The specific consumer “class action”
Consumer “class actions” were introduced in France by Law 2014-344 of 17 March 2014 (also known as the “Hamon Law”) and Decree 2014-1081 dated 24 September 2014, and can only be brought by consumer associations approved by the Ministry of Economy and Finance.
Currently, 15 accredited consumer associations can legally take action to protect consumers who have suffered loss arising from a common cause. Organisations may only act where they have obtained written powers of attorney from those they represent and may not seek out claimants through any form of advertising.
This action is limited to consumer law and competition, and includes areas such as telecommunications, banking, insurance, energy, housing, etc.
The framework is also limited by the nature of the injuries suffered. Only material damages are likely to be compensated. Article L623-1 of the French consumer code excludes moral damages and non-patrimonial damages (such as pain and suffering) from the scope of compensation.
Since this right of action is quite recent, there has only been one first instance judgment, but no final judgments. However, several actions have been launched by consumers’ associations. For example, the insurance company AXA is the target of a class action in which the collective damages, to be determined during the proceedings, could amount up to 300m and 500m Euros if the consumers are successful. Another class action on housing led to a settlement agreement. Other class actions have also been launched against companies such as SFR (telecommunications), Foncia (housing), BMW (car manufacturer), and BNP Paribas (bank).
General framework for class actions in France
Various laws have broadened the scope of class actions, which are now available in the fields of health law, discrimination, discrimination at work, environmental damage and protection of personal data (Law of modernisation of justice in the 21st century, 2016-1547, called "Loi J21").
At the time of adoption of the Hamon Law, the French government stated that it would review the new law within 30 months to determine whether to extend the procedure to health and environmental claims.
A class action procedure was then inserted into the National Health Law which was published on 26 January 2016 (Law 2016-41) and further detailed by Decree 2016-1249 on 29 September 2016.
Since then, Law 2014-344 dated 14 March 2014 and Decree 2017-888 dated 6 May 2017 have introduced a general framework for different kind of class actions ranging from health law, discrimination, discrimination at work, environmental damage to protection of personal data.
Regardless of the area concerned, a duly authorised organisation will have to be mandated in order to issue a claim instigating a liability action, which will be divided into two distinct phases.
First, the judge will rule on whether any liability is found and will determine the type of compensation, such as compensation on an individual basis, or taking a collective approach to the damages (Article 826-15 of the French Civil Procedure Code).
It is only during the second phase that the judge will assess damages and decide on the compensation.
Alongside these two steps, another way to achieve redress is through an amicable dispute resolution process (mediation).
For all types of action, by law the class action must be based on "individual cases presented by the applicant". Regarding the action introduced before the judicial court, it can be engaged when several people placed in a similar situation have suffered damage caused by the same entity.
Actions can be brought in either civil or administrative courts, depending on the nature of the defendant.
Each of the five categories of actions that may now be subject to a class action are governed by common rules established by the Act dated 18 November 2016 and Decree No 2017-888 of 6 May 2017 for both civil and administrative proceedings, such as:
- the necessity of prior notice before any action is taken (except for class actions in the field of health)
- an obligation to specify the individual cases in support of the claim, with the sanction for failure being nullity (Article 826-4 of the Civil Procedure Code, “CPC”)
- experts’ fees have to be paid by the defendant (Article 826-8 CPC)
- an obligation for the individuals to inform the organisation that they choose to ask directly the defendant for indemnification (Article 826-18 of the CPC)
- the necessity of a mandate for the purpose of compensation (Article 826-20 of the CPC)
- an obligation for mandatory information to appear in the judgment that recognises the defendant’s liability (Article 826-16 of the CPC)
- fixing the date on which publicity measures at the expense of the defendant shall be published (Article 826-14 of the CPC)
- an obligation to create an account at the “Caisse des dépôts et consignations” if no legal representation (Article 826-23 of the CPC)
- conditions for the enforcement of the judgment (Article 826-21 of the CPC)
- an obligation to specify the identity of the people involved in the class action under penalty of nullity (Article 826-22 of the CPC), and
- conditions for transfer of the claimant’s rights (Article 826-24 of the CPC).
Particular requirements are then specified for each type of class action:
Health-related class actions
The general framework described above applies to health related class actions. It is governed by specific provisions: Article L.1143-1 of the French Public Health Code (“CSP”) and seq. and article R.1143-1 and seq.
Such an action can be commenced by an approved healthcare users' association, with the purpose of compensating for any physical damage caused by the breach of a legal or contractual obligation by a producer or a supplier of health products, or a provider using one of these health products.
The procedure provides for two different phases:
Step 1 - admissibility and collective liability: the civil or administrative judge, depending on the case, determines whether the conditions required for the application to be admissible are met or not and, if necessary, renders a judgment on the liability of the defendant (producer, supplier or user of the product) in light of the individual cases represented by the approved association.
Step 2 - individual compensation procedure: as a result of a breach as held in the judgment, people fulfilling the criteria for joining the group (the "opt-in" system) obtain individual compensation for the damage suffered.
However, an amicable dispute resolution procedure is possible. Indeed, mediation can be initiated with the parties' consent, in order to find an amicable agreement on the claims of the applicants.
In the context of health law, compensation for damages can only be awarded through an individual compensation procedure, because personal injuries must be reviewed by medical experts on an individual basis.
For class actions in the field of health, as opposed to the four others, prior notice is not necessary before action is taken.
The law was examined by the Constitutional Council, which stated on 21 January 2016 that the provisions of the Law on class actions for personal injuries caused by health products were constitutional. In particular the Council considered that (1) the retroactive effect of the new setup is constitutional, since it merely opens a new kind of procedure for pre-existing losses or claims (as opposed to retroactively modifying the content of the law), and (2) the judgment on liability does not need to detail further how each individual indemnification shall be calculated.
Many questions remain unanswered: can these proceedings allow for compensation of non-pecuniary damages, such as for anxiety? Can multiple associations of healthcare users act simultaneously or intervene voluntarily in ongoing class action proceedings? What about multiple associations bringing actions before different jurisdictions simultaneously?
With regard to class actions in the area of discrimination, the legislator has laid down general rules, but also specific rules concerning discrimination in employment relations attributable to an employer.
Under the general rules, a class action can be initiated for any damage that may lead to any kind of discrimination, but which is outside the professional framework: e.g. discrimination in access to housing, education or health. The class action is then only open to associations of at least five years standing involved in combating discrimination or working in the field of disability (Law no 2008-496 dated 27 May 2008 “portant diverses dispositions d'adaptation au droit communautaire dans le domaine de la lutte contre les discriminations”).
Class actions for discrimination can be introduced only if the operative event or breach took place after the law came into force.
As regards discrimination at work, the law provides that a representative trade union may take action before a civil court in order to establish that candidates for employment, training or work experience, or employees, have been discriminated against, directly or indirectly, for a recognised reason and by the same employer.
This action may also be initiated by an association of at least five years standing involved in combating discrimination or working in the field of disability.
The action must be preceded by a request for the discrimination to stop, and may therefore be initiated only after the expiry of a six-month period from the date of the request or from the date of the notification of the rejection of the application by the employer.
Class actions for discrimination can be started only if the operative event or breach took place after the law came into force (Articles L1134-6 to L1134-10 in the French Labour Code).
The law provides that class actions may be brought against those who cause environmental damage on the basis of Article L. 142-3-1 of the Environment Code.
This action is open to approved environmental protection associations whose statutory purpose is to protect victims or to approved associations on physical damages or financial interests.
The purpose of a class action is to obtain the cessation of a breach and/or compensation for any environmental damage.
However, this notion of “environmental damage” is not defined by the legislator, potentially broadening its scope considerably.
Class actions for environmental damage can be introduced only if the operative event or breach took place after entry into effect of the law.
Protection of personal data
According to article 43ter of Law No78-17 dated 6 January 1978 “relative à l'informatique, aux fichiers et aux libertés”, class actions specific to the protection of personal data allow any approved consumer association, any representative trade union or any association of five years’ standing (having as its object the protection of privacy and personal data) to initiate collective actions.
Thus, these designated bodies can act when several “natural persons” in a similar situation suffer damage resulting from a breach of the law on information technology and individual freedom by a person liable for processing personal data or by a subcontractor.
However, this class action is limited to requiring the cessation of a breach, which means that no compensation for victims is provided for by the law.
Collective redress for shareholders
In France, “class actions” are limited to consumers. However, under French law, shareholders have some procedural mechanisms which allow for collective redress and could be similar in effect to a group class action.
Company shareholders can form associations to represent their interests and initiate an “ut singuli” action (Article L. 225-1201 and article L. 225-252 of the French Commercial Code2). Article L. 452-1 of the French Monetary and Financial Code3 grants the same right to authorised shareholder defence associations of publicly traded companies.
Nevertheless, the purpose of this type of "action in defence of the collective interest" is very limited because the associations are empowered to exercise social action: the judgment is given to the group, and not for the benefit of individuals who make up its membership. The association may secure compensation for the collective harm, that is to say the damage suffered by the sum of individual interests.
1 Article L. 225-120 of the French Commercial Code:
I. - In companies whose shares are admitted to trading on a regulated stock market, shareholders whose shares have been registered for at least two years and who hold at least 5% of the voting rights may form associations to represent their interests within the company. In order to exercise the rights to which they are entitled under Articles L. 225-103, L. 225-105, L. 823-6, L. 225-231, L. 225-232, L. 823-7 and L. 225-252, such associations must have notified the company and the French Financial Markets Authority [Autorité des Marchés Financiers] of their legal status.
II. - Where, however, the company's capital exceeds €750,000, the share of voting rights to be represented pursuant to the preceding paragraph is reduced according to the number of the voting rights relating to the capital, as follows:
1° 4% over €750,000 and up to €4,500,000
2° 3% over €4,500,000 and up to €7,500,000
3° 2% over €7,500,000 and up to €15,000,000
4° 1% over €15,000,000.
2 Article L. 225-252 of the French Commercial Code
The directors and managing director shall have individual, joint or several responsibility to the company or third parties either for infringements of the laws or regulations applicable to limited companies (sociétés anonymes), or for breaches of the constitution, or for tortious or negligent acts of management. If more than one director, or more than one director and the managing director, have participated in the same acts, the court shall determine the share to be contributed by each of them to the compensation awarded.
3 Article L. 452-1 of the French Monetary and financial Code:
"Properly declared associations having as their explicit purpose, as defined in their company constitutional documents, the defence of investors in financial securities or financial products may bring legal proceedings before any court, even though the filing of civil actions, in relation to facts which cause direct or indirect prejudice to the collective interests of investors in general or to certain categories of investors.
Where a practice contrary to the laws or regulations is likely to compromise the rights of investors, the shareholders' associations … may apply to the court for an order compelling the individual or legal entity responsible to comply with said provisions and end the irregularity or eliminate its effects.
The application shall be brought before the presiding judge of the regional court having jurisdiction at the place where the company has its registered office, who shall give an immediately enforceable summary ruling. The presiding judge shall be competent to hear and determine objections of illegality. He may, even without consultation, take any protective measure and impose a coercive fine payable to the Trésor public for execution of his order."