Lawsuit by associations: Extension to injunctions and remedial actions

The law implements Directive (EU) 2020/1828, which requires member states to provide for two types of representative actions - injunctions and remedies. Up to now, remedial actions do not exist in German law. The regulations now required for remedial actions by associations have been bundled in a new Consumer Rights Enforcement Act (VDuG).

The new remedial action extends to all civil disputes involving claims and legal relationships of a large number of consumers against a company (Section 1 (1) VDuG). It thus extends not only to consumer protection provisions, but also to tort law. Remedial action can be considered, in particular, in the case of claims for damages under data protection law, product liability cases or antitrust damage claims. So-called small companies are put on an equal footing with consumers and can also join representative actions, Section 1 (2) VDuG.

Note: Small companies are only those with fewer than ten employees and an annual turnover or annual balance sheet of no more than 2 million Euro.

Consumers themselves are not entitled to bring an action, but certain qualified domestic consumer associations as well as corresponding qualified entities from other EU member states, Section 2 VDuG. In order to participate in the remedial action, consumers must register with the register of representative actions (so-called opt-in). The timing of the registration was hotly disputed in the legislative process. A consumer-friendly approach prevailed. According to this approach, registration is still possible three weeks after the conclusion of the last oral hearing.

The requirements for the similarity of the claims affected by the remedial action have been lowered compared with the government draft. Thus, the claims concerned now only have to be "essentially similar", Sec. 15 (1) Sentence 1 VDuG.

The plaintiff no longer has to prove that the claims of at least 50 consumers are affected by the action for redress. Instead he only has to demonstrate that the claims are affected in a comprehensible manner, Section 4 (1) VDuG.

The procedure of an action for remedial action pursuant to Section 16 (1) sentence 2 VDuG, according to which the plaintiff association claims performance to consumers who have not been named, is likely to be of particular practical relevance. Thus, first a basic remedy judgment is issued, which merely contains the liability parameters. Subsequently, in a so-called settlement phase, the convicted entrepreneur can organize the fulfillment of the claims himself. If this does not succeed, a remedial judgment follows, in which, for example, in the case of payment claims, the convicted entrepreneur is ordered to pay a collective total amount. The distribution to the entitled consumers is carried out by a trustee in a so-called implementation procedure.

The filing of an action for redress only suspends the statute of limitations for claims of registered consumers and small businesses (Section 204a (1) sentence 1 no. 4 VDuG). Consumers are thus still free not to register for a remedial action and instead to take the route of an individual action. Accordingly, in addition to the remedial action, there will probably still be insolvency proceedings in the future. This will ultimately exacerbate existing liability risks for companies.

A register of actions by associations is kept at the Federal Office of Justice (Section 43 VDuG). The Higher Regional Courts at the place of jurisdiction of the company are responsible for the respective lawsuits.

Note: Any third-party funding for the lawsuits pursuant to Section 4 (3) VDuG must be disclosed to the court by the entity entitled to file the lawsuit.