Class actions

1. Class actions Comparative profiles and protection of the consumers Short report of the conference carried out in Padova, 18 – 19 May

2. The program,18 may • Prof. Andrea Giussani: introduction on the class actions as the best way for the protection of the consumers. • Avv. Lorenza Bergamo: examples of “collective actions” in Italy and connected problems. • Prof. Sergio Chiarloni: protection of the consumers in Italian system and bills in order to introduce “class actions”. • Rachael Mulheron٭English Group Litigation • Prof. Francesco Shurr٭٭: collective protection of the consumers in the European Union legislation. ٭(Reader, Department of Law, Queen Mary University of London) ٭٭(University of Innsbruck) Paolo Cerchiaro 2007

3. The program,19 may • Rachael Mulheron: medical class actions and group litigations in a comparative perspective. • Francesco Shurr: the German “collective action”. • Prof. Marco De Cristofaro: the protection of the mass and collective interests between the Italian civil code and civil procedure. • Prof. Andrea Giussani: is it possible to introduce the class actions in Italy? Paolo Cerchiaro 2007

4. Giussani: introduction on the class actions as the best way for the protection of the consumers • Italian civil code, rule 1469 sexies C.Civ. (but now it is in the “Consumer Code”). The associations and trade unions of consumers can sue the companies and the producers that put in the contract illicit condictions. They can obtain an injunction or declaration against the corporations / producers to stop the illicit practice. - Differences between art. 1469 sexies and U.S.A. “Rule 23” (Fed. R. Civ. P. 23). Paolo Cerchiaro 2007

5. Giussani: introduction on the class actions as a the best way for the protection of the consumers • In the U.S.A. system the access to the justice is simpler than in Italy. • Because in U.S.A. there are contingency fees agreement. • Instead of this, in Italy there is the rule of victus victori (the party who loses the action must pay expenses & lawyers also of the other parties). • For the consumers there is less expensive to sue the corporate in U.S.A. than in Italy. Paolo Cerchiaro 2007

6. Avv. Lorenza Bergamo: examples of “collective actions” in Italy and connected problems. • Financial Crack (e.g. Agertinian bond; Cirio Corporation Crack; Parmalat) has offered the opportunity to experiment collective actions. • Many of them are still in Tribunal (Padova and Treviso). • Collective action under the Consumer rule, by now, are brought by the “Federconsumatori” • “Federconsumatori” is the association that pick up a lot of persons, who are generally called consumer; the consumers for being able to be part of a collective action must be enrolled to the association. • The association is the party in the process, but needs the authorization of each one of the persons enrolled who want to sue the same defendant. Paolo Cerchiaro 2007

7. Avv. Lorenza Bergamo: examples of “collective actions” in Italy and connected problems. • Example: 500 workers of a company that used asbestos v. INPS (Italian government body for public welfare): • Much more complicated case for the judge; • Many individual claims put together because of a common issue of fact/law; • The judge rejected the action; • The expenses lawyers have been divided between all the workers Paolo Cerchiaro 2007

8. Prof. Sergio Chiarloni: protection of the consumers in Italian system and bills in order to introduce “class actions”. • The bills to the examination of the Parliament Many different opinions; the major points: • Copy the North American model (injunctive and damages class action); • Perfect and improve the model of collective action (that still exits in the Consumer Code) • He prefers this way, because it should be less difficult to realize in Italy. Paolo Cerchiaro 2007

9. Prof. Sergio Chiarloni: protection of the consumers in Italian system and bills in order to introduce “class actions”. • Problems in the bills (2°model): • Only the associations are able to bring collective action. • Should be used procedure for business action (d.lgs. N. 5/2003, very complicated rules). • punitive damages (against the Constitution). • No provisions about: certification; categories of types of class actions. - Both models (1,2) use ambiguous concepts and mix terms of one and the other model. Paolo Cerchiaro 2007

10. Prof. Francesco Shurr: collective protection of the consumers in the European Union legislation. • directives of the European community to fight unfair competition. • Most of them preview injuctive remedies. • Problems: • Every country must compare them with its own legal principles. • often they delay to perform them. • the consumers and the judges do not have incentives for resort to the E.C.J and perfom its decisions. • The sentences of E.C.J. against the states are too much low and so they do not stimulate to perform and enforce the E.U. law. Paolo Cerchiaro 2007

11. Rachael Mulheron: English Group Litigation • A. England has a representative rule; the earlier versions is of 1873. • B. In 2000 representative rule was repeated and introduced G.L.O. (Group Litigation Order). A. Representative rule: Where more than one person has the same interest in a claim, the claim may be begun; or the court may order that the claim be continued, by or against one or more of the persons who have the same interest as representatives of any other persons who have that interest. Paolo Cerchiaro 2007

12. Rachael Mulheron: English Group Litigation Difficulties: - In application to most group litigation (e.g. Markt & Co Ltd v Knight Steamship Co Ltd, where a ship sank, in 1910, during a war and all cargo aboard went lost). • Barriers to bring litigation for many reasons: separate contracts; separate defenses; separate damages claims; separate final decisions and res judicata. • Traditionally the representative rule contains an opt-in regime. • Group litigation brought, prior to 2000, gave the lack of utility of the representative rule (e.g. in 1996, the Creutzfeldt-Jakob litigation ). Paolo Cerchiaro 2007

13. Rachael Mulheron: English Group Litigation B. Group litigation orders (GLO’s) Definition (Civil procedure rules, part 19 section 10 = rule 19.10): A group litigation order means an order made under rule 19.11 to provide for the case management of claims which give rise to common or related issues of fact or law (called the “GLO issues”). Group litigation order (rule 19.11): The court may make a GLO where there are or likely to be a number of claims giving rise to the GLO issues. Paolo Cerchiaro 2007

14. Advantages opting-in preserves the liberty of the individual to choose whether to sue. a person who does not want to litigate should not find himself “roped in” to a class action as a result of mere silence. Under opting-in, class members will be bound by the result only if they intend to be so bound. Disadvatages Opting-in is little more than a permissive joinder device, for people who want to sue together. Opting-in is a barrier to participation in the litigation, for people who are vulnerable and subject to barriers. Opting-in does not promote access to justice as opt-out regimes do. Rachael Mulheron: English Group LitigationThe opt- in approach: advantages and disadvantages (compared to opt-out models) Paolo Cerchiaro 2007

15. opt-in regimes reduce the possibility of the litigation becoming unmanageable. The opt-in approach assists the defendant to know the size of the potential class Opt-in helps to reduce the problem of future claimants emerging over time. Opt-in regimes are consistent with the ordinary procedures for commercing a legal proceeding. A person may not learn, until too late, of his right to opt-in, which he would have exercised, if he had known. Establishing an opt-in register too early in the action can encourage weak claims. Multiple proceedings for the defendant are more likely under opt-in. Identifying all class members can be very difficult for claimants’ lawyers at the time that the register is closed. Opt-in does not fulfill the deterrent function of the law, because it can lead to under-compensation Rachael Mulheron: English Group Litigation Paolo Cerchiaro 2007

16. Rachael Mulheron: English Group Litigation Application of the GLO: A wide variety of scenarios have been covered to date under the GLO regime (e.g. holiday packages, care homes alleged abuses, pension disputes, tax payment disputes, allegedly defective medical products, landfill nuisance claims). Number until now: there have been 52 Group Litigation Orders: it mans that the rule has been used on a “fairly modest scale”. People are not encouraged to ask for GLO. Why? The major problem, probably, is this: the GLO is too much brief and this is a value but it could be also a problems. Paolo Cerchiaro 2007

17. Rachael Mulheron: English Group Litigation 5 Criteria for the commencement of a GLO; to bring a multi-party action following requirements are necessary: • A number of claims; • Giving rise to “common or related issues of fact or law”; • must be consistent with the overriding objective of the CPR, which is to enable the court “to deal with cases justly”; • Consent of the CJ (Lord Chief Justice, if it is in Queen’s Bench division) or VC (Vice-Chancellor, if the order is in a county court) is required; • No GLO if, for example, the representative rule wuold be more appropriate for the case. Paolo Cerchiaro 2007

18. Rachael Mulheron: English Group Litigation Anyway, a lot of problems with this procedural device remain. Other ad hoc representative rules and proposals (and bills): • Competition Act 1998, c41, s47b.This rule permitts representative actions to be brought on behalf of consumers in respect of antitrust violations and anti-competitive practices; • A variety of EU consumer protection directives. • English reform proposals in 2006: • Representative Actions for the Enforcement of Intellectual property rights; • Representative Actions in Consumer protection legislation; • Damages Actions for Breach of the EC Antitrust rules. Paolo Cerchiaro 2007

19. Rachael Mulheron: English Group Litigation • Comparison with the other models of class action. 1. A lot of differences with the definition of the U.S.A. class action: • A class actions in USA is a procedural device which enables the claims of a number of persons against the same defendant to be determined in the one suit. • In a class action, one or more persons (the representative plaintiff) may sue on his own behalf and on behalf of a number of other persons (the class) who have a claim to a remedy for the same wrong, and who have claims that share questions of law or fact in common with those of the representative plaintiff (the common issues). Only the representative plaintiff is a party to the action. • The class members are not usually identified as individual parties, but are merely described. • The class members are bound by the outcome of the litigation on the common issues, whether favourable or adverse to the class. Paolo Cerchiaro 2007

20. Rachael Mulheron: English Group Litigation 2. Other examples of class actions, for example: • Federal Court of Australia Act 1976 • Class Proceedings Act 1992 (Ontario and most other Canadian common law provinces in the years thereafter). 3. CONCLUSIONS Major differences in operation between the English GLO and the USA class action: a. The conduct of certification, to consider: • Numerosity requirements (what minimum number of class members is required?) • Commonality (what common issues of fact/law exist and how predominant must the common issues be over the individual issues?) Paolo Cerchiaro 2007

21. Rachael Mulheron: English Group Litigation • Superiority (what factors indicate that a class action is the best or preferable way of determining the dispute between the class members and the defendant?) • Adequacy of representation (is the representative claimant suitable and able to adequately represent the class members?). b. Opt-out regimes: advantages and disadvantages. c. Class definition instead of indentification of class members. Paolo Cerchiaro 2007

22. (19 May)Prof. Marco De Cristofaro: the protection of the mass and collective interests between the Italian civil code and civil procedure. • Which and how principles of civil code and civil procedure code could be modified? • It is political problem and it is necessary to divide the consumers into three categories: • consumers who have suffered a light injury (e.g. phone companies for the telephone rates) . • Consumers who have suffered a little greater injury (e.g. antitrust violations). • Consumers who have suffered serious injury (e.g. mass torts). Paolo Cerchiaro 2007

23. (19 May)Prof. Marco De Cristofaro: the protection of the mass and collective interests between the Italian civil code and civil procedure. • The possible solutions: a. If damages are small or little greater it is better (cases 1,2) for the consumer to aggregate in a class to recover them. • In this case (a) the principles (e.g. fair process and representation; the right to have trial; …) will be minimally compromised. b. If there are serious damages (case 3) it will be better for the person to act alone and bring an individual lawsuit. - In this case (b) if there was a collective or class action the principles would be mainly compromised Paolo Cerchiaro 2007

24. (19 May)Francesco Shurr: the German model of “collective action”. • Gesetz zur Einfuhühurng von Kapitalanleger – Musterverfahren (KapMuG): law for the introduction of the model procedures for the investors • It is effective since 1° November 2005. • History: More than 15.000 investors sued Deutsche Telekom in more than 2500 individual lawsuits with 700 lawyers; the courts were incapable to manage all the causes and they were too much complicated to put together before one court. • Consequences: German Costitutional Court “enforced” the Legislator to create a collective action in order to avoid what succeded in Deutsche Telekom case Paolo Cerchiaro 2007

25. (19 May)Francesco Shurr: the German model of “collective action” • Targets: to bring a collective action and so put together in the same judgment all the persons who have suffered the same damage; to reduce individual lawsuits. To fight forum shopping To avoid the problem of contrasting decisions. • Fields: (KapMuG ) can be certified only in case of unfair advertising (very limited application). Paolo Cerchiaro 2007

26. (19 May)Francesco Shurr: the German model of “collective action” • Procedure: • Ask the court to bring the collective action (KapMuG); there must be at minimun 9 individual actions. • Give notice publishing it in the Official Journal. • Exhibition order to the plaintiffs and defendants. • Possible to appeal the exhibition order. • Certification of the “model” plaintiff (like class representative). • Dicover and suspend all the judgment connected with one that is already certificated (this, in practice, takes a very long time). • Possible to opt-in in the class (not if the judgment is suspended). • There are not contingency fees. Paolo Cerchiaro 2007

27. (19 May)Francesco Shurr: the German model of “collective action” Why (KapMuG) is different from all other countries. • The judgment must be started as indivudual by one plaintiff. • This plaintiff (or the defendant) should ask for the collective action. • If there are requirement to proceed as a collective action (KapMuG) the court will consider the predominant common questions of fact/law; this is the collective phase. • Decision on common questions is binding for all the members of the action (only for the party who opt-in the class). • After that everyone of the individual judgments stared continue again to decide the individual questions (the issues that are different for every single case). • the judgment begins individual and ends still individual, after one common phase. Paolo Cerchiaro 2007

28. (19 May)Francesco Shurr: the German model of “collective action” • Conclusions: Germany courageously has decided to experience an absolutely new model. The model will be in force (effective) until 1° November 2010. Paolo Cerchiaro 2007

29. Rachael Mulheron: medical class actions and group litigations in a comparative perspective. • How do group medical class actions arise? • In England there are several possibilities. Which causes of action are possible: • Tort: negligence; breach of statutory duty. • Breach of contract. • Equity: fiduciary breaches. • Statute: consumer Protection Act 1987. Major problem: actions may be brought against several possible defendants. Paolo Cerchiaro 2007

30. Rachael Mulheron: medical class actions and group litigations in a comparative perspective. • Examples of medical class actions • England: Davies v. Eli Lilly (1987) Benoxaprofen, for arthritic treatment. • Australia: Bray v. F Hoffmann-La Roche Ltd (2003) vitamins pills. • Canada: Anderson v. Wilson (1999) Hepatitis B among patients who attended a clinic for an ECG test, and who were cared for a techician who was Hepatitis B-positive. • USA: In re Telectronics Pacing Systems Inc. (1996) Defective pacemaker leads.(but also Abbott Laboratories…) Paolo Cerchiaro 2007

31. Rachael Mulheron: medical class actions and group litigations in a comparative perspective. • Potential problems with medical class actions 1. The problem of multiple defendants The crucial question is if it is necessary for each representative plaintiff and each class member to have a claim and a cause of action asserted against each defendant. Different views from different countries… Paolo Cerchiaro 2007

32. Rachael Mulheron: medical class actions and group litigations in a comparative perspective. • Canada (Ontario’s more permissive rule) Bendall v. McGahn Medical Corp (1994) leaking silicon breast implants. It is not necessary for the class representative to be able to sue each defendant Necessary to prove only a cause of action asserted agaist one defendant. Paolo Cerchiaro 2007

33. Australia (stricter position) Nixon v. Philip Morris Ltd (1999) It is necessary to prove the cause of action against each defendant. Rachael Mulheron: medical class actions and group litigations in a comparative perspective. Paolo Cerchiaro 2007

34. Rachael Mulheron: medical class actions and group litigations in a comparative perspective. 2. The problem of proving commonality • The common issue do not have to detemine liability of the defendant; although the number of individual issues impacts upon the analysis (e.g. diagram before). • Proving causation: in medical negligence; in medical product; in pharmaceutical product. • Claims can be very tricky and hard to bring for the plaintiffs. • It will be essentially an individualized enquiry for each class member. • Could be useful sub-classes when two different theories of liability are being advanced by the class (that is what happened in Anderson v. Wilson (1999). Paolo Cerchiaro 2007

35. Rachael Mulheron: medical class actions and group litigations in a comparative perspective. 3. The problem of limitation periods Usa class action rule: the limitation period for all class members is stopped: Contrast with it the position under the English GLO, where the limitation period continues to run against all group members (because they have to file their individual claims and after they enter the group) Paolo Cerchiaro 2007

36. (19 May)CONCLUSIONSProf. Andrea Giussani: is it possible to introduce the class actions in Italy? • He is sure that Italy can adopt USA class actions. • They would be the only and best way to protect the rights of persons who, otherwise, would not be able to get protection with the same positive effects. • If Italy will not make all the possible to take in class actions it will lose its sovereignty, more and more to the time. - About this problem: the U.S.A. jurisdiction is very receiving and many persons have already part of a class actions (e.g. Argentinian bond) Paolo Cerchiaro 2007

37. FINE Paolo Cerchiaro 2007