Brazil: The International Comparative Legal Guide To: Class & Group Actions 2014

1 CLASS/GROUP ACTIONS

1.1 Do you have a specific procedure for handling a series or group of related claims? If so, please outline this.

Yes, Brazil has some specific federal laws that provide for a group of related claims, commonly named in the country as class actions or collective claims. It is important to note that the Brazilian class actions system differs from the class action procedures in the USA in several aspects.

1.2 Do these rules apply to all areas of law or to certain sectors only e.g. competition law, security/financial services? Please outline any rules relating to specific areas of law.

The Brazilian class actions system aims to protect the environment, consumers, the cultural patrimony, economic/antitrust rights and other so-called diffuse, collective, and homogeneous individual interests. Tax matters are excluded from group litigation.

1.3 Does the procedure provide for the management of claims by means of class action (whether determination of one claim leads to the determination of the class) or by means of a group action where related claims are managed together, but the decision in one claim does not automatically create a binding precedent for the others in the group?

The Brazilian model provides for the management of claims by means of class actions, but again it is important to bear in mind that this system is unique and not very similar to American class action litigation.

1.4 Is the procedure 'opt-in' or 'opt-out'?

There are no opt-in or opt-out mechanisms similar to the ones in the American system of class actions. In fact, in most cases, the individuals whose rights are protected and litigated under the Brazilian class action system do not become aware of the filing of the lawsuit. However, even in these cases, the ruling will benefit the individuals.

1.5 Is there a minimum threshold/number of claims that can be managed under the procedure?

No, no minimum threshold is requested.

1.6 How similar must the claims be? For example, in what circumstances will a class action be certified or a group litigation order made?

The claims must involve similar situations and in most cases the claims derive from a common legal relationship or a common origin. Brazil does not have certification rules for class actions.

1.7 Who can bring the class/group proceedings e.g. individuals, group(s) and/or representative bodies?

The Attorney General (called in Brazil Ministério Público), the Federative Republic of Brazil, the States, Municipalities and the Federal District, administrative agencies, and private associations can bring such proceedings. Individuals do not have standing to sue.

1.8 Where a class/group action is initiated/approved by the court must potential claimants be informed of the action? If so, how are they notified? Is advertising of the class/group action permitted or required? Are there any restrictions on such advertising?

Public notice of the existence of the class action is made by a publication in an official newspaper. No advertising is permitted.

1.9 How many group/class actions are commonly brought each year and in what areas of law e.g. have group/class action procedures been used in the fields of: Product liability; Securities/financial services/shareholder claims; Competition; Consumer fraud; Mass tort claims, e.g. disaster litigation; Environmental; Intellectual property; or Employment law?

Brazil does not have such official data, but the number of class actions has increased in the last few years and it will probably continue to grow in the near future.

1.10 What remedies are available where such claims are brought e.g. monetary compensation and/or injunctive/declaratory relief?

Under Brazilian law, all kinds of remedies are permitted, and the most common ones are injunctive relief, imposition by the court of an obligation against the defendant and monetary compensation. Brazil does not permit punitive damages.

2 ACTIONS BY REPRESENTATIVE BODIES

2.1 Do you have a procedure permitting collective actions by representative bodies e.g. consumer organisations or interest groups?

Yes, private associations, such as consumer organisations, are allowed to file class actions, provided they meet certain formal requirements.

2.2 Who is permitted to bring such claims e.g. public authorities, state appointed ombudsmen or consumer associations? Must the organisation be approved by the state?

Please see the answer to question 1.7 above.

2.3 In what circumstances may representative actions be brought? Is the procedure only available in respect of certain areas of law e.g. consumer disputes?

Please see the answer to question 1.2 above.

2.4 What remedies are available where such claims are brought e.g. injunctive/declaratory relief and/or monetary compensation?

Please see the answer to question 1.10 above.

3 COURT PROCEDURES

3.1 Is the trial by a judge or a jury?

The trial is by a judge.

3.2 How are the proceedings managed e.g. are they dealt with by specialist courts/judges? Is a specialist judge appointed to manage the procedural aspects and/or hear the case?

Class actions can be filed before State or Federal courts, depending on the parties involved in the case as plaintiffs and defendants. In most of the cases, there are no specialised courts/judges in class actions.

3.3 How is the group or class of claims defined e.g. by certification of a class? Can the court impose a 'cut-off' date by which claimants must join the litigation?

Brazil does not have a certification procedure for class actions. Also, there is no specific period for claimants to join the litigation because this is not a typical procedure under Brazilian law.

3.4 Do the courts commonly select 'test' or 'model' cases and try all issues of law and fact in those cases, or do they determine generic or preliminary issues of law or fact, or are both approaches available? If the court can order preliminary issues do such issues relate only to matters of law or can they relate to issues of fact as well, and if there is trial by jury, by whom are preliminary issues decided?

There are no test or model cases, although the ruling of a leading case can be used as a court precedent to the following cases that deal with similar issues. Judges decide both preliminary matters of law, such as lack of standing to sue or to be sued, and also issues of fact.

3.5 Are any other case management procedures typically used in the context of class/group litigation?

No other procedures are typically used.

3.6 Does the court appoint experts to assist it in considering technical issues and, if not, may the parties present expert evidence? Are there any restrictions on the nature or extent of that evidence?

Yes, the judge is entitled to appoint experts to assist with technical issues. The parties can also appoint experts to assist them. There are not many restrictions on the nature or extent of technical evidence, provided that it is useful to the judge to rule the case.

3.7 Are factual or expert witnesses required to present themselves for pre-trial deposition and are witness statements/expert reports exchanged prior to trial?

No, under Brazilian law, there is no pre-trial deposition. Expert reports are presented before the trial and witnesses are heard during the trial.

3.8 What obligations to disclose documentary evidence arise either before court proceedings are commenced or as part of the pre-trial procedures?

The Brazilian model does not have pre-trial procedures related to the disclosure of documentary evidence. Documents are presented by the parties during the case.

3.9 How long does it normally take to get to trial?

In general, the Brazilian Judiciary is very slow and the trial usually takes from two to six years, depending on the complexity of the case and whether or not the court ordered a technical examination.

3.10 What appeal options are available?

Interlocutory decisions, as well as final rulings, are subject to appeals. Parties are entitled to appeal to the second level of jurisdiction and after that to a special level of jurisdiction, which encompasses appeals to the Brazilian Supreme Court and to the Superior Court of Justice.

4 TIME LIMITS

4.1 Are there any time limits on bringing or issuing court proceedings?

Yes, the time limit depends on the nature of the claim.

4.2 If so, please explain what these are. Does the age or condition of the claimant affect the calculation of any time limits and does the court have a discretion to disapply time limits?

In the absence of a specific provision, the statute of limitation is ten years. However, Brazil has a wide range of time limits, such as five years for consumer-related claims and three years for tort claims. Several situations, such as the mental condition of the claimant and when the person is domiciled abroad serving the country, affect the calculation, because the time limit does not run under such circumstances.

4.3 To what extent, if at all, do issues of concealment or fraud affect the running of any time limit?

Usually no, but a case-by-case analysis is necessary.

5 REMEDIES

5.1 What types of damage are recoverable e.g. bodily injury, mental damage, damage to property, economic loss?

All types of damages are recoverable.

5.2 Can damages be recovered in respect of the cost of medical monitoring (e.g. covering the cost of investigations or tests) in circumstances where a product has not yet malfunctioned and caused injury, but it may do so in future?

Brazil does not accept indemnification for future or hypothetical damages, but only for actual damages. This specific situation raised in the question may be understood by the courts as future/hypothetical damages.

5.3 Are punitive damages recoverable? If so, are there any restrictions?

There is no specific provision related to punitive damages and thus they cannot be awarded in Brazil.

5.4 Is there a maximum limit on the damages recoverable from one defendant e.g. for a series of claims arising from one product/incident or accident?

No, there is no maximum time limit.

5.5 How are damages quantified? Are they divided amongst the members of the class/group and, if so, on what basis?

Material/economic damages must compensate all the losses suffered by each of the members. Thus, after the ruling of the case, the members must start a collection procedure. Moral/noneconomic damages are quantified by the judge according to the circumstances of the case, such as the degree of guilt of the offender, the seriousness of the violation and the economic capacity of the parties.

5.6 Do special rules apply to the settlement of claims/proceedings e.g. is court approval required?

Parties can reach a settlement in any class action and the agreement must be approved by a court.

6 COSTS

6.1 Can the successful party recover: (a) court fees or other incidental expenses; (b) their own legal costs of bringing the proceedings, from the losing party? Does the 'loser pays' rule apply?

If the claimant succeeds, it can recover court fees and other related costs (such as costs with evidence/technical exams). Some judges also entitle the winning claimant to receive attorney fees, which are calculated by the judge, usually fixed at between 10% to 20% of the amount in dispute. On the other hand, if the defendant succeeds, it is not entitled to recover costs and fees, because the law exempts the plaintiff of a class action to pay such amounts, except in case of frivolous litigation.

6.2 How are the costs of litigation shared amongst the members of the group/class? How are the costs common to all claims involved in the action ('common costs') and the costs attributable to each individual claim ('individual costs') allocated?

The costs of litigation are not shared amongst the members. The entities with standing to sue, such as the Attorney General and civil organisations, support the entire cost.

6.3 What are the costs consequences, if any, where a member of the group/class discontinues their claim before the conclusion of the group/class action?

Please see the answer to question 6.2 above.

6.4 Do the courts manage the costs incurred by the parties e.g. by limiting the amount of costs recoverable or by imposing a 'cap' on costs? Are costs assessed by the court during and/or at the end of the proceedings?

No, the Brazilian courts do not control litigation costs.

7 FUNDING

7.1 Is public funding e.g. legal aid, available?

Yes, as mentioned in the answer to question 6.2 above, the entities with standing to sue, such as the Attorney General and other government bodies, support the litigation costs with public funding.

7.2 If so, are there any restrictions on the availability of public funding?

There are no specific restrictions.

7.3 Is funding allowed through conditional or contingency fees and, if so, on what conditions?

No, it is not allowed.

7.4 Is third party funding of claims permitted and, if so, on what basis may funding be provided?

Third party funding is not a common practice in Brazil and it may raise some ethical issues.

8 OTHER MECHANISMS

8.1 Can consumers' claims be assigned to a consumer association or representative body and brought by that body? If so, please outline the procedure.

Yes, consumer associations and other entities have standing to sue. Please see the answer to question 1.7 above. The procedure related to consumers' claims does not differ from other class action claims.

8.2 Can consumers' claims be brought by a professional commercial claimant which purchases the rights to individual claims in return for a share of the proceeds of the action? If so, please outline the procedure.

No. A professional commercial claimant does not have standing to sue.

8.3 Can criminal proceedings be used as a means of pursuing civil damages claims on behalf of a group or class?

If certain conduct is ruled by the Judiciary as a crime, the victim can use the criminal decision to pursue suffered damages. However, this is not a common practice in class actions.

8.4 Are alternative methods of dispute resolution available e.g. can the matter be referred to an Ombudsperson? Is mediation or arbitration available?

Parties are entitled to settle during the course of the class action, but there is no specific method for that, such as mediation. Arbitration is an alternative method of dispute resolution in Brazil, but it is not resorted for resolving class action claims.

8.5 Are statutory compensation schemes available e.g. for small claims?

Individuals can file claims before small claims courts. Such cases are simple and limited to a small amount. Class action claims cannot be filed before small claim courts.

8.6 What remedies are available where such alternative mechanisms are pursued e.g. injunctive/declaratory relief and/or monetary compensation?

All remedies are available but, in practical terms, the most common is monetary compensation.

9 OTHER MATTERS

9.1 Can claims be brought by residents from other jurisdictions? Are there rules to restrict 'forum shopping'?

Yes, residents from other jurisdictions can file claims in Brazil, but they are obliged to present a guarantee (such as a bond) to guarantee the payment of court costs and attorney fees in case they lose the claim.

9.2 Are there any changes in the law proposed to promote class/group actions in Brazil?

Since 2009, Brazil has been discussing changes to the class action law, but it does not seem that we will have a new legislation in the near future.

Originally published in the 2014 edition of The International Comparative Legal Guide To: Class & Group Actions by Global Legal Group Ltd., London, www.iclg.co.uk.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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