Art. 49 and 54 TFEU, Recital 2 of Directive (EU) 2019/2121 of the European Parli…
The possibility of taking class actions was introduced into the Italian judicial system on 2010. Five years later it is possible to draw some tentative conclusions and ask some questions. This article looks at the history and legal framework for class actions in general and the experience in Italy so far.
The European and Italian Legal Framework
Class Actions are related to the wider protection of consumer rights in the European Union. The EU’s first consumer action plan is from 1975. The official paper contains some common programmes related to consumer rights. Subsequently the Maastricht Treaty introduced into the EU Treaties a chapter on consumer protection and gave specific powers to the Union to adopt laws for their protection. Although consumer rights litigation can be affected by transnational issues, jurisdiction remained national and cross-border claims were not, at first, addressed to a sufficient degree by the EU legislator.
From 1993 onwards cross-border litigation has been the subject of EU debate and been included in many official documents, including the European Green Papers on Consumer Rights from 1993[1] and 2000, as well the 2003 Directive on access to justice[2].
During this time many Members States began addressing the question of class actions and some implemented their own rules[3], with differing levels of success[4].
Because of the significant differences between the Member States, the European Union invited all the Members States to implement and harmonize local law in order to allow consumers to be able to bring class actions by year 2009. The idea was that the procedure rules would be similar across the EU.
The European Commission launched its initiative on Collective Redress on 11 July 2013 aimed at (i) exploring ways to ensure that consumer mass claims can be solved[1], (ii) implementing a series of common, non-binding principles for collective redress mechanisms in the Member States so that citizens and companies would be able enforce the rights granted to them under EU law where these have been infringed and (iii) ensuring a coherent horizontal approach to collective redress in the European Union without harmonising Member States' systems[2].
The EU Collective Redress idea is completely different from the US Class Action because it only allows a number of claimants to commence a common action (subject to a number of requirements) in order to obtain a judgment which would have effects only in favour of the claimants. The US system is very different in that the judgment extends its effect in favour of persons who did not joined the class action proceeding but had similar rights. The two systems are often described as the opt-in and the opt- out systems.
In Italy the Class Action procedure is governed by the Italian Consumer Code, and in particular Art. 140 bis. This provision was introduced in 2009 and come in effect the following year. Currently, in Italy a class action can be commenced in order to obtain determination of liability, order to pay damages and/or refunds in favour of consumer users subject to a number of requirements. The action operates within the terms of contractual liability, product liability, unfair competitive behaviour or unfair commercial practices.
Law 24 March, 2012, n. 27 lower one of the admissibility thresholds. Formerly, class actions were inadmissible if class members rights, for which protection was sought, were not “identical,” whereas these rights now need to be “homogeneous,” which is a wider concept.
Like all EU Collective Redress provisions the Italian system is an opt-in system. The opt-in system implies the waiver of any individual claim. Unlike the mechanism in the USA, based on the opt-out, in Italy the consumers or users may join the lead plaintiff by filing a written declaration and evidence supporting their claim.
On the basis of Nctm’s experience, most of the class actions introduced after the implantation of the law, have been blocked by the Competent Courts during the examination of admissibility.. Competent Courts may rejects the claim if:
iii. the rights allegedly infringed upon are not homogenous;
In addition the Court might decide to stay the proceedings where an inquest from an administrative authority have been started in relation to the same facts or there is an action before an administrative court.
The decision on the admissibility of the class action can be appealed before the competent Court of Appeal within a period of thirty days of its notification or communication whichever is earlier. The Court of Appeal must decide no later than forty days from the filing of the appeal. The complaint does not produce the effect to stay the proceedings.
Once the “first stage of admissibility process” is completed allowing the case to go forward, the Class Action is subject to a further preliminary examination on the merits. The Court orders the class action admissible and sets the terms and conditions for the most appropriate advertising, ensuring that the order is published on the web site of the Ministry of the Economic development too. On this basis consumer who might want to opt-in to the proceedings could do it within at maximum 120 days from the issuance of the order.
If the claim is granted, the Court orders the liquidation of the same amount of the damages suffered for all the participants to the class action or, as an alternative determine a criterion to be applied to all claims in order to calculate the damages for each consumer. In this case the parties have a term of no more than 90 days to find an agreement. Otherwise the Court will determine the amount on its own initiative. The decision is executive after 180 days from its publication and might be appealed.
Unofficial statistics indicate that, after five years, only 58 class actions have been initiated and of those only 10 have passed the admissibility test. 18 cases have been already declared inadmissible and 30 are still pending. Among the class actions found to be admissible, only 3 were definitely decided with the issuance of a final judgment[3] and in only one case the Court ruled in favour of the Claimants ( a Consumer Association).
The numbers above show that the class action system in Italy has not been successful. According to consumer associations the main reasons for the failure of the instrument are (a) the opt-in system (which strongly limits the damages that can be liquidated in the proceeding and it does not allow the class action to be seen by defendants - usually financial institution, product manufactures, industries, etc. - as a real risk to be prevented[4]) and (b) strict requirements of admissibility required by the law, with particular reference to the “homogeneity” requisite (and strongly applied by the Italian Court).
The first case to be addressed is, on the basis of our experience, is the only case of an admissible class action which has resulted in a judgment in favour of a Consumer Association. We refer to the “Wecantour Case”, decided on 2013 by the Court of Naples (Judgment no. 2195 on 18 February 2013). The proceeding was commenced by National Consumer Union (Unione Nazionale Consumatori) against the tour operator Wecantour. Tourists who had reserved and paid for a stay in the luxurious resort of Zanzibar, found that once on the island, they were placed on a different hotel because the agreed “luxury” hotel was not available (due to some restoration works). The replacement hotel was not luxurious. The court upheld the claims of the lead plaintiffs and part of the group but rejected the claims of further remaining class members on the grounds that their rights were not perfectly “identical” to those of the others. In this regard, the court applied a very restrictive interpretation of the law applicable at the moment of the introduction of the case on 2009 (when “identity” of interests/rights was an admissibility requisite rather than simple homogeneity as required by the current law). The Court mentioned in obiter dictum that the new “homogeneous rights” concept introduced by the 2012 reform would have improved the effectiveness of the class action tool applicable to future cases.
The second case is Voden Medical Instrument . The case was introduced by Codacons (one of the most popular Italian consumer associations). The Class action was in relation to alleged liability of Voden Medical Instrument for the sale of a kit to diagnose swine flu. The Court[5] confirmed the existence of an illicit commercial practice in that false information had been circulated about the properties of the kit, but dismissed the class action because the Claimants/Class Participants did not have homogenous interests/rights. In particular, the Court clarified that the symptoms suffered by any damaged party were not homogenous as “symptoms caused by the vaccine were not in fact similar, because some consumers had headaches and other were nauseous". Furthermore, the Court clarified also that the few Claimants with homogeneous rights – even if the case was admissible – would only have been entitled to compensation an overall amount of “14 euros”, equal to the cost of the kit purchased. Due to the few participants who had opted in the class action, the overall risk of damages for the defendant was not significant. In light of the above and according to our evaluation of “class action” case law in Italy, we can conclude that one of the major obstacle is a very strict interpretation by the Courts of the requisite of “homogeneity of interests/rights”; most of the class actions have been considered not admissible due to the significant diversity in the position of each potential class member[6] or because consequences of the failure of a service, notwithstanding the identity of the cause, were considered different from each consumer[7]. The same prevalence of “personal issues related to the determination of damages” rather than “general and homogeneous issues” applicable to any potential consumer adherent could affect the requisite of homogeneity[8].
In a very recent case decided by the Court of Venice concerns “Volkswagen”[9]. Here the Court declared as non-admissible the class action because, despite for the identity of the cause of action and/or the purchase of the same model of car, the determination of damages suffered by the applicants were subject to a number of subjective and objective factors which affected the requisite of homogeneity and would have required the Court to examine and decide on a number of different and heterogeneous cases which were outside the scope of the class action.
In conclusion, after 5 years, it can be concluded that many of the comments made when the procedure was introduced are confirmed; class action does not seem to be a successful or useful instrument. The current law cannot allow class actions to succeed. The lack of success of the instrument is not only due to the rules them selves but also due to other factors. We refer in particular, (i) to the main principle in Italian tort law regarding the fact that any party is entitled only to claim for damages which are actual (so that they are related to a specific individual situation, to the time and space of each claimant, subject to their prove) and (ii) the lack of the availability of “punitive damages” or the like. It goes without saying that the first principle above has a very strong impact on the “homogeneity requisite”, while the second issue affects the amount of the damages. Until both these issues are address we do not see much future for the class action procedure in Italy.
[1] A trend can be identified towards an increasing scaling up of mass claims. Expanding mass consumer markets with consumers shopping cross-border and on the internet create a high potential for large groups of consumers being harmed by the same or a similar illegal practice of a trader.
[2] National redress mechanisms should be available in different areas where EU law grants rights to citizens and companies, notably in consumer protection, competition, environment protection and financial services
[3] There are not official statistics on class actions commenced and/or introduced and/or pending before the Italian Court; the most updated data have been published on http://www.osservatorioantitrust.eu/it/azioni-di-classe-incardinate-nei-tribunali-italiani/ and refers to the statics as of January 2016
[4] On the contrary, in the United States of America the opt-out systems allow any class action to be a real risk of multimillionaire damages, so that usually the defendants are interested to try to find a settlement before the judgment
[5] The case arrived at the Supreme Court after two phases in the merit Courts
[6] Court of Appeal of Rome, on 27 January 2012 (Case Codacons vs Soc. Bat Italia)
[7] Court of Milan, on 8 November 2013 ( Case Altroconsumo vs Trenord)
[8] Court of Milan, on 9 December 2013, (Case Codacons vs Soc. M.R.)
[9] Court of Venice, on 12 January 2016, ( Case Altroconsumo vs Volkswagen AG/Volkswagen Group Italia SPA)
[1] COM(93) 576 def.
[2] COM(2000) 51 def; direttiva 2003/8/CE in GUCE L 26/2003.
[3] For a comparative review of the national rules - http://ec.europa.eu/consumers/archive/redress_cons/countryfichesmemonumber.pdf
[4] V. Evaluation of the effectiveness and efficiency of collective redress mechanisms in the European Union Report published on 26 august 2008 - http://ec.europa.eu/consumers/archive/redress_cons/finalreportevaluationstudypart1-final2008-11-26.pdf
