New Italian Class Action Regime Enters Into Force - Class Actions

On May 19, 2021, the reform of the Italian legal framework on class actions finally entered into force. The new rules, designed by Law n. 31 and published on April 18, 2019, (Law n. 31/2019), were initially intended to become effective on April 19, 2020, but had been delayed twice.

The new rules on class actions are now included in the Italian Civil Procedure Code (ICPC) and no longer in the Code of Consumers.

The reform introduces new substantive and procedural rules aimed at broadening the scope of application of class actions in Italy and making class actions more user-friendly and effective.

Extension of the scope of application

The first change affects the scope of the rules on class actions. While in the previous legal framework the class action procedure was expressly aimed at protecting the individual homogeneous rights and collective interests of "consumers" and "users" only, the new provisions remove any particular reference to the addressee of the rules on class actions. This means class actions are now available both to consumers and businesses, making the class action procedure an instrument applicable both in B2C and in B2B relationships.

Furthermore, the scope has been widened in terms of the laws class actions are applicable to. While under the previous legal framework class actions were limited to claims pertaining to alleged violations of antitrust laws, unfair commercial practices, violations of contractual rights of a plurality of consumers and users and product liability, they are now available to anyone seeking compensation for violation of homogeneous individual rights, regardless of the subject matter of laws laying down the rights alleged to be violated.

A claim for violation of homogeneous individual rights may be filed by any member of the "class" (to which the owners of the homogeneous individual rights belong) and by non-profit organizations or associations (if they are registered on a public list established by the Ministry of Justice), whose objectives encompass the protection of homogeneous individual rights.

The new rules expressly provide that class actions can be filed only against companies or entities in charge of the provision of public services or public utilities, implying that it is not possible to file a class action against a public administration.

Procedure

A new provision has been laid down with reference to the competent court. Class actions must be filed exclusively before the specialized business division of the court where the defendant has its registered office.

Proceedings start with the submission of a brief, which is published on the Ministry of Justice website. Publication makes it easier to make people aware of the filing of a class action (furthermore the relevant acts and decisions of the class action proceedings are published on the Ministry of Justice website).

While the previous rules provided that the class action would follow the ordinary procedure, the new rules provide that the class action is governed by the summary procedure provided by Articles 702-bis and ff. of ICPC, making it clear that the judge cannot change to the ordinary procedure.

Within 30 days from the first hearing, the court will issue an order stating whether the claim is admissible or not. The claim is not admissible in the following cases (which are the same cases provided in the previous legal framework):

where it is clearly ungrounded (in such a case, the claimant may file a new class action if the circumstances change or when the claimant raises new reasons of fact or law);
where the court deems that the individual rights are not homogeneous;
where the claimant is in conflict of interests with the defendant; and
where the claimant appears not to be able to take care adequately of the homogeneous individual rights claimed.

As it was already provided for, the court may rule the stay of the proceedings if there is an investigation before an independent authority or proceedings before an administrative judge ongoing. The rules makes it clear that there is no prejudice to the provisions set forth by the Legislative Decree n. 3/2017 (with which the Directive 2014/104/EU on antitrust damages actions has been transposed in Italy).

Investigation phase of the proceedings

The new rules introduce measures aimed at making it easier for the claimant to fulfil the burden of proof and to collect the evidence necessary to ground the claim.

In particular: (i) it is expressly provided that the court may use statistics and presumptions to assess the liability of the defendant; (ii) on reasoned request by the claimant (that should identify facts and proof reasonably available to the defendant sufficient to support the plausibility of the claim), the court may order the defendant to disclose relevant evidence (the disclosure order can be limited to what is deemed appropriate for the decision and in case of refusal to comply with the disclosure order fines will be applied). When ordering the disclosure of confidential information, the court takes effective measures to protect such information; (iii) unless there are specific reasons, the defendant will be responsible for paying in advance the fees and the expenses pertaining to an expert technical witness.

Upholding of the class action

In contrast to what is generally provided for the summary procedure by Article 702-ter, the final provision issued by the judge is not an order but a ruling. In the case of a ruling upholding the class action, the court:

where the claim has not been filed by an organization or an association, rules on the claims for damages or restitutions;
establishes that the defendant's actions claimed by the claimant has harmed homogeneous individual rights;
identifies the homogeneous individual rights, specifying the elements necessary to be included within the "class" composed by the owners of such rights;
declares the opening of the opting-in procedure scheduling the deadline for the owners of the homogeneous individual rights to opt in to the class action; and
appoints a "delegated judge" for the opt-in procedure and appoints a "common representative" of those who are opting in to the class action (ie the participants to the class action).

Opting-in procedure: Extension of the chance to opt in

Italian class actions have always been based on the opt in mechanism: parties claiming to have been damaged by the violation of homogeneous individual rights are required to opt in to participate in the class action. The new rules on class actions also broaden the scope of the opting-in procedure.

In the first phase, with the order that admits the class action, the court sets a deadline to the owners of homogeneous individual rights for opting in to the class action. In the second phase, with the ruling which upholds the class action, the court opens a new opting-in procedure. This means that the eligible participants may join the class action before and even after the court's favorable judgement on the merit (for the defendant, it is therefore not possible to know the definitive number of participants in the class action before the court's decision ruling on the merit).

The content of the claim for opting in has now been explicitly regulated, which must specify the subject matter of the claim and the facts on the basis of which the claim is grounded.

The procedure before the 'delegated judge'

With the new rules, a specific procedure for the assessment of the opting-in claims has been introduced, which is regulated in detail by Article 840-octies of ICPC.

In particular: (i) within 120 days from the deadline to opt in scheduled by the ruling which upholds the class action, the defendant may submit its defensive brief with reference to the facts laid down by the participants in the class action in their opting-in claims; (ii) within the subsequent 90 days the "common representative" of those who are opting in to the class action (ie the participants to the class action) prepares a "project of redressing" for each claim for violation of homogeneous individual rights; (iii) within the subsequent 30 days, the defendant and the participants in the class action may submit their comments on the "project of redressing"; (iv) within the subsequent 60 days the "common representative" may make changes to the "project of redressing" and proceed with its submission.

The delegated judge, when upholding the claims for opting in, with reasoned decree condemns the defendant to pay the sums or to refund the goods to each participant to the class action.

Settlement agreements

Until the hearing of discussion, the court may formulate a proposal for a settlement agreement.

After a ruling upholding the class action, the common representative of the participants in the class action, on their behalf and in their interest, may agree with the defendant on a project for a settlement agreement, which has to be approved by the delegated judge, with regard to the interests of the participants to the class action. Each participant in the class action may challenge the settlement agreement project and may revoke the power of the common representative to sign the settlement agreement on their behalf. Also, the claimant may adhere to the settlement agreement.

Such measures encourage the consensual settlements of claims brought with class actions.

Individual actions

As in the previous rules on class actions, the new provisions are laid down without prejudice to the right of each individual to bring an individual civil action.

However, it has been now explicitly provided that participants in class actions may bring an individual action provided that their opting-in claim has been withdrawn before the decree of the delegated judge, upholding the claims for opting in, becomes definitive.

Combination of class actions

Class actions filed within 60 days from the publication of the claimant's brief, which are brought against the same defendant and are based on the same facts, are joined to the "leading" class action.

Once the 60-day period has elapsed, further class actions on the same facts and against the same defendant cannot be filed. This does not apply if the leading class action (i) is declared not admissible by a final order; or (ii) has been removed from the court docket; or (iii) has been defined by a decision which does not rule on the merit of the case.

Collective action for injunction

The new provisions also reformed the collective action for injunction which was until now provided for by Article 140 of Code of Consumers. The new rules provide that whoever has an interest in the issuing of an injunction against actions which cause damages to a plurality of individuals or companies can file a claim to obtain a cease and desist order or a ban on the repetition of the omissive or commissive conduct.

Fees to be paid to the common representative and to the claimant's lawyer

With the decree upholding the claims for opting in, the judge condemns the defendant to pay directly to the common representative and to the claimant's lawyer a sum equal to a percentage – which is progressive based on the number of the participants in the class action – of the total amount due by the defendant to the members of the class action.

The relevant provision expressly provides that this fee for the claimant's lawyer is due as a "bonus," thus unveiling the favor of the law toward the class action and creating a possible additional incentive to start class actions.

Entry into force

The new rules apply to unlawful acts carried out after the entry into force of the provisions (May 19, 2021). The provisions in force before May 19, 2021, will continue to apply to acts carried out before that date.

Conclusion

The changes introduced by the reform of Italian class actions will likely lead to a significant increase in class action litigation in Italy, since they have:

widened the scope of application of class actions, both from a subjective (no longer limited to B2C but extended to B2B relationships) and the objective (class actions are now applicable to any alleged unlawful act) perspective;
made it easier for the claimant to fulfill the burden of proof (the court may use statistics and presumptions) and to collect the evidence necessary to ground the claim (the court has the power to issue wide disclosure orders and apply fines in case of non-compliance);
broadened the chance to join the class action (it is possible to join the class action even after the court's favorable judgement on the merit); and
increased the possibility to find consensual settlements of the claim (both the court and the common representative may submit settlement proposals).

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.

Italy: New Italian Class Action Regime Enters Into Force