On November 24, 2020, the European Parliament formally endorsed the text of a new collective actions legislation, the Directive of the European Parliament and of the Council on Representative Actions for the Protection of the Collective Interests of Consumers. With this, the European Parliament has brought collective consumer lawsuits to the European Union (EU). This article discusses the status of the directive, its purpose, and class action trends across Europe.
November 07, 2022 Articles
Class Action Filings on the Rise in Europe
Filings are up, especially in products liability cases, ahead of full implementation of the EU’s Representative Actions Directive.
By Teresa Griffin, Eldin Hasic, Adrienne Busby, Patrick Reilly, and Stephanie Koltookian
The European Parliament’s November 24, 2020, formal endorsement of the legislation followed a fairly protracted procedural saga. The directive was first presented in April 2018 as part of the “new deal for consumers,” a legislative package drafted in response to high-profile cases involving “mass harm” or breaches of consumer rights in multiple EU member states, like the Volkswagen diesel investigations in which the manufacturer was alleged to have used software to secure certain results on diesel emissions tests.
Following the European Parliament’s formal endorsement of the directive, the 27 EU member states are now required to translate the directive into national law and implement an effective procedural mechanism to allow “qualified entities” to commence representative lawsuits on behalf of consumers, and they are required to do this by the end of this year. Further, the EU member states are required to apply these procedural measures by June 25, 2023. The data show, however, that some EU member states and their European neighbors are well on their way to advancing class and mass tort actions in a wide variety of contexts.
A recent study noted that class action filings in Europe have increased more than 120 percent over the last five years, propelled by greater attention to potential mass actions by plaintiffs’ firms and increased availability of litigation funding. See K. Henderson, Z. Okanyi et al., CMS European Class Action Report 2022, at 2 (CMS 2022) (noting that more class actions have been filed by “an increasing number of claimant law firms focussing on these claims, supported by increased capital available from litigation funders,” which is expected to continue increasing). The data are no surprise and confirm what practitioners in this space have come to know: The plaintiffs’ bar in the EU is not waiting for the full implementation of the Representative Actions Directive. Of particular note, this rise is fueled in significant part by products liability, personal injury, and consumer mass actions.
Let’s consider the timeline: Under the terms of the directive, the EU’s 27 member states are required to provide a collective litigation option to consumers by December 25, 2022, including by adopting or amending national law in jurisdictions where mechanisms for such litigation were not previously established. But while that process is still ongoing, multiple EU members states already have taken legislative action to permit greater collective litigation mechanisms than previously available in their respective jurisdictions. In addition, legal industry observers already have noted the increased presence of plaintiffs’ firms and litigation funders in the EU in response to the greater and increasing availability of representative and collective redress actions. See id.
Consistent with these developments, class action filings have been on the rise in Europe in recent years as EU member states have been reworking national litigation to meet the requirements of the directive. In fact, a record high 110 class actions were filed in Europe in 2021. Id. at 5. This was one more than the 109 filed in 2020, which itself was a record and massive increase over the 68 class actions filed in Europe in 2019 and 49 in 2018. Indeed, the 2020 and 2021 figures represent a 120 percent increase in class action filings in comparison with 2018. Id.
Delving deeper into the data, the class actions filed in Europe over the 2016–2021 time period were spread across a number of industries. Financial products, shareholder, and securities class actions comprised 29 percent of total filings; products liability, consumer law, and personal injury class action amounted to another 22 percent; human rights, discrimination, and environmental claims were 14 percent; and the remaining 35 percent comprised various other types of cases. Id. at 6. But in the recent uptick, products liability, consumer law, and personal injury class actions have accounted for the sharpest increases, tripling from 10 in 2020 to 30 in 2021. Id. at 7. Indeed, products those types of class actions were the largest category of filings in 2021. Id.
At least for now, the geographic data show that the filings are concentrated in a few jurisdictions. More than half of class action filings in Europe (about 54 percent) were filed in the United Kingdom during the five-year period between 2016 and 2021. Id. at 6. While the directive does not apply to the United Kingdom after it left the EU as part of Brexit, the United Kingdom has preexisting national law permitting class actions and the most established plaintiffs’ bar in this area in Europe. The Netherlands was the second most common jurisdiction for filings, with 13 percent over the same period. In particular, the Netherlands and Portugal stand out in the data for the highest growth in class action filings over the past two years relative to prior filings in those countries, while filings in some larger members states such as Germany and France have been low. Id. at 6, 12, 15. It is noteworthy that the increase in filings is not limited to EU member states—7 percent of all European class actions during this five-year period were filed in North Macedonia, which has a population of about 2 million and is a candidate for EU membership but not a member yet. Id. at 6. What these data show is that, whether filed in a member state or not, class actions are increasing at an unprecedented pace in Europe, and the directive promises to fuel that trend well into the future.
The information in this article includes an updated version of an introductory article on the Collective Redress Directive. We continue to monitor the implementation of the Collective Redress Directive by EU members and related developments and have written on related topics, for those interested in more information.
Teresa Griffin, Adrienne Busby, and Patrick Reilly are partners in the Indianapolis, Indiana, office of Faegre Drinker Biddle & Reath LLP; Eldin Hasic is an associate in the firm’s Fort Wayne, Indiana, office; and Stephanie Koltookian is an associate in the firm’s Des Moines, Iowa, office.
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