
Their differences benefit to consumers, either by shortening the timeframes or by overcoming the opt-in mechanism.
- Ordinary class action
Following the claim by the consumer organization, the company must be found liable by a court’s final decision (i.e., appeal barred). The court must rule on liability as well as determine the groups of consumers concerned and the damages to be repaired.Following this, the court must fix the terms and time limits under which consumers can adhere to the action. The French consumer code provides however for minimum compulsory indications the decision must contain. Adhesion to the action shall give the consumer organization power to act on the consumers’ behalf in order to seek indemnification for the final damages ruled on by the court.
Publicity measures must be undertaken by the company. Failing that, the consumer organization shall do this but at company’s expense.
- Simplified class action
When the identity and the number of consumers concerned are known, a simplified class action can be filed. The amount of their damages must be equal as regards their source or their reference period. The judge shall therefore rule on the liability of the company and on the compensation due individually to consumers. They shall then be personally informed, at the company’s expense, in order for them to accept compensation and be indemnified. - The antitrust class action
Such class action is consecutive to a decision by the competition authority on antitrust practices (French or European). Only practices provided by Articles 101 and 102 of the Treaty on the Functioning of the European Union and their equivalent in French law are concerned.The antitrust class action cannot be engaged upon the expiry of a five year’s period as from the competition authority’s decision, but such decision does not need to be final. Moreover, damages prior to the effective date of entry into force of the class action French law are eligible to the antitrust class action, except where the competition authority’s decision became final prior to such date.
7. Which are the main economic sectors under fire?
- Insurance and Banking: floating rate debt, tied selling practices in contracts, loan insurance may constitute targets.
- Telecoms and Internet: collection and reuse of personal data for commercial purposes, tied selling practices, sharing of data with intelligence agencies, cartel arrangements…there are numerous sensitive issues to deal with in this sector.
- Transport industry: the airline industry (notably through customer loyalty programs, fuel surcharge), rail transport (performance of service on specific lines).
Conclusion
Although far less comprehensive than its American fellow, the moderate French class action should not be underestimated.
No doubt that the arrival of class action in France forces companies to enhance professionalism and to integrate additional risk management to deal with:
- accrued financial risk;
- accrued risk regarding the image and reputation of the company;
- accrued risk related to the extension of time-barring periods.
