Class Actions. Current Congress Activity (Second Part)

As mentioned in Marval News edition # 102, since the decision rendered by the Supreme Court in re “Halabi” in February 2009, several bills have been submitted to Congress in order to regulate class actions. At present, seven bills are pending before the Congress, many of which are about to lose parliamentary status.

Among the projects, the bill submitted by Senator Liliana Negre de Alonso, Chairman of the Committee on General Legislation, must be highlighted, as it aims to unify the interests of the different stakeholders.

Although the text and the scope of the bill are not defined yet, a general agreement among the members of the Committee seems to exist regarding the issues described below.

Federal jurisdiction - Emulating U.S. CAFA 2005 (Class Action Fairness Act), the bill would provide federal jurisdiction for class actions. Assuming class actions as a complex and specific procedure, the creation of specialized courts is encouraged by the Committee.

Term to answer the complaint - According to the procedure’s characteristics, the bill would provide for a term of over 15 business days to answer the complaint, in order to grant the appropriate exercise of the defendant rights.

Certification stage - In line with the U.S. regulatory tradition (Federal Rule of Civil Procedure 23), there is general agreement to include a certification stage, whereby the existence of a homogeneous group of interests might be assessed by the court, in order to justify the admissibility of a class action.

Adequate representation - Respecting Anglo-Saxon practice, the Congress is considering the need for an adequate representative for the class action, who will have to achieve the economic and legal standards required for this kind of process.

Opt-out system - The congressional majority opinion would stand for an opt-out system like the one provided by Rule 23, which entitles individuals to request the exclusion of the class action and the ruling effects. Thus, opt-out members may file an individual claim on the same grounds.

Single proceeding rules for the whole country - The Congress is devoted to enact one single legal framework for the whole jurisdiction (subject to the approval of local legislatures), in order to avoid actions and procedural rules overlapping all over the country. This premise aims to unify this kind of actions and avoid constitutional challenges, grounded on the local nature of procedural rules.

Class Action National Registry - Similar to the unification purpose, the Committee has reached a consensus on the creation of a Class Action National Registry. The claims’ registration will prevent the filing of identical class actions before different jurisdictions, discouraging forum shopping practices.

In principle, these points would be the grounds for a general agreement that has been reached within the Committee on General Legislation of the Senate. However, we will have to wait until the next ordinary session period (beginning in March), in order to see whether these, and other, guidelines, finally become law.