France Provides for Consumer Class Actions

Written By Michael A. Eizenga and Preet K. Bell

France, following the lead of many other European Union members, has enacted legislation providing for class actions in the consumer law field. The new law, known as the "Hamon Law", was passed in February but is still coming into effect through various decrees, which also provide further details on the mechanics of the legislation. The law covers numerous consumer issues in addition to providing for class actions.

The Hamon Law contains many features which make it distinct from Canadian class action legislation.

First, individuals are unable to start class actions. The right to bring a class action is only provided to nationally accredited consumer protection associations (of which there are approximately 16). The scope is also limited to consumer class actions, which includes actions with respect to the sale of goods, supply of services, or anti-competitive practices. With respect to anti-competitive practices, the law is even further limited in scope; a class action can only be brought after a competition authority has already found a competition law violation.

With respect to damages, consumers can only claim for "material" damages, which are financial or economic damages. Damages such as pain and suffering are not allowed.

The most unique feature of the Hamon Law is the fact that there is no separate certification or screening decision. In Canada, a class action must first be certified in order to proceed; a certification decision considers whether the claim has the requisite elements to proceed as a class action. In France, the "first judgment", as it is called, will determine whether the criteria for a class action is satisfied and rule on the merits of the case, including liability, the definition of the class, quantification of damages, the time period for opting into the class, and how class members will be notified of the judgment. Unlike class action legislation in Canada, the Hamon Law has an "opt-in" only regime, which requires class members to actively opt-in to the class action. However, since the opt-in period is determined at the same time as liability and damages, class members will know of the decision (including the damages they would receive) before choosing to opt-in.

After the opt-in period has expired, the court can make a second judgment in relation to any difficulties in implementing the first judgment. The opt-in period must be no less than two months and no more than six months.

There is also a simplified procedure available where the identity and number of class members is known and the damages suffered by each class member are the same. In this case, in the first judgment, the court can order that the defendant directly compensate the class members in accordance with the judgment.

Mediation is also available and any settlement agreement reached is subject to approval by the court. As with any judgment, class members must opt-in in order to be bound by the agreement.

Due to the limited scope and standing provided by the Hamon Law, it is difficult to determine whether this law will result in a large number of class actions. This would appear to be highly dependent on the motivation of the approximately 16 accredited consumer associations. However, it is expected that companies found guilty of any competitive misconduct will almost assuredly face a subsequent class action, which may likely change the willingness of companies to cooperate with competition authorities and potentially plead guilty to charges of anti-competitive behaviour.