Francesca Rolla of Hogan Lovells Studio Legale identifies key trends emerging from recent reforms of the class action laws in Italy.
Class action law has been introduced in Italy at the end of a protracted and challenging legislative process. Law no. 99/2009, effective 1 January 2010, allows consumers to group together to file a single suit bringing joint court claims. The new law has introduced article 140-bis in the Consumers Code. As will be discussed in paragraph 3 below, a recent reform has now amended article 140-bis of the Consumers Code.
Article 140-bis originally provided that “individual homogenous rights of consumers and users” may (also) be enforced through class action, in relation to contractual rights of a group of consumers/users in identical circumstances regarding the same company (such as in case of standard term agreements), identical rights of end consumers and final users of a product in relation the manufacturer, irrespective of a direct contractual relationship between them and identical rights of consumers in respect of unfair business practices or anti-competitive conducts.
The law, in its original formulation, did not clarify when “individual” rights of consumers and users might be considered “homogeneous” and gave no guidelines as to the concept of “identity” in the individual rights – an element of crucial importance in the assessment of the admissibility of the class action. Indeed, point 6 of article 140-bis provides that the Court, before a class action can be decided on the merits, shall assess whether the class is admissible and can declare the class action non-admissible in any of the following cases: if the claim is manifestly groundless; if there is a conflict of interest; if the rights infringed are not identical; or if the lead plaintiff is not able to adequately represent the interest of the class.
THE TREND IN ITALY
Unlike in the United States where this collective mean of protection is widely used (239 class actions were promoted in 2010 and 260 in 2011) the trend in Italy has not been such as to significantly impact the litigation scenario. Indeed, in spite of expectations very few class actions have been filed so far and, among those, only two have been declared admissible by Courts.
Several reasons may explain why the class action law has not been very successful in the Italian contest. Firstly, it is worth noting that under article 140-bis, litigation funding is entirely left on the initial plaintiff. Secondly, the leading plaintiff can be sentenced to pay attorneys’ fees and further damage if the class claim is found non admissible in the preliminary phase, and ordered to give publicity of the non-admissibility decision at own expenses. Distribution of such costs among class members is only theoretical, as class members can opt-in after the claim is declared admissible.
Another reason can be found in the difficulty in meeting the “identity of rights” test (one of the requisites for the class to be admitted) particularly in respect of actions brought for product related damages.
Also for these reasons, the Italian Parliament has recently passed a new legislation (Law 27/2012) aimed at fostering the effectiveness of the class action regime. As will be noted in paragraph 3, however, the amendments introduced by Law 27/2012 are not such
THE 2012 REFORM OF CLASS ACTION LAW
The most significant amendments introduced by the 2012 reform relate to the extent of the protection and to the typology of rights that can be defended through class action.
On the first point, the reform has amended article 140-bis so that class actions can now be filed not only to protect consumers’ individual rights, but also for the defence of their collective interests. The reform has also clarified that claimants – besides seeking compensation of damage – can also ask the Court to assess and declare the defendant’s liability.
On the second point, the reform provides that the rights actionable through class actions no longer need to be “identical” and it is now sufficient that they are “homogenous”. Again, however, there is no clarification or guideline as to what is meant by homogenous rights.
In this scenario, it is worth recalling a recent decision issued by the Court of Appeals of Rome (decision 27 January 2012) on a product-related damage class claim which had been declared non-admissible by the Court of Rome (decision 13 April 2011) on grounds, inter alia, that the rights being enforced were not identical. In particular, the Court of Rome found that the rights at stake (rights to compensation for alleged damage to health) were materially diverse and would have required a specific, individual assessment for each claimant, in contrast with the ratio underlying the class action system. In confirming the non-admissibility decision, the Rome Court of Appeals pointed out that, even replacing the “identity of rights test” with the “homogeneity of right” test, the class would still be considered inadmissible, due to the significant diversity in the position of each potential class member.
The – albeit limited – case law on class actions appear to confirm that product-related class claims would hardly be declared admissible. Indeed, case law appears to exclude commonality whenever the facts underlying the claim require the assessment of different individual circumstances, a situation which would often occur in product liability claims, particularly where injures occurred and related health damage is sought.
Also for these reasons, Italian consumers associations (which have been considered the driving forces behind class action) appear to be progressively losing their interest in bringing class actions in Italy and are rather looking again at the other side of the Atlantic, as the US-style class action regime seems to be less restrictive.
*The author would like to thank Alessandro Borrello for his contribution to the preparation of this article.