New Rules for Class Action Lawsuits

05.08.2019

Legal Update No 692

Bryan Cave Leighton Paisner (Russia) LLP (formerly Goltsblat BLP in Russia) is pleased to offer a snapshot of the new class action developments under Federal Law No. 191-FZ of 18 July 2019 coming into force on 1 October 2019.

A class action is a type of lawsuit where claims by a large group of claimants, such as consumers suffering from mass violations of their rights or company shareholders, are considered in a single process.

RF Civil Procedure Code (CPC) developments:

Another chapter has been added introducing new class action clauses not found in the previous CPC. These focus on:

  1. Class action requirements:

    • common defendant;

    • common or homogeneous rights of group members;

    • similar facts underlying the claims;

    • same remedy.

  2. Class actions may be brought by any member of the group or, if permitted by law, another party (such as a public consumer association).

  3. A group must consist of 1+ 20 members (one representative plaintiff and at least 20 joining them);

  4. A group is represented by the member named in the statement of claim (the “representative plaintiff”) or, if permitted by law, another party (such as a public consumer association).

  5. Other members will opt in when the lawsuit is filed or pending but their rights in the proceedings are limited compared to those of the representative plaintiff (they may read case materials, attend hearings, etc.)

  6. Class action decisions will have a collateral estoppel effect on subsequent claims of the same kind, unless those bringing them want to challenge the facts already established (decided issues are not re-litigated in another lawsuit from a member of the same group that has not opted in or has opted out of the previous class action brought against the same defendant on the same subject matter, unless they are challenged by that member).

In other words, these changes pave the way for mass consumer and other such claims, for instance food product liability claims, overpricing claims against companies or claims for damages from natural disasters. Class actions allow consumers to seek justice where, although the damages for individuals would be too small to make a lawsuit worthwhile, once joined, there is a significant total amount at stake – enough to make litigation feasible. This is why they might pose a new threat to companies.

RF Arbitration Procedure Code (APC) changes:

Although provided for in the APC, class actions have been extremely rare as these provisions do not work properly: specifically, a “group” was understood to mean those participating in the same legal arrangement (for instance, the same contract), rather than having common or homogeneous rights (such as similar contracts with the same defendant).

The Law is designed to boost the effectiveness of the APC clauses and the changes are generally consistent with the CPC developments except that, for a lawsuit to be certified as a class action, a group must consist of 1+5 members (i.e., the representative plaintiff and at least five members opting-in) as opposed to the CPC 1+20 scheme.

On the other hand, the Russian Code of Administrative Court Procedure, which also regulates class actions (in Article 42 “Filing Administrative Lawsuits in Class Actions”), is not affected by the new bill.

Contact details

For all issues related to publications, news and press releases, please contact:

Ksenia Soboleva

Head of PR and Communications

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