European Union: EU-- And Member State-Level Reforms Should Spur Increase in Class Actions

The GJN suit was filed in Milan, where Philips’ head of quality products is located, but is open to plaintiffs from across the EU, marking the first time a 2020 EU directive allowing for cross-border class actions has been applied.

The directive, which was adopted with the aim of “improving consumers’ access to justice” while including “safeguards to prevent abusive litigation,” also required every EU member state to implement its own mechanism for collective actions.

Though a few countries, including Poland and France, had yet to formally approve a class action mechanism, the directive went into effect in June 2023.

“EU collective action law is still evolving,” says Brussels-based Crowell & Moring partner Emmanuel Plasschaert. “Some of the impacts of the [EU directive] should become more apparent with time.”

A Move Toward Forum Shopping?

Plasschaert says the new measures could lead to forum shopping, with class action lawyers looking for ways to file in countries that have adopted more plaintiff-friendly procedures governing class actions, within the limits of the applicable international private law. Plaintiffs’ lawyers might be more likely to file in member states that have a shorter average time for cases to be settled, for example, or more access to discovery or plaintiff-favorable opt-in/opt-out rules.

For example, the Netherlands adopted a class action framework that is considered one of the most plaintiff-friendly in all of Europe, including the possibility of U.S.-style opt-out claims—in which class members have to take steps to opt out of the litigation if they do not want to be included. (However, in cross-border cases filed in the Netherlands, potential claimants in other member states would still have to opt in, under EU rules.)

In Belgium, recent reforms shifted the “opt-in” or “opt-out” period to much later in the litigation timeline, making the process significantly more plaintiff-friendly, Plasschaert says.

Win-Win or Lose-Lose

“Essentially, group members get to choose whether they want to be part of the proceedings only after they already know that either a settlement agreement has been reached or the court has declared the case well-founded,” says Plasschaert. “It’s win-win for the plaintiffs and lose-lose for the defendant.”

Belgium also expanded the range of suits that can be brought to include claims by aggrieved investors against an issuer of securities. It also now allows entities formed specifically to bring a class action on behalf of a group. Previously, only well-established consumer protection groups or protection groups of subject matter experts (SMEs) could serve as class representatives. 

Under the old Belgium rules, less than a dozen class action cases were filed over the decade it was in effect.

“With both EU-level and member state-level reforms, it seems inevitable that the number of class actions is going to increase,” says Plasschaert. “After a few of these cases work their way through the system, we will have a better sense of what the magnitude of the increase will be.”