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The Rise of Class Actions “À La Française”

Cécile Derycke, Hogan Lovells, France , Hogan Lovells, France

For years, the introduction of a class action mechanism under French law was discussed and delayed due to political and procedural constraints.

Contrasting with this history, the last couple of years have seen a tremendous evolution, with two types of class actions already enacted and others being discussed and drafted.

The Pioneer: The Consumer Class Action

It all began with the adoption of the Consumer law of March 17, 2014, the so-called "Hamon law", which created the first class action mechanism under French law ("action de groupe" in French). The new law came into force on October 1st, 2014. Pursuant to the terms of the Hamon law, only a representative consumer protection association authorized at national level may act before civil courts to seek compensation for the individual losses sustained by a group of consumers (starting at two). To date, fifteen associations are authorized to launch such class actions. Consumers are defined in the French Consumers Code as any natural person acting outside his or her trade, business, craft or profession.

The loss sustained by the consumers must result from the breach of a professional's legal or contractual obligations, whether in the context of the sale of goods or the provision of services. This type of class action can also be used to seek compensation for the loss suffered by consumers as a consequence of anticompetitive practices (for example, overcharging resulting from a cartel or abuse of dominant position).

The French system is an opt-in system. Each consumer who wants to be part of the class must take a positive action to opt in.

To join the group, consumers must be in an identical or similar position (not defined by the law) and have sustained a loss caused by one or more professionals. The law does not exclude any specific sector from the scope of application of a class action. However, only material losses affecting a consumer's assets may be compensated through this type of class action. Losses resulting from physical or psychological damage are excluded.

The adoption of this new law was a significant change of the French procedural landscape. Since the entry into force of this class action mechanism, six actions have been initiated.

The Next Step: The Health-Related Class Action

On December 17, 2015, the law on modernisation of the French health system (the "Public Health Law") was definitely adopted by the Parliament. Article 184 of this law provides for the introduction of class actions regarding bodily damage triggered by a health or cosmetic product. These class actions will come into force at the date provided for in an implementation decree to be enacted or on July 1st, 2016 at the latest.

This new type of class action may be initiated by associations representing users of the health system authorized at local and national levels (i.e. more than 480 associations to date). The action may be launched on behalf of a group of users who are placed in an identical or similar situation (which is not defined by the law).

The action may be directed against the manufacturer, a supplier or a service provider (e.g. a hospital) using the product for an alleged breach of their legal or contractual obligations. Applicable liability regimes are not affected by this law.

The Court may, at its discretion and with the parties' consent, appoint a mediator whose mission will be to present an amicable settlement agreement to the parties.

In the absence of mediation or if the mediation fails, the Court will hand down a judgment ruling on admissibility and liability. This judgment will also determine:

  • the compensable bodily damage, being observed that all losses resulting from these bodily damage may be compensated (material and psychological losses notably),
  • adequate publicity measures,
  • the definition of the "group" and the criteria to join the group,
  • the cut-off date to join the group, which may range between 6 months and 5 years after completion of the publicity measures.

In principle, individual compensation is dealt with out-of-court. Compensation requests may be made to the defendant(s) directly by the "user" of the health system or through the association. The concerned users may the first-instance Court which was seized with the class action if no compensation offer is made or if it is deemed insufficient.

The application of the Hamon Law will be assessed 30 months after enactment. Yet, the health-related class actions were enacted well before, despite the extreme complexity of dealing with individual injuries through a class action. This illustrates the current "French frenzy" on class actions.

The Day After: Towards The Adoption of a General Framework For Class Actions?

The French Ministry of Justice submitted a bill to the French Parliament in the Summer 2015, initially entitled "bill relating to measures implementing 21st century justice". The bill was subsequently renamed "bill on class action and judicial organization" (the "Class Action Bill"). Currently discussed before the French Parliament, this Bill will likely be adopted in the coming months.

The Bill specifies that this new class action mechanism will only be available for certain areas of law. Under the current state of the Bill, the newly created class action should be applicable to actions relating to discriminations and actions initiated on the basis of a limited number of Articles of the French Labor Code.

However, the structure of the Bill shows that the intention of the law maker is to create a common general framework applicable to class actions on different topic. This intention was also clearly expressed in the explanatory statements of the Bill when it was discussed before the French National Assembly.

Each class action's specificities, depending on the area of law, would thus be defined in subsequent pieces of legislation that would complete the law. Specific class actions in different areas could therefore be created in the future, such as a class for data protection breach, for losses sustained as a result of an environmental damage, etc.

Under the current state of the Bill, damages which can be compensated may be caused by any "breach of the same kind of legal or contractual obligations". Unlike in the consumer class action, the consumer will not need to be bound to the professional by a contractual relationship. The scope of the Bill is therefore much broader.

The Bill provides that the action would aim at either putting an end to the violation, compensating the loss, or both, hence covering a wide range of potential actions too. This could for instance allow class actions even when it is hard to assess any loss, which can be the case for the breach of data protection laws or in environment matters for instance.

After resisting for years, France is now leading the charge on class actions in Europe. For how long? The implementation of the first actions as well as the political agenda (the presidential elections will take place in 2017) might influence the next steps, in one way or another. What is for sure is that the procedural landscape is changing tremendously with these new actions as well as other evolutions (e.g. the avocats are now allowed to promote their practice on the French TV and radio). The world is changing and so is France.