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Sylvie Gallage-Alwis, Thomas Rouhette and Nikita Yahouedeou discuss Key Trends & Developments in Class Action in France in Chambers & Partners’ Collective Redress & Class Actions 2023 Guide

By Sylvie Gallage-Alwis & Thomas Rouhette & Nikita Yahouedeou

Partners Sylvie Gallage-Alwis and Thomas Rouhette and Associate Nikita Yahouedeou discuss the Key Trends & Developments in Class Action in France in Chambers and Partners’ Collective Redress & Class Actions 2023 Guide

Sylvie, Thomas and Nikita’s article was published in Chambers and Partners’ Collective Redress & Class Actions 2023 Guide on 7 November 2023, and can be found here.

France’s Overhaul of Its Class Action Mechanism: A New Era for Collective Redress

France has implemented a collective redress mechanism that is sector-specific and can be expanded to cover new types of issues that may be raised against companies. This is how a “class action” for consumer claims was first created in 2014, together with competition-related class action (follow-on actions), before specific class action schemes were introduced for discrimination, health and cosmetics, environment or data privacy-related issues.

However, up until now, only a limited number of actions have been launched, and this mechanism has not even been used in some fields, such as the environment and cosmetics.

While there is no official record of class actions in France, according to the Observatory of Class Actions (Observatoire des Actions de Groupe), 37 group actions have been launched since 2014. Furthermore, it is public knowledge that a company was held liable in a class action for the first time on 5 January 2022 by the Paris Tribunal Judiciaire (Civil Court). This action was a class action in the health sector, in which the liability of the manufacturer of Depakine (Sanofi) was sought. The claimant association alleged that this medicine caused physical malformations and neurodevelopmental disorders in utero in foetuses of pregnant women treated with this medicine. The Civil Court held the manufacturer liable. Appeals have been lodged both by the claimant and the defendant, so the proceedings are still ongoing. While not definitive, this judgment is the first out of the 37 group actions already launched in France in which the defendant has been held liable (many of the group actions are still ongoing).

It is therefore not surprising that on 11 June 2020, the report of the French National Assembly on the results and prospects of group actions concluded that “the results of this new procedure remain disappointing”. The report criticises the low number of claims filed and their lack of success. However, this evaluation is based on a somewhat narrow set of criteria: the number of claims filed and the number of defendants found liable. One could argue that these metrics are not the only ways to gauge the effectiveness of a legal mechanism. For instance, the legal reasoning employed in court decisions indicates that judges are not willing to extend presumptions in favour of the plaintiffs in class action cases as they might in other contexts. This could suggest a more cautious or stringent approach by the judiciary when assessing group actions, rather than an outright failure of the mechanism itself.

In this context, a political agreement was reached at the European level on 20 June 22 under the slogan “Europe must become the shield that protects people”. The French June 2020 report, for its part, recommended broadening the range of damages and sectors concerned, pointing out that the draft Directive includes financial services, for example, and proposing a “universal” group action to put an end to any possibility of invoking a dismissal on this point. The report also advocates for a more robust range of possible sanctions, including penalties proportionate to a company’s turnover. The intention here is clear: to adjust the framework in light of previous judgments that have favoured companies, thereby making it increasingly difficult for similar defences to succeed in future cases.

This goal was reiterated by the French Senate when sharing the Administrative Supreme Court’s view on the proposed bill to reform class action in France. The Supreme Court noted that “During 2020, Laurence Vichnievsky and Philippe Gosselin led a fact-finding mission on the assessment and prospects of group actions, informed by numerous hearings and comparative law data. They noted that the procedure had been little used, with the number of group actions brought since 2014 amounting to just 32, including 20 in the consumer field, with only six proceedings having had a positive outcome. They observed that ‘group action has not been the source of significant advances in consumer defence’, whereas joint or collective actions had developed more. As a result, they put forward thirteen proposals, aimed in particular at establishing a common, unified framework for all group actions before the civil courts, broadening the scope of standing, providing for full reparation of all losses, whatever their nature, abolishing the prior formal notice requirement in environmental, personal data protection and discrimination cases, ensuring the financing of group actions, and reducing the time taken to reach judgment”.

This is why, on 15 December 2022, while France did not need to pass a new bill to comply with the new Directive (UE) 2020/1828 of 25 November 2020 on representative actions for the protection of the collective interests of consumers, a bill to reform the legal framework of group actions has been proposed.

This bill aims not just to align with the Directive but to overhaul France’s group action framework entirely. The proposed reform seeks to streamline the system for greater efficiency, gauged by the number of actions initiated.

The objective of the reform is therefore to simplify the procedure with different changes such as:

  • There is to be a single and unified type of class action mechanism. Therefore, the different types of class actions (environmental, consumer, health, discrimination, etc) provided for in various laws and codes will disappear.
  • Full compensation for the victims will become the main purpose of the class action. Therefore, the restrictions regarding the types of damage that can be compensated will disappear.
  • Class actions will be extended to more associations: all approved associations, representative trade unions, associations that have been registered for two years (compared with five years today), and specially created ad hoc associations bringing together at least fifty victims or at least five companies or five local authorities or groups of local authorities will be able to act. Associations that protect a European-wide consumer interest will also be able to file such claims in France.
  • The Public Prosecutor will be able to bring class actions or to join an action brought by an association.
  • The formal notice step will disappear, except in labour-law related disputes.
  • Greater publicity will be given to the class actions brought.
  • There is to be a “civil sanction” payable to the state under certain circumstances. It is worth noting that the French Administrative Court has raised a number of issues linked to the introduction of such a sanction.
  • Certain “financial barriers” are to be removed. At present, third-party funding is not standard in France. Claimants generally fund their claims themselves, subject to Articles 696 and 700 of the French Code of Civil Procedure. The bill proposes to introduce a mechanism under which, under specific conditions, the state can partly or totally bear the costs, fees and taxable charges relating to the proceedings in place of the claimants. If adopted, although it does not cover fees such as lawyers’ fees, this provision may reduce the cost of the procedure for the claimants eligible for this scheme.
  • Jurisdiction is to be granted to specialised courts so that the judges of these courts get specific training and means to handle such cases.

Despite these changes, the bill maintains some existing features, notably the “opt-in” nature of the French class action mechanism.

It is encouraging to see the new French bill aim to sidestep criticisms often levelled at the US class action system – namely, the way it compels companies to settle prematurely to avert costly litigation and reputational damage. The architects of the French legislation have clearly heeded these issues, noting that the US system has led to various excesses. Driven by media scrutiny and consumer advocacy, companies in the US frequently settle even when liability has not been conclusively established, largely due to fears over brand damage and mounting legal expenses. The French embassy in the US further underscores a key criticism: the US class action often disproportionately benefits attorneys at the expense of the actual claimants.

However, the bill’s authors dismiss such warnings, asserting that the French system is insulated from these pitfalls due to key differences with the US approach – such as an opt-in rather than opt-out mechanism, the absence of punitive damages in France, and a distinct lawyer compensation system. Whether these safeguards prove effective remains to be seen.

As for the status of the bill, the National Assembly submitted the bill to the French Administrative Court which issued an opinion on 9 February 2023, mentioned above. The Défenseur des Droits also gave its opinion on 23 February 2023. They both support the bill and have contributed to the draft by submitting amendments. Based on these comments and on the work of the National Assembly, a modified version of the bill has been issued. An accelerated adoption procedure was initiated by the French Government on 6 March 2023, and the National Assembly gave its approval on the first reading two days later. The bill is likely to undergo only minor revisions in the coming discussions before becoming law.

It is crucial for companies to brace themselves for the forthcoming legal changes, particularly in a jurisdiction unfamiliar with this type of redress mechanism. This preparation is all the more important given that judges in France have already expressed concerns about their limited resources to handle such cases.

Looking at case law, it is worth putting a lot of effort into the issue of the admissibility of the action. There are some obvious criteria to check as soon as the summons are received:

  • check that all the information that is imposed by law is mentioned in the summons;
  • check whether the defendant is the right entity and check whether the relationship described by the plaintiff is one that can be subject to a group action (manufacturer, consumer/professional, data processor, employer) depending on the ground of the group action; and
  • check that the association launching the group action is authorised to do so.

Beyond the basic checks for admissibility, there are more nuanced aspects that must be scrutinised as part of an effective defence strategy in group action:

  • check whether it is clear that there are at least two individuals in a similar or same situation – eg, what situation is at stake and what type of damage is claimed;
  • check the date of the alleged breach for statute of limitation purposes; and
  • check whether there is a demonstrated interest in bringing a claim.

Indeed, the defence strategy is bound to vary depending on the specifics of the issue at hand and the arguments presented by the association. Note that in France, there is no discovery or disclosure process. There was an attempt to include it in the upcoming bill but this was rejected. Therefore, each party is entitled to file only the documents it deems necessary for its case, even if there are means to force a party to share data, though very strictly framed.

Our experience in handling mass litigation outside the scope of class actions with thousands of plaintiffs, in areas such as toxic tort, aviation, automotive, and health-related cases, shows that it is essential to individualize both the allegations made by the plaintiffs and the plaintiffs themselves. For example, when alleging a breach, it is important to determine the timing of the breach. This can help not only with the statute of limitations, but also with determining which regulation is applicable, as regulations often evolve. It is tempting for plaintiffs to frame a situation as a breach under current regulations when the breach could only have potentially occurred while other regulations were in effect. It is also tempting to omit the fact that some individuals would be subject to a specific law while others would be subject to another. This work is tedious, but plaintiffs have no incentive to do it, as case law in mass litigation tends to award the same lump sum to all plaintiffs unless the defendant can provide strong evidence that the plaintiffs are not in similar situations.

Going through this exercise in a group action context is even more challenging. The mechanism is designed to allow the plaintiff association to present only a few test cases, which it will have selected from all of its claims as the least ambiguous and challengeable. However, the defence needs to think outside the box to determine the pool of plaintiffs. To do this, it must analyse each allegation made against it and determine the relevant timing and whether a similar situation could exist for hundreds or thousands of opt-in plaintiffs. The defence can also organise the pool of plaintiffs into categories to convince the court to explicitly exclude some categories in its judgment and avoid future debate. In our view, this is the only way to design an effective defence for companies.

Again, if we take the example of mass toxic tort litigation, an efficient defence is to convince the court that not everyone has been exposed to the same dose and that some could not have been exposed. This also helps explain why the same piece of legislation does not necessarily apply to all the plaintiffs. Companies that manage not to be condemned in all cases in an identical way are the ones who have anticipated the pool of plaintiffs that could emerge over the years and have explained it to the courts from the outset.

This individualisation will also help with the issue of damages. One of the defendant’s first tasks will be to determine the number of plaintiffs who could opt in if the company is held liable. This exercise will allow for the assessment of a worst-case scenario and the determination of the right reserve to record.

This exercise will also be important when it comes to the assessment of the damages themselves. While material damage can be easily assessed and challenged, moral damage and bodily harm, which are damages that can be compensated in some group action schemes, are much more difficult to assess. The use of experts will be essential here as well as a perfect command of the facts in each case. Needless to say, the use of technology to record and organise data is crucial.

Another important issue to consider from the outset is the publicity of the judgment if liability is acknowledged. If plaintiffs seek specific publicity measures using the company’s own resources, it is essential to assess the feasibility of implementing such actions. Furthermore, the company needs to gauge whether the means proposed by the plaintiffs are proportionate to the issue at hand, especially in terms of time and effort expended compared to the stakes involved.

In summary, companies should prepare themselves for a likely uptick in class actions if the bill in question is passed. Up to this point, France has been relatively unfavourable to collective redress mechanisms. However, the present legislative and governmental efforts are designed to change this dynamic, positioning France in competition with more class action-friendly jurisdictions like the Netherlands and Portugal. Therefore, proactive preparation for this looming shift is not merely advisable; it is essential.

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