Class Action Suits Gain Popularity in Consumer Claims
A recent appellate court rejecting a bank's appeal in a class action claim by 1247 consumers has emphasised the increasing popularity of class actions in Poland. This article examines why the class action scene is changing in Poland.
The Polish Act on Pursuing Claims in Group Proceedings was enacted in 2009, but only a few cases were instigated under this law, with only three judgments issued. Poland adopted an opt-in model, where a group of at least ten members can collectively pursue consumer rights, product liability claims and tort claims (except for claims for the protection of personal interests), based on the same or similar factual grounds.1 The members participate in the proceedings via a representative, often a consumer ombudsman. The action is divided into three main phases: the merits part is preceded by an examination of the admissibility of the claim and certification of the group. Owing to significant procedural differences between class actions and standard civil litigation, many claims have been declared inadmissible due to a failure to comply with the rules. However, as legal professionals and clients have become more familiar with the technical requirements, more class actions are progressing to the next stage.
The media in Poland increasingly reports on new class action suits. It is stated that the Polish State Treasury is the most common defendant (in up to 70% of cases, where it was sued for undue excise taxes, and undue care over anti-flood facilities), but banks and insurers are close runners-up. On 30 April 2014 the Appellate Court dismissed mBank's (formerly BRE Bank S.A.) appeal from the decision of the Regional Court in Łódź which declared mBank S.A. liable to 1,247 consumers relating to Swiss franc forex loans. The courts found that the mortgage contracts contained abusive clauses that enabled mBank to modify interest rates based on non-defined criteria and to the detriment of its clients. Thus mBank was entitled to increase its interest rates every time the relevant benchmark reference rate increased, but was not obliged to decrease it when the benchmark rate fell.
This case is a milestone for class actions in Poland. It has been widely discussed in the media, is likely to have raised consumer hopes and expectations, and has fostered a hope that a group acting together may be more successful than individual litigation. It has also galvanised mid-size law firms into identifying class actions as potential pitches for their business development. Such law firms have already started to gather consumers into groups and threaten big financial institutions.2
If a bank is concerned about the possibility of a class action, then monitoring the press, blogs and consumer forums can yield information for internal lawyers and PR officers. An increase in media activity is a likely forerunner of a class action. The larger the group, the lower the average cost of the proceedings for each member. It is therefore often in consumers' best interests to form large groups by advertising possible class actions on the most popular social media. Furthermore, when preparing for a class action suit, the bank should collect and filter its data regarding clients who have previously filed similar complaints. This might be useful in estimating the possible total disputed value and save time once proceedings commence.
Engaging specialist PR assistance can be advisable as the media tends to present cases only from a consumer's point of view. A bank may consider, inter alia, initiating a public discussion, identifying other entities concerned about the same issue and training spokespeople.
Footnotes
1. According to the data available on the website of the Ministry of Justice, 93 were instigated between 2010 and 2012, and 9 in the first half of 2013, totalling 102 lawsuits.
2. See eg JK, Kolejne pozwy zbiorowe klientów ws. polisolokat [Further class actions brought by unit-lined insurance clients], Rzeczpospolita of 3 February 2014; Karolina Mózgowiec, Pozew zbiorowy ws. OFE: prawnicy liczą na milion osób [Class action concerning open pension funds: lawyers expect a million people], Polskie Radio of 5 December 2013.
