Friday, January 11, 2008

Italy's New Class Action Law

My utmost thanks to Jon Eskelsen, of the U.S. Chamber Institute for Legal Reform, for passing along the text of Italy’s new class action law that went into effect on December 21, 2007. The law amends Italy’s Consumers’ Code, article 140, and gives certain associations capacity to sue collectively for tort liability, unfair trade practice, and anti-competitive behavior (antitrust violations). The law doesn’t specify the availability of collective procedures to redress securities class action claims, but as I’ve noted elsewhere, suing for fraud in secondary open market transactions is much closer to a tort than a contract claim. This is, of course, in contrast with face-to-face transactions that are typically contractual in nature. Consequently, it seems that by opening the door to tort liability, Italy may also open the door to securities class actions. As always, I’d certainly be interested in any comments (on or off the blog) to the contrary. At any rate, it appears that 453.3 provides what we might classify as a combined certification/motion to dismiss procedure. Section 453.6 sets up a Camera di Conciliazione (conciliation committee) picked by both the plaintiff association and the defendant (each picks one lawyer) plus a lawyer appointed by the chief judge. I’m also told that the government will revisit class legislation in early 2009. The text of the bill is below and it takes effect on July 1:

452. The provisions contained in paragraphs 452 to 456 introduce and regulate the collective redress action intended to protect consumers, which is seen as a new general tool of protection in the context of the national measures aimed at regulating the consumers’ and users’ rights, in line with the principles introduced by Community law in order to increase the levels of protection.
453. The following article shall be added after Article 140 of the Consumer Code (Legislative Decree no. 206 dated 6th September 2005):

“Article 140-bis (Collective redress action) - 1. The associations referred to in Article 139, paragraph 1 and the other parties referred to in paragraph 2 of this article do have legal capacity to sue in order to protect the collective interests of consumers and users by resorting to the court of the place where the company has its offices, in order to request the ascertainment of the right to be compensated for damage as well as in order to request that the defendant be ordered to return any due amounts to the individual consumers or users within legal relationships relating to agreements entered into pursuant to Section 1342 of the Italian Civil Code, or as a consequence of tort liability, unfair trade practice or anti-competition behaviour, providing that such unlawful acts damage the rights of a plurality of consumers and users.

2. The associations and the councils which duly represent collective interests have legal capacity to sue under paragraph 1 above. Those consumers and users who intend to benefit from the protection afforded by this article must notify the promoter in writing of their intention to join the class  action.  The promoter may be informed of this even during the appeal and up until the hearing scheduled in order for the parties to specify their conclusions. Any individual consumer or user who wishes to file claims having the same subject matter may in any case intervene in the action brought pursuant to paragraph 1. The commencement of the class action referred to in paragraph 1 or the fact of joining it afterwards shall interrupt the statute of limitations pursuant to Section 2945 of the Italian Civil Code.

3. At the first hearing the court, after having heard parties and gathered brief information  (to any necessary extent), shall declare the admissibility or inadmissibility of the claim by way of an order that may be challenged before the Court of Appeal, which shall rule in Chambers. The claim is declared inadmissible when it is clearly groundless, when there is a conflict of interest, or whenever the judge does not ascertain the existence of any collective interest deserving protection pursuant to this article. The judge is entitled to postpone the assessment of the admissibility of the claim when preliminary investigations concerning the same subject matter are underway before an independent authority.  Should the judge declare the admissibility of the claim, then the party who has promoted the class action is ordered to duly advertise the content of the claim, and actions are also taken for the continuation of the proceedings”.

4. Should the Judge accept the claim, he or she shall also sets the criteria to be used in order calculate the amount to be paid or given back to the individual consumers and users who have joined the class action or who have intervened in the proceedings. The Judge shall also establish the minimum amount to be paid to each consumer or user should this be possible on the basis of the documents at his or her disposal.  Within 60 days of the service of judgment, the company shall make its offer for payment by way of a written deed to be served upon any entitled party and to be filed with the clerk’s office.  Any form of proposal accepted by the consumer or user shall be enforceable.

5. The decision that brings the proceedings referred to in paragraph 1 to an end shall also produce legal effects on those consumers and users who have joined the class action. Those individual consumers or users who have not joined the class action or who have not intervened in the proceedings under paragraph 1 shall continue to have their right to bring individual actions.

6. Should the company fail to make its offer within the term referred to in paragraph 4, or should its offer remain unaccepted after 60 days of its service, the chief judge of the court having jurisdiction pursuant to paragraph 1 shall appoint a sole Camera di Conciliazione (conciliation committee) in order to set the amounts to be paid or given back to consumers and users who have joined the class action or who have intervened pursuant to paragraph 2, and who request so.  Camera di Conciliazione is composed by a lawyer duly indicated by the those who have brought the class action and by a lawyer indicated by the summoned company, and it is chaired by a lawyer appointed by the chief judge of the court, chosen from among those entered in the special register for higher jurisdictions.
Camera di Conciliazione shall set, by way of minutes to be signed by its chairman, the terms, methods and amounts to be paid in order to compensate the individual consumers and users for damages. Said minutes shall be enforceable.
Alternatively, should the  party who has promoted the class action and the defendant jointly request so, the chief judge of the court shall order out-of-court settlement before one of the conciliation bodies referred to in article 38 of Legislative Decree no. 5 dated 17th January 2003, as subsequently amended, operating in the same municipality as that of the court. The provisions set forth in articles 39 and 40 of Decree no. 5 dated 17th January 2003 (as subsequently amended) shall apply to any compatible extent.

454. The provisions referred to in paragraphs 452 to 456 shall become effective after one hundred and eighty days of the date of this law coming into force.

455. The following shall be added in article 50-bis, paragraph 1 of the Italian Code of Civil Procedure, after number 7):
“7-bis) in the proceedings referred to in article 140-bis of the Consumer Code (Legislative Decree no. 206 dated 6th September 2005)”.

456. In the Consumer Code (Legislative Decree no. 206 dated 6th September 2005, as subsequently amended), the title of Part II of Chapter V shall be replaced as follows: “Access to justice”.


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