Class action proposed for consumer protection cases

The reform would bring to the legal system enforceable claims affecting a large group, which, at present, either due to the costs or a lack of information and skills, are not taken to court.

According to the proposal, the handling of a matter as a class action would require that several people have a claim against the same defendant and based on the same or similar facts. In addition, it should be appropriate to handle the dispute in the form of a class action and the class should be sufficiently well defined. Participation in a class action would require express joining of the class.

The class action would be brought by the Consumer Ombudsman

The proposal is that the scope of application of the Act be limited to matters in which the number of parties is large and so the need for a class action is strongest. The Consumer Ombudsman would act as plaintiff and represent the class. This would ensure that no one could bring a class action for the purpose of harming another.

A class action would be possible for example in disputes relating to a defect in consumer goods or the interpretation of contract terms. Also disputes between a consumer and an entrepreneur relating to investment insurance and products, for example pension insurance, savings life insurance and the sale and marketing of fund units and other corresponding investment instruments would belong to the scope of application of the Act.

On the other hand, consumer disputes relating to share issues would not belong to the scope of the Class Action Act, because issues relating to the procedure of the issuer of a security or a party making a public purchase offer would be excluded from its scope.

According to the proposal, the Consumer Ombudsman could, where necessary, inform of a class action in a newspaper or of his web site. People could join the class for example by filling in a form. The proposal would not set any limits to the size of the class. However, it is unlikely that the Consumer Ombudsman would bring a class action unless there were several people involved.

The claims could be varied

A class action could be used for example to demand monetary compensation from the defendant or to demand that the defendant not undertake certain action or allow certain action. Also cases of personal damage could be handled as class actions.

The claims for damages of the injured parties could vary in amount. It would also be possible to handle qualitatively different demands, such as a price reduction and the cancellation of a purchase, in the same class action. The claims would, however, have to be based on the same or similar facts and the proof to be presented in favour of the claims could not be very different in the case of the different class members.

The procedure to be used would primarily correspond to ordinary legal procedure in a civil case. The members of the class would not be parties to the litigation nor would they have the right of a party to be heard; these rights would be exercised by the Consumer Ombudsman or his representative. A member could withdraw from a class action before the beginning of the main hearing. After the case has been left to be decided, withdrawal would no longer be possible.

The judgement to be given on the basis of a class action would be binding on the plaintiff, the members who have joined the class and the defendant. A class member would, for his part, have the right to appeal the judgement only if the plaintiff does not appeal it.

A defendant who feels that the dispute is not suitable to be handled as a class action could present a related procedural objection in the ordinary manner. If this objection is overruled, the decision could usually be appealed against even before a decision in the class action.

A member of the class would not be liable for litigation costs

In a class action, a class member would not be responsible for the litigation costs; instead, they would be paid by the plaintiff, i.e., the Consumer Ombudsman, or by the defendant. It is evident that a class action would be more burdensome and expensive a procedure than an ordinary trial. With regard to attaining the goals of the new procedure, it is well-founded that a member of the class is not responsible for litigation costs.

Under the proposal, the handling of class actions would be concentrated in the District Courts of Turku, Vaasa, Kuopio, Helsinki, Lahti and Oulu. It is estimated that at most a few class actions be brought annually. The estimate is based on the number of actions brought in Sweden.

The class action would increase the weight of the new class-complaint procedure proposed for the Consumer Complaint Board. If a recommendation issued on the basis of a class complaint were not followed, the Consumer Ombudsman could take the case to court as a class action.

Further information: Counsellor of Legislation, Mr Asko Välimaa, tel. (09) 1606 7708
Senior Legal Adviser, Ms Maarit Leppänen, tel. (09) 1606 7704
email: [email protected]