Class Actions: the Supreme Court Rules in Favor of Consumer Associations

On August 21, 2013 the Argentine Supreme Court (“CSJN”) revoked a Federal Court of Appeals Tribunal D decision rejecting a plaintiff association standing to sue in the PADEC v. Swiss Medical case.

In its ruling, the CSJN established that the plaintiff association has the right to initiate a collective action seeking the declaration of ineffectiveness of certain clauses of the contract signed by the defendant with its affiliates. Pursuant to the provisions of Article 37 of the Consumer Protection Act at the time of rendering the decision, some of the disputed clauses were declared as not agreed by administrative decisions of the Department of Competition, Deregulation and Consumer Protection. However, the claim remained for the suppression of the unilaterally increase of monthly fees already performed and the consequent ineffectiveness of the clause authorizing such right.

Once again, and following the “Halabi” precedent, the CSJN, classified rights in 3 categories: (a) individual rights, which must be defended with individual actions; (b) rights with a collective impact that concern collective assets; and (c) rights with a collective impact that concern individual but homogeneous assets (see Marval News # 81, “Class Actions: Landmark Ruling by the Supreme Court”). In this way, it was understood that, even in the presence of individual rights, when a factual and legal equivalence can be identified there may not be a case for a collective good , making the existence of a single trial whose decision shall have expansive effects reasonable, excepting in those aspects concerning the evidence of the damages.

After the merits of the action were considered, the CSJN referred to the obiter dictum of the "Halabi" ruling which states that "it is perfectly acceptable within the framework of our system for certain associations to deduct collective action with similar features than the one existing U.S. law pursuant to [...] Article 43 [of the Constitution]" thus not recognizing that plaintiff’s standing to sue in this case would violate the right of access to justice.

It should be noted that in "Halabi" there was only an individual plaintiff; therefore the referral to associations was just one more of the grounds to sustain the nationalizing of North American "Class Actions". The change now is in the definite consolidation of association rights to claim in defense of homogeneous individual rights.