December 17, 2018
Model Declaratory Judgement suits
The act for Model Declaratory judgement lawsuits (Musterfeststellungsklage) went into effect on 1 November 2018. Qualified institutions and consumer protection organizations can file class action suits against a company to obtain a declaratory judgment on behalf of consumers.
Only those institutions with a minimum of 10 associations as members or 350 individual members have the right to sue. They would have had to have been registered for four years under the Act on Injunctive Relief or with the European Commission and may not receive more than five percent of their financing from corporate entities. Additionally, the law suit cannot be initiated for profit.
The regional Superior Court (Oberlandesgericht) has jurisdiction over the proceedings. The complaint must allege that at least 10 people were victims of the tort. Filing a claim under the Act does not bar individual consumers from bringing personal actions against the tortfeasor; however, no other model proceedings based on the same facts may be brought against the same defendant.
A total of 50 plaintiffs will have to sign up to a litigation register within a two-month period for the case to go forward. Other plaintiffs have until the day before the first hearing to register to be part of the class.
The model proceeding ends with a declaratory judgment or if the parties reach a settlement. The declaratory judgment is binding on the questions of fact and law for the plaintiffs who were members of the class. Based on that, a member of the class may initiate an individual action for damages. Alternatively, the parties may settle the claim. If they do so, settlement is subject to review by the Court. The settlement is deemed valid unless 30 percent or more of all class members explicitly opt out of it.
On 1 November 2018 the Verbraucherzentrale Bundesverband (German federal central consumer protection organization) and the Allgemeiner Deutscher Automobil-Club (ADAC) – A German automobile club with membership in the millions, initiated the first action under Act at the Oberlandesgericht in the northern German city of Braunschweig against the Volkswagon Company, makers of the VW cars on behalf of consumers that bought its diesel automobiles. The suit alleges that VW misled consumers about its diesel automobiles and is thus, liable for damages.