U.S. Chamber: Proposal Could Make EU a Major Global Hub for Abusive Litigation

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April 11, 2018

EU Commission's Collective Redress Framework Contradicts Some of Its Own Recommended Safeguards

WASHINGTON, D.C. — Lisa A. Rickard, president of the U.S. Chamber Institute for Legal Reform (ILR), issued the following statement today about the European Commission’s proposal to rescind and replace the EU’s “Injunctions Directive.” The proposal would create a new European Union-wide framework for collective redress (class action lawsuits):

“While well-intentioned to provide consumer redress, this proposal nonetheless could make the EU a major global hub for abusive litigation. The proposal lacks critical safeguards and may result in a system that is as bad or worse than in the U.S.

“If adopted, the proposal will allow lawsuits to be filed on behalf of undefined groups of consumers. Unlike the U.S. system, this new European system will mean consumers are represented in lawsuits even where they don’t want to be represented. Furthermore, in many class actions, lawyers will be paid large fees, litigation financiers will get a cut, and the rest of the money will go to third party groups. The alleged injured consumers, however, will get little or no money.

“Further, the proposal would permit many redundant lawsuits to be filed on behalf of the same groups for the same alleged injury. It would also foster ‘forum shopping’—suing in the country with the most permissive laws.

“The European Commission contradicted some its own previously recommended safeguards against abusive litigation, and will now prohibit—instead of require—‘opt-in’ collective actions.

“The Commission also ignored the fact that nearly 70 percent of Europeans support strong safeguards on collective actions.”

In 2017, ILR released a six-nation survey of European Union consumers saying that 69 percent said that they would only support advancement of new collective action lawsuits with safeguards in place.

ILR seeks to promote civil justice reform through legislative, political, judicial, and educational activities at the global, national, state, and local levels.

The U.S. Chamber of Commerce is the world’s largest business federation representing the interests of more than 3 million businesses of all sizes, sectors, and regions, as well as state and local chambers and industry associations.