On 3 April 2019, the Italian Parliament approved Law n. 31/2019. The law will enter into force on 19 November 2020 and substantially reforms class actions in Italy, with potentially significant consequences for national litigation.
The new law permits class actions to be brought against companies and entities providing public services or utilities, for misconduct perpetrated whilst carrying out their respective business activities. The class action procedure was originally only available to consumers and users but is now extended in scope to anyone who claims to have suffered damages as a result of a violation of “homogeneous individual rights” by the same qualifying unlawful conduct.
What forms of collective actions are permitted in this jurisdiction and under what authority?
The class action remedy was previously only available to consumers and users under Legislative Decree n. 206/2005 (the Italian “Consumer Code”, articles 139, 140 and 140 bis). It has now been extended in scope and moved to the Italian Code of Civil Procedure (under new articles from 840 bis through 840 sexiesdecies) (the “New Law”).
Pursuant to the New Law, class actions can be brought in Italy not only by consumers (consumatori) or users (utenti) but also by any individuals who have “homogeneous” rights (1).
However, the Italian class action differs from the United States equivalent in several respects:
- Class actions in Italy may only be filed against business entities, such as corporations or other legal entities, provided that all of the claims refer to the same conduct/breach.
- Class actions shall be brought before the specialised business chambers (sezioni specializzate in materia di imprese) of the Court where the defendant has its legal office.
- The commencement of a class action does not prevent an individual bringing a separate proceeding to claim the same damages.
1. The “homogeneity” test requires all alleged rights to be generated by (or be dependent on) the same fact/event (e.g. a certain – single or repeated – conduct) which has caused the potential claimants to be in homogeneous legal positions and thus their relevant claims to be based on the same grounds. The following are examples of homogeneous individual rights: contractual rights of a plurality of persons that are in the homogeneous legal position vis-à-vis an undertaking as a result of the conclusion with the latter of a contract on the basis of a standard contractual form; or homogeneous customers’ claims deriving from torts committed by an undertaking in carrying out its business activities (e.g. under product liability).
Who may bring them?
According to the New Law, class actions may be brought not only by individual consumers or users, but also by non-profit associations and organisations safeguarding individuals’ rights, provided they are registered on a specific list held by the Italian Ministry of Justice.
Under the previous law, class actions could only be brought for specific cases of liability under the law of tort (i.e. breach of contractual rights of a plurality of consumers, product liability, unfair commercial practices, and unfair competitive behaviour). Pursuant to the New Law, however, class actions may be brought for almost all tort liability cases, provided that the claims refer to the same breach/tort.
Opt in or opt out?
The New Law introduces a double opt in system: pre-judgment opt in and post-judgment opt in.
- Opt in is initially permitted following the order of the Court declaring the action admissible, by applying via the online portal for the class action.
- Opt in is subsequently permitted after delivery of the judgment establishing the liability of the defendant.
A class action may be filed by any member of the class and also by organisations or associations that aim to safeguard individuals’ rights. However, the New Law provides that these organisations and associations shall be not-for-profit and must be registered on a public list at the Ministry of Justice.
Moreover, Article 840-quater of the Italian Code of Civil Procedure provides that, 60 days after the date of the publication of the class action on the Ministry of Justice's website, no further class actions may be brought against the same defendant on the same facts. A new class action may only be brought against the same defendant and on the same grounds where there are new reasons in fact or law, the previous class action has been declared inadmissible or any ruling in that prior action did not include a finding on the merits.
All applications for class actions are subject to an admissibility assessment undertaken by the judge at the first hearing. (This step is similar in content and scope to the class certification process under US law.)
The class action will be considered inadmissible if:
- the claim appears to be manifestly groundless after a preliminary review by the court
- there is a conflict of interest
- the rights of the class members are not homogeneous, or
- the promoter of the action cannot adequately represent the interests of the class.
Finally, both the calculation of damages and any potential enforcement action shall be carried out exclusively by a common representative of the participants in the class action. This representative must meet the requirements for appointment as an insolvency administrator.
Judge or jury?
Judge. There is no jury in legal proceedings in Italy.
What relief may be obtained?
The relief obtainable extends to a declaratory judgment on the defendant’s liability, compensation for losses and restitution of any undue payment.
Punitive damages are not available.
How are such actions funded?
According to Article 840-ter, paragraph 8 of the Italian Code of Civil Procedure, if the class action is considered inadmissible, the court will immediately rule on the legal costs of bringing the action.
If the claim is declared admissible, the proceedings proceed. At the request of one of the parties, the Judge may appoints an expert (consulente tecnico d’ufficio) to deal with technical issues relating to the proceedings, in which case the defendant shall cover the costs of the expert and make an advance payment for their fees.
The court may determine, where necessary, the amount which every claimant should pay into an expense fund. Should a claimant fail to pay its allotted sum into the fund, it will be prevented from taking part in the proceedings. These amounts may be increased by the judge while the damages due are being calculated.
At the end of the calculation phase, the judge will rule on the legal costs and expenses and order the defendant to pay the fees of the common representative and the claimants’ lawyers. The fees of the common representative are calculated as a specific percentage of the total sum due to the claimants and will depend on the number of participants to the class action (the percentage decreases as the number of participants increases). The defendant will also be ordered to pay a reward to the claimants’ lawyers, which is calculated in the same way as for the common representative. The fees of the common representative may be increased or decreased by 50%, although the reward of the lawyers may be only decreased by 50%.
These new rules on the payment of legal expenses follow the general principle that the losing party must pay the legal costs of the winning party. However, there can be exceptions to this general rule. For example, if the judge believes the case to be complex, he/she may decide that each party should bear its own costs or may decide that the losing party must pay only a proportion of the costs of the winning party.
Is pre-trial disclosure available?
There is no general discovery or pre-trial witness depositions in Italy.
Likely future scope and development?
The New Law is clearly aimed at making the bringing of class actions easier.
- The entitlement to bring a class action has been extended considerably, given that each member of the class, as well as associations and organisations, may sue the perpetrator of the unlawful conduct.
- Claimants now have two opportunities to join the action: after the declaration of admissibility and after the decision upholding the class action.
- The New Law brings several advantages for claimants, particularly in terms of cost reduction.
All these circumstances will probably increase the number of class actions, which were quite uncommon under the previous legislation.
In addition to this, the New Law could significantly affect the behaviour of public and private companies which may potentially be sued in a class action by claimants injured as a result of their conduct. In this respect, the New Law could have a deterrent effect. Indeed, should they lose a case, defendants to a class action could face huge financial penalties, both in terms of payment of compensation for widespread damage and the payment of fees due to the common representative and the claimants’ lawyers.