Italy

After several delays and some improvements suggested by the business community and supported by the Berlusconi government, a new consumer class action law became effective on January 1, 2010 in Italy.  The Class Action Act allows claims based on torts occurring after August 15, 2009.  The issue of retroactivity of the law is contentious and has been challenged in the Italian Supreme Court.

In less than a year, six significant class action lawsuits have been filed against both Italian and foreign defendants, making Italy’s number of class action lawsuits high in comparison to other countries with recently introduced class action laws.  At least two of the cases seek extremely high damages, totaling Ä6.25 billion ($8.5 billion) together (and some numbers suggest that damages sought could exceed Ä10 billion, or $13.7 billion). 

The class action law is the first law in Italy to provide for monetary damages in a class action, as previous laws only allowed for injunctions, marking extraordinary change in the Italian litigation system.  These lawsuits are limited to four types of cases:  contracts, product liability, anti-competitive (anti-trust) practices, and unfair commercial practices. 

Despite the considerable amount of money involved in these cases, Italian supporters of this legislation suggest that it will not cause the abuses seen in the U.S.  The law differs from the U.S. Federal Rule of Civil Procedure 23 in a number of areas, e.g., more restrictive class certification process; an “opt-in” basis; no discovery and absence of punitive damages. 

However, despite safeguards put in place to prevent frivolous lawsuits, certain trends are worrisome.

For one thing, the Italian class action law empowers consumer associations to file lawsuits on behalf of consumers, who give mandates to these associations to act on their behalf.  Although not the actual “plaintiffs” in the class actions, consumer associations assume a plaintiff’s role and therefore act accordingly.  Consumer associations are proactively looking for class action opportunities and are advertising to attract and “recruit” potential plaintiffs.  It is not all that different from practices used by U.S. plaintiffs’ lawyers, although since the consumer associations are non-profit organizations they do not appear to bring these cases solely for monetary reasons.  It is not clear at this point how and at what rate the consumer associations will be “compensated” for their class action work, and how and how much they will pay the consumers.  It is also not clear whether the consumer associations will advocate the specific interests of the class of plaintiffs they represent (who under this Italian law may not necessarily be members of these organizations), or whether these consumer associations will pursue their own interests and/or the interests of their members as a whole.

Although controversial and under reconsideration, contingency fees are allowed in Italy.  Because of this funding arrangement, the role and influence of Italian plaintiffs’ lawyers will probably evolve and their relations with consumer associations will also require attention.