The Commercial Court of Appeals has recently settled the controversy about the percentage of return admissible in settlement agreements executed in commercial class actions, accepting the refund of just 60% of the claimed amount instead of the full amount.
The decision was handed down by Chamber "A" in "Re Unión de Usuarios y Consumidores v. Banco de Corrientes S.A. on ordinary proceedings" ("Unión de Usuarios y Consumidores c/ Banco de Corrientes S.A. s/ ordinario"), in which the plaintiff (i) questioned the value of the collective life insurance over the debit balance collected by the defendant to its clients; and (ii) requested the refund of the sums collected by the defendant during ten years prior to the complaint, for the difference existing between the questioned value of the insurance and the value sustained applicable by the plaintiff.
After a long dispute, the parties reached a settlement agreement contemplating the refund of 60% of the difference between the amounts collected by the bank to its clients and paid by the former to the insurers, in the three-year term prior to the complaint until the approval of the agreement.
The Public Prosecutor and the first instance Judge rejected the agreement considering that there were no elements to establish the reasonableness of such percentage.
Once the decision was appealed, the Public Prosecutor before the Court of Appeals shared the opinion of her first instance colleague against the percentage of return as well as her request that the full amount should be determined by an accountant expert.
In order to rule on the appeal, the Court of Appeals recalled that it is possible to enter into settlement agreements within the framework of consumer class actions, especially when such actions involve disposable economic interests, provided that the conditions set forth in section 54 of the Argentine Consumers Protection Law No. 24,240 are met. These conditions are: (i) contemplating the right of exclusion of the class members who want to depart from the agreement; (ii) obtaining the approval of the settlement agreement through a founded ruling; and (iii) giving notice to the Public Prosecutor so that he decides about the appropriate consideration of the interests of the affected class.
In connection with the full amount at stake, the Court of Appeals dismissed the petition for determining it through an expert on the ground that it was sufficiently proved with the report issued by a recognized international consulting firm appointed by both parties which had been attached to the agreement.
According to the Court of Appeals, such report was duly based on the account books of the defendant (which were kept lawfully) and on the supporting documentation, whose information had been submitted to reasonableness and consistency procedures which were duly explained, without elements to challenge the estimation performed.
Regarding the repayment percentage, the Court of Appeals emphasized that the principle of full compensation was not applicable to request the refund of the full amount committed since, beyond the private report filed by the parties, the definitive and real extension of such amount was unknown since a final decision admitting or dismissing the claim had not yet been issued.
On that basis, the Court considered that the return of 60% was reasonable in view of the full amount presumably involved according to the private report filed by the parties; and, in particular, in view of the amounts that each beneficiary would receive, since the difference with the presumptive full amount was exiguous.
Given these circumstances, the Court concluded that it was unjustified to continue the process until reaching a final judgment, since such situation would entail years of delay and procedural expenses, which would eventually dissipate the benefit attempted through the agreement.
This is a very important precedent for commercial class actions, since it not only ratifies the possibility of terminating them through settlement agreements, but also allows that, under certain conditions, such agreements depart from the full compensation principle to be executed for lower amounts, with the consequent advantage of saving procedural costs, and substantially limiting the economic contingency of a possible adverse judgment.
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