Class actions have existed in French law since the Hamon Law of 2014 (Law No. 2014-344 of 17 March 2014). They were originally limited to consumer and competition law. As such, a nationally representative and approved consumer protection association may bring an action before a civil court in order to obtain compensation for individual losses suffered by consumers placed in a similar or identical situation and having as their common cause a failure by one or more of the same professionals to fulfil their legal or contractual obligations: 1° In connection with the sale of goods or the provision of services; 2° Or when these losses result from anti-competitive practices within the meaning of Title II of Book IV of the French Commercial Code or Articles 101 and 102 of the Treaty on the Functioning of the European Union. The class action can only concern compensation for economic loss resulting from material damage suffered by consumers.
The scope of the class action has since been extended successively to health, the environment, personal data protection, the fight against discrimination and property rental disputes. However, the results of class actions remain very disappointing: of the 32 actions initiated to date, only 4 have been successful, and only through settlements. All others have failed or are mired in endless procedures.
A bill initiated on 15 December 2022 by the MPs Laurence Vichnievsky and Philippe Gosselin has drawn the consequences and envisages a complete reform of the class action regime in order to make it more effective. This bill was adopted by the National Assembly on 8 March 2023 and transmitted to the Senate (Sen., No. 420, 9 March 2023). It will more than likely be adopted in the coming months. The reform implemented by the bill constitutes both a risk for businesses, which will be confronted with many more actions that are more risky in terms of damages and sanctions, but also an opportunity, because for the first time, the class action will be open to business victims and not only to consumers. The scope of the reform is such that it should be taken into account in future decisions and prepared for now, especially as the text adopted by the National Assembly provides for application to actions brought after its entry into force, i.e. to earlier events, except for the civil fine.
I. More class actions to come
- Actions of a universal nature. The bill proposes to replace the current specific class actions, which are governed by 7 different regimes, with a single general class action regime. Such an action may be brought “on behalf of a number of natural or legal persons in a similar situation who suffer damage caused by the same or similar breach of their legal or contractual obligations by any person acting in the course of or in connection with the performance of their professional duties, by any legal person governed by public law or by any body governed by private law entrusted with the management of a public service”.
- An extension to all types of damage Until now, non-pecuniary damage was excluded from the field of damage for which compensation could be sought, even though it is a type of damage, in particular through anxiety damage which has already been recognised in the field of joint actions (see for example the Levothyrox case, Court of Cassation, 1st Civil Division, 16 March 2022, No. 20-19.786) and could make it possible to initiate class actions, particularly in the area of health. The bill will open up the class action to all damage of any kind suffered as a result of the breach in question.
- A significant extension of the persons with standing, including to associations representing businesses. Until now, only state-approved associations having existed for more than five years’ could take action under the ordinary class action procedure, with the right to take action extended to certain other entities for certain specific class actions. In addition to approved associations, the bill opens up the action to a whole series of entities (associations existing for more than 2 years whose purpose has been infringed; or acting on behalf of at least 50 natural persons, or 5 private law legal persons registered in the Trade and Companies Register for 2 years, or 5 local authorities; certain trade unions for certain actions; certain entities qualified under European law). This means in particular that instead of having to initiate group actions, companies will be able to initiate class actions through this mechanism.
II. Class actions generate higher risks.
- Potentially higher penalties. The civil penalties resulting from the new regime will be higher since it makes it possible to obtain the cessation of unlawful conduct and/or compensation for any type of damage, whether physical, material or non-pecuniary. In addition, it provides for a civil penalty of up to 3% of the annual pre-tax turnover for legal persons which may be imposed in the event of fraudulent conduct causing serial damage, without this risk being insurable.
- A more efficient procedure. Various procedural measures are planned to try to improve the effectiveness of the procedures: creation of specialised judicial courts to deal with them, establishment of a public register of class actions, possible establishment of a collective procedure for the settlement of damages allowing a global settlement.
Reception of the reform : initial reactions from commentators are mixed. Proponents of class actions welcome the progress made in the bill (universal nature, broadening of the type of damage that can be claimed, extension of standing), but regret the complexity of the procedure, the maintenance of the opt-in regime to the detriment of the opt-out regime, the refusal to consecrate discovery and punitive damages (Ch. Lèguevaques, Pet. Aff., April 2023, 4). The CNB regrets the exclusion of lawyers (Res. CNB, 11 and 12 May 2023). Finally, others stress the unknowns of the text (scope of the prohibition on financing by third parties with an economic interest in the action, scope of possible financing by the State) and the difficulties of interpretation linked to the civil penalty, the procedure and the application of the law over time (D. Lecat and M. Brueder, Le nouveau régime envisagé de l’action de groupe : un futur nid à contentieux?, Gaz. Pal., 9 May 2023, 37).