September 9, 2024
In recent years, we have seen class actions and other systems of collective redress spread from the U.S. to Europe.
By virtue of the EU Directive on Representative Actions (“RAD”) collective redress will soon be available in all EU member states (for more details on the EU Directive see our previous alert here). The deadline to implement the RAD expired on 25 June 2023. This alert gives a brief overview over the developments in the EU class action space since the deadline expired.
I. General Overview
The landscape of EU class actions is still evolving. Although the implementation deadline expired more than a year ago, in many EU member states the legislative process to implement the EU representative action is still ongoing. This includes Spain, France, and Poland (see below for details).
On the other hand, the Netherlands and Portugal continue to emerge as the early movers in the class action space. Both countries have created collective redress mechanisms which are attractive to plaintiffs and litigation funders. Both countries are among the very few EU member states which have implemented an opt-out mechanism to constitute a class. Most EU countries have chosen opt-in mechanisms for fear of “US-style” class action litigation and due to potential constitutional constraints.
In the Netherlands, almost all class actions claiming damages are brought in cooperation with a litigation funder. The Netherlands has also experienced a gradual influx of players from the US legal market, e.g., plaintiffs’ law firm Hausfeld opened an office in Amsterdam in 2020 and litigation funders with a US background have followed since.
In Portugal, a couple of active consumer protection organizations have filed several new class actions in the last year. Currently, over 100 class actions are pending. The focus of these actions is on data protection and anticompetitive practices to the alleged detriment of consumers, mostly against tech companies.
II. Details on legislative developments in selected EU jurisdictions
We highlight the following key developments in noteworthy EU jurisdictions which have not yet implemented the RAD:
1. Spain
Spain’s draft on representative actions is one of the very few legislative proposals with an opt-out mechanism. The opt-out proposal has drawn substantial criticism in the Spanish parliament for creating a US-like class action procedure.
The proposal is currently being reviewed by the “Comisón de Justicia” (comparable to the House Judiciary Committee).
2. France
France’s national assembly proposed a draft in March 2023 to implement the RAD. Notably, the draft included a provision for punitive damages (capped at 3% of a company’s average annual revenue) which did not have its basis in the RAD. In February 2024, the Senate discussed the proposal and objected to a number of provisions, including the punitive damages. A joint committee of both chambers is now tasked with developing a compromise before the final text is submitted again for approval to both legislative chambers.
After French president Emmanuel Macron dissolved parliament in June 2024, the legislative process was halted. With a new parliament just constituted, it could be well into 2025 until the law gets ultimately passed.
3. Poland
The Polish draft is in the final stages of the legislative process. It proposes an opt-out mechanism for all representative actions seeking injunctive relief and an opt-in mechanism for all other reliefs, including damages.
Poland has an active consumer authority which could be quick to draw on the new redress mechanism to enforce consumer protection.
III. Outlook
While the number of class actions in the EU has been rising continuously over the past several years, they are still in their infancy in most EU jurisdictions. For instance, in Germany, only a handful of new cases have been brought since the new law entered into force there in October 2023. Major jurisdictions have yet to finalize their implementation of the RAD. If more EU member states provide plaintiff-friendly redress mechanisms, like the opt-out mechanisms currently proposed in Spain and Poland, this could increase plaintiff activity more uniformly across the EU rather than in select jurisdictions. With ever new EU legislation being passed on substantive consumer protection, e.g., the recent AI act and the pending Green Claims Directive, EU class actions could gain more traction over the coming years.
Starting in June 2028, the EU Commission is obliged to evaluate the success of the RAD for consumer protection in the EU. Mechanisms that have proven to facilitate consumer protection organizations to bring cases might then become the new EU-wide standard.
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, Transnational Litigation, or Appellate and Constitutional Law practice groups, the authors, or any of the following leaders and members of the Class Actions practice group:
Frankfurt:
Alexander Horn (+49 69 247 411 537, [email protected])
Munich:
Markus Rieder – Co-Chair, Transnational Litigation (+49 89 189 33 260, [email protected])
Friedrich A. Wagner (+49 89 189 33 262, [email protected])
Brussels:
Christian Riis-Madsen – Co-Chair, Antitrust & Competition (+32 2 554 72 05, [email protected])
Paris:
Eric Bouffard (+33 1 56 43 13 00), [email protected])
Jean-Pierre Farges – Co-Chair, Business Restructuring & Reorganization (+33 1 56 43 13 00, [email protected])
Pierre-Emmanuel Fender (+33 1 56 43 13 00, [email protected])
London:
Susy Bullock – Co-Chair, Transnational Litigation and ESG (+44 20 7071 4283, [email protected])
Patrick Doris (+44 20 7071 4276, [email protected])
Osma Hudda (+44 20 7071 4247, [email protected])
Ali Nikpay – Co-Chair, Antitrust & Competition (+44 20 7071 4273, [email protected])
Philip Rocher (+44 20 7071 4202, [email protected])
Deirdre Taylor (+44 20 7071 4274, [email protected])
Doug Watson (+44 20 7071 4217, [email protected])
United States:
Theodore J. Boutrous, Jr. – Los Angeles (+1 213.229.7000, [email protected])
Christopher Chorba – Co-Chair, Class Actions, Los Angeles (+1 213.229.7396, [email protected])
Theane Evangelis – Co-Chair, Litigation, Los Angeles (+1 213.229.7726, [email protected])
Lauren R. Goldman – Co-Chair, Technology Litigation, New York (+1 212.351.2375, [email protected])
Kahn A. Scolnick – Co-Chair, Class Actions, Los Angeles (+1 213.229.7656, [email protected])
Bradley J. Hamburger – Los Angeles (+1 213.229.7658, [email protected])
Michael Holecek – Los Angeles (+1 213.229.7018, [email protected])
Lauren M. Blas – Los Angeles (+1 213.229.7503, [email protected])
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