Artificial hurdles for consumers? The strange dispute over the class action lawsuit

Actually, Germany has to implement an EU directive by the end of the year, which should enable real class action lawsuits for consumers for the first time - but WELT information suggests that this deadline will no longer be met.

The reason for the delay are discrepancies between the lead Ministry of Justice (BMJ) and the Ministry of the Environment (BMUV), which took over responsibility for consumer protection issues from the BMJ when the traffic light coalition took over.

A central point of contention concerns the question of when those affected can join the new class action lawsuit: the draft bill from the House of Justice Minister Marco Buschmann (FDP) only wants to allow this until the first court date, so that the accused companies can calculate the amount of the costs that would arise in the event of a defeat to come up to them, assess them better and take them into account in settlement negotiations.

This deadline is too short for the BMUV, which is led by Green Minister Steffi Lemke. If consumers who have been harmed are cut off from participating in the procedure by this artificial hurdle and instead have to sue themselves, there is a risk that the efficiency gains for the judiciary will also be lost.

In an act of unusual openness and possibly calculated provocation, Lemke's Minister of State Christiane Rohleder recently made the dissent public at an event organized by the Federation of German Industries, which was reported on by the "Frankfurter Allgemeine Zeitung".

The BMJ, for its part, counters this and emphasizes to WELT that the draft provides an "appropriate balance between consumer and entrepreneurial interests" and accommodates the former, for example through the free, low-threshold and digital possibility of joining the lawsuit.

The limitation of the accession periods would correspond to the “regulations for model declaratory action that have already proven themselves in practice” (MFK), which the previous federal government introduced at the end of 2018 in response to the diesel scandal, and which have been used in 31 proceedings to date. However, the MFK has only partially fulfilled the hopes placed in it; with their help, almost 250,000 claims from aggrieved consumers against VW were bundled, but tens of thousands of individual lawsuits were and are still being filed.

Among other things, this may have something to do with the restrained design of the MFK, in which a claim by the plaintiffs can only be established on the basis of the merits, but then they still have to collect them themselves - if necessary in a separate procedure. With the introduction of the new class action lawsuit, it is likely to become largely obsolete, since this also provides for the actual payment of damages to a trustee and the subsequent distribution among the plaintiffs.

The dispute over the manner in which the European class action suit should be translated into German law is settled; a compromise is now to be sought at ministerial level. Interests come together that are already well known from the consultations before the model declaratory action was introduced at the end of 2018.

To put it somewhat simply, on the one hand there are legal counsel and commercial lawyers of the old school who expect plaintiffs to take the initiative, be accountable and share the risk of legal costs and warn against the emergence of an American-style “lawsuit industry”.

The opposite pole is formed by consumer-oriented lawyers and associations who demand the lowest possible legal protection options for injured parties and who see the insistence on traditional procedural law principles as at best outmoded taunting of principles, but rather as a fig leaf of large corporations in order to prevent as many plaintiffs as possible from asserting their justified claims with artificial hurdles.

The two ends of the spectrum of opinion are expressed in two reports, one of which was prepared on behalf of the consumer advice center and the other at the instigation of 14 trade associations. "The draft from the Ministry of Justice tries to find a compromise and also tries to take the interests of the economy into account," says Luidger Röckrath, partner at Gleiss Lutz Rechtsanwälte, in an interview with WELT.

However, the lawyer, who specializes in business litigation, considers the wishful thinking of consumer advocates that those affected should sit back, wait for the outcome of the proceedings and join the lawsuit even after it has been successful in court to be unrealistic.

This has less to do with the much-discussed "American conditions" that are not a threat in this country anyway. The fact that legally questionable class action lawsuits are sometimes used in the USA to extort settlement payments from defendant companies has more to do with the peculiarities of procedural law there that are not up for debate in Germany anyway, namely the extremely complex "discovery" that is independent of the outcome of the proceedings Distribution of the legal costs and the residual risk that cannot be eliminated, of being condemned by a lay jury to pay punitive damages in an unforeseeable amount, even on a thin basis.

In comparison, the effort, costs and collateral damage of civil lawsuits here do not represent an unreasonable burden for larger companies - provided they win in the end. The fact that (class) lawsuits only hurt the balance sheet if they are justified actually speaks for setting the hurdles to participation as low as possible.

"Collective legal protection is a paradigm shift," says Röckrath. In the past, only some of the consumers who suffered damage would have taken on the trouble, costs and risks of court proceedings, especially in the case of smaller amounts.

The fact that it can be worthwhile for companies to be stubborn even in legally clear cases is shown, for example, by the countless claims for compensation due to severely delayed or canceled flights. Although there is no doubt that passengers have a right to claim in such cases, it is apparently still more profitable for some airlines to only pay after the complaint has been filed, because enough of those affected give up beforehand.

A number of providers have long since filled this gap, making legal enforcement as convenient as possible for passengers, but also collecting part of the compensation amount in return - and flooding the district courts with tens of thousands of individual lawsuits.

Röckrath finds it remarkable that the draft bill names such cases as prime examples for the new class action lawsuit. Because class action lawsuits are only permissible for "similar" claims, so they would have to be raised separately for each canceled flight.

Although this is possible in principle, the planned law also raises practical hurdles here. In order to avoid abuse, only those associations should be entitled to sue that the Federal Office of Justice classifies as particularly reliable. This is currently only the case for 71 associations - and according to Röckrath's assessment, these are likely to focus their resources on larger processes with thousands of people affected.

The market for individual lawyers, but also for start-ups specializing in certain types of claims, disguised debt collection companies and other hybrid forms of legal enforcement will continue, as will the associated burden on the courts. How big it will also depend on the compromise between the BMJ and BMUV.

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