Class actions as a tool for consumer protection.
The class action in the United States is well known for their media presence and high awards of penalty damages. The European Commissioner for Consumer Protection, Meglena Kuneva and the Commissioner for Competition, Neelie Kos, have both proposed that the US class action be introduced in the European Union to help enforce consumer and competition law. The problem in Europe is that the regulatory authorities which enforce consumer and competition laws do not have the resources to investigate all the claims of wrongdoing which they receive from aggrieved consumers and traders. The European Commissioners are therefore proposing that the US style class action be introduced in Europe in order that private individuals will bring claims for the losses they suffer against the companies who breach the laws rather than having to rely on regulatory agencies to bring the case for them.
In the US a class action provides the claimant the opportunity to “tag along” with a large group of individuals who have all suffered similar losses due to the law being breached. The US system uses an opt-out process which means that as a qualifying claimant you are automatically included in the claim unless you specifically state that you want to bring your own individual claim. The damages awarded are penalty damages which can be double or triple the nominal sum awarded where the court feels the damages should be more punitive. The lawyers who represent the claimants work on the basis of a contingency fee, meaning they receive a percentage of the awarded damages, usually large amounts of money.
There is the ability for private persons to bring claims in the courts in Europe for losses suffered due to breaches of consumer and competition laws. Some of the European countries, for example in the Netherlands and Germany, changes are being made to the litigation process to include claims from large groups of claimants. The common problems with the systems being adopted in Europe are that the three US characteristics of a class action outlined in the paragraph above are not available in the European countries. The class actions in Europe are opt-in which means you have to specifically consent to the claim being brought on your behalf. This implies extra time and extra work as all claimants have to be informed of the claim and expressly consent to it. Also, the infamous awards of punitive damages in the US are not available in Europe where only pecuniary damages, i.e. damages which only cover the loss suffered, may be sought Lastly, lawyers in Europe cannot work on a contingency fee basis as it would go against long established principles regarding conflicts between client and lawyer. These last two factors often deters both claimants and lawyers from bringing a claim, however viable it may be, due to the high costs involved with bringing an action to court against a large corporation.
It is likely that the class action in its European form will increase in use and it is vital that it does so in order to ensure access to justice for private individuals. However, the full US style class action is unlikely to be adopted in Europe.