Austria may soon have a new Class Action model available to its consumers. As of May 2024, a new draft bill has been presented by the Ministry of Justice. Such a deal could be the first-time Austria authorizes a model for class actions like that of other countries.  

Current Austrian law requires individuals, of which must be at least fifty, to assign their claims to Consumer Organizations, such as the Association for Consumer Information (VKI), which then asserts a single action against the defendant company. The consumer organization may only take legal action against companies’ contractual clauses. Further, the law requires that the claims be based on an essentially similar cause of action, and that the claims regard essentially the same question of law or fact.

The new draft deal could broaden the scope available to consumers to include all European Union claims based purely on a national legal basis and could facilitate access to justice for consumers where it would otherwise not be available. The proposed legislation would limit the fee for joining a claim to a maximum of 250 Euros, which would greatly reduce the cost of litigation and provide more access for consumers. 

Similarly to the claim requirements in Austria, California requires that class action claims satisfy numerically, commonality, typicality, and adequacy. There must be enough parties involved that joinder of all would be impracticable, but the law does not specify how many parties must be included. The representative claims must share a common question of law or fact, they must concern legal questions that are typical for the rest of the class, and the representatives must act with respect to all member’s interests.

California’s scope of class actions is much broader than that of current Austrian Law. In California, such areas include but are not limited to consumer protection, employment disputes, product liability, and securities fraud. 

The available relief in Austria is very narrow. The main form of relief is monetary damages, which is distributed first to the litigation funder, then the representative association, and finally split amongst the damaged parties. On occasions an injunction or declaratory relief may be granted, however this is a rare occurrence. Punitive damages or additional compensatory damages are not permitted. 

Conversely in California, the options for damages are significantly broader. The available damages include actual monetary damages of more than $1,000, injunctive relief, restitution of property, punitive damages, or even more broad, any other relief deemed proper by the courts. 

More differences still, the Austrian model provides defendant companies with more defenses for dismissal of claims. Such defenses provide that a claim shall be dismissed if the defendant can prove the consumer organization is under the influence of a party who holds an interest in bringing a claim against the defendant, such as their competitor. A defendant may also prove that the litigation funder is dependent on either the defendant company or any of its competitors. Defendants may also provide evidence disproving the similarity requirement. 

Alternatively, in California, under the Consumers Legal Remedies Act, claims will be dismissed if a defendant can claim that their violation was not intentional, that the violation was a bona fide error that occurred through their use of reasonable procedures for avoiding such errors, and that the defendant made an appropriate correction, repair, replacement, or other remedy for such error. Both systems currently allow for counterclaims.

It is also important to note that Austria does not have any pre-trial discovery procedures. While this proposed bill may help gain access to relief for consumers, parties are not required to share evidence with one another, making yet another hurdle to overcome in the process.

In contrast, the United States has a much more involved process for pre-trial discovery. The Federal Court System, California, and many other states have very strict rules that must be followed. Per the California Code of Civil Procedure, any party may obtain non-privileged materials relevant to the subject matter involved. Some of the required areas of initial discovery that attorneys have an obligation to provide their opposing counsel with include information relevant to their claim or defense, identifiable information of witnesses or all persons likely to have discoverable information, a computation of damages, and information regarding insurance policies relevant to a potential judgment.

While this may seem like a clear-cut statement to be followed, courts may limit the scope of discovery if the burden or expense of providing the discoverable material outweighs the potential benefit of it. Attorney-client privilege protects the communication between privileged parties during a confidential interaction to obtain or provide legal services, but the information itself can still be discoverable through other tools of discovery. Additionally, tangible material prepared in anticipation of litigation and shows the attorney’s impressions is considered work product and is protected from being discoverable.

Even given all the differences between the United States legal system and Austria’s legal system, if Austria chooses to adopt the proposed bill, this would be a win for plaintiff consumers as there would be more opportunity and access for justice, reduced litigation costs, and relieve burden on the courts by preventing an overwhelming amount of similar small claims. 

_{Authors: Katie Boucher, Christoph Jeannée}