Class Actions: Congressional Activity

In February, 2009 the Supreme Court established for the first time the admissibility requirements of class actions in re “Halabi”.

Considering its particular characteristics, the Higher Court requested the Federal Congress to provide a specific legal frame for class actions.

Several bills had been submitted to the Parliament as a consequence of the judgment. Currently, there are seven bills available to regulate class actions. Some of them were described by Marval News # 85 (please see “Class actions reached Congress”). Nevertheless, six of the bills are about to lose parliamentary status.

However, the more recent regulation attempt submitted by Representatives Rodolfo R. Yarade and Mónica L. Torfe must be highlighted. Deputy Yarade is a member of Frente para la Victoria -the official party- and Deputy Torfe belongs to Salta’s Partido Renovador.

This bill had been submitted on August 17, 2010 and its main guidelines are based on -and even improved- the rules which regulate class actions in the United States (FRCP 23).

The structure of the draft is grounded on two well-defined stages.

The first is the class certification stage, and it starts with the filing of the complaint. In this phase, the plaintiff must present evidence to prove that the admissibility requirements have been met. On the other hand, the defendant will have the opportunity to challenge the admissibility of the claim as a class action. The adjudication regarding the class certification may be appealed.

The Ombudsman, the civil associations duly registered in accordance with the law, as well as those having legal standing authorized by other laws, shall act as co-plaintiffs of one or more members of the class, if regulation requirements are fulfilled.

Once the class is certified, the second stage begins. Then, the defendant will have to answer the complaint and offer evidence on the merits within thirty days of the service of process. Therefore, proceso ordinario rules (“ordinary proceedings”) from the National Code of Civil and Commercial Procedure will be applied.
All represented individuals must be notified by the court, according to the characteristics and extension of the class. Any member of the class may opt out from the action. The bill requires a written opt-out demonstration filed within sixty (60) days of the notification.

The Judgment will have res judicata effects relative to all of the class members, whether the decision admits the lawsuit or it is denied totally or in part, with the only exception of the class members that made a timely request to opt-out.

The project establishes a mandatory conciliation previous stage. The action may be settled. The terms of the agreement require the District Attorney’s legal opinion and the judicial authorization.

Other special features of the Bill ought to be highlighted. The draft provides the opportunity to increase the number of factual and expert witnesses; and each party will have bear their own expenses generated during the proceedings. Compensation of moral damages is not allowed under this Bill.

The “whereas” of the draft mention the outlines provided by the Supreme Court in re “Halabi”. The Bill supporters also consider that the project was able to adapt the basic elements of the class action to our legal system.

Although the Bill project is capable of being improved, we must admit that a great step forward has been made concerning class actions. The structure not only tends to respect the provisions of the American CPR (Rule 23), but also take into account Argentine legal methods. In this scenario, it seems possible that the Congress finally passes one of the pending Bill projects to become the law.