A synopsis of Gidi’s article ”Class actions in Brazil: a model for Civil Law Countries"

Publicado em 04 Setembro 2012.

 

Gidi Sinopse

A synopsis of Gidi’s article ”Class actions in Brazil: a model for Civil Law Countries. [1]

The Author observes that some civil law lawyers have a negative opinion of American class actions because:

1)     They are expensive;

2)     They generate high attorney’s fees;

3)     They generate huge compensatory and punitive damages awards;

4)     They allow courts to create public policy and usurp the legislative function.

He maintains that these consequences are related to the peculiarities of American legal cultured and don’t necessarily derive from class actions.

The creation of substantive public policy and social regulation is within American legal culture and it is related to the precedent’s system.

Most differences derive from the spirit of the individual litigation ideas that lies at the background of every system. American system as a whole is notably plaintiff oriented while Brazilian system is (or at least it was) defendant oriented.

Some other remarks:

·        In most civil law system witness testimony is afforded little evidentiary value. The party is not considered a true witness, does not give evidence under oath and cannot call herself to testify.

·        Brazilian society is not very litigious simply because it has lost hope on the legal system.

·        Punitive damages are usually unavailable. Career judges, being conservative civil servants, are more likely to award modest amount of compensatory damages.

·        Brazilian procedure does not offer realistic devices to class actions such as consolidation, test cases, joint trial, collateral estoppel, stare decisis, and liberal rules for joinder of parties and intervention.

The Brazilian class action traces its origins to papers delivered in Italy in the 1970, written among others by Mauro Cappelletti, Michele Taruffo and Vicenzo Vigoriti. In Brazil, José Carlos Barbosa Moreira, Ada Pellegrini Grinover and Waldemar Mariz Oliveira Júnior were the pioneers. The introduction of class action in Brazil is due to their research and lobbying efforts.

The Public Civil Suit Act, enacted in 1985 was the first Brazilian statute dealing with them. [2]

In 1988 the new Constitution created the “mandado de segurança coletivo”, a kind of collective and non-criminal habeas corpus.

In 1989 and 1990, the legislature enacted three statutes for the protection of handicapped people, investors in the stock market, and children.

In 1990, the Consumer Code was enacted. [3]

The Government is often a defendant in Brazilian class actions.

Class actions have been brought against industries, banks, private schools, credit card companies, health insurance plans, in order to curb mass wrongs, such as misleading advertising, environmental damages, product defects, lack of adequate information to consumers and the use of abusive clauses in adhesion contracts.

Unlike the U.S. laws, the Brazilian private and procedural laws are federal, regulated by the national codes and uniform in all 26 states.

Gidi defines class action as the action brought by a representative plaintiff (collective standing), in protection of a right that belongs to a group as a whole (object of the suit), which judgment will bind the group as a whole (res judicata).

Some of the Brazilian innovations:

·        The office of the Attorney General is always notified of the filing of a class action;

·        The creation of a Special Fund Account for the Protection of Diffuse rights;

·        The protection of representatives from the responsibility for defendant’s attorney’s fees, costs and expenses, except in cases of bad-faith litigation;

·        The unnecessary of advancing court costs, fees, expert’s fees and other expenses.

Some shortcomings of Brazilian Class Actions:

·        The “notice” requirement is satisfied merely by a single publication in an official newspaper. Besides, it is required only in class actions for individual damages;

·        The absence of regulation and procedures for settlements. In fact, settlements are not allowed, since the plaintiff cannot freely dispose of the group’s rights;

·        The class decree is binding on the absent class members only if favorable to their interests.

Types of Group Rights”

Article 81 of the Brazilian Consumer Code enumerates three categories of group rights amenable to collective litigation: diffuse, collective and homogeneous individual rights.

A diffuse right is a transindividual and indivisible right that belongs to a group of indeterminate people not previously connected, who are linked only by the factual circumstances of the specific instance. (Recognition of a right that belongs to an indeterminate group of people without legal personality is indeed a departure from traditional civil-law dogma). It is important to stress that the protection of diffuse rights does not preclude protection of individual rights. So, class members actually harmed by pollution or deceptive advertisement can still claim individual damages, individually or through a class action for individual damages.

A collective right is also transindividual and indivisible, but belongs to a specific group of persons linked to each other or to the opposing party by a legal relationship. However, there are cases of collective rights that are divisible into individual rights, the indivisibility arising only from the legal authorization to treat the controversy collectively, affording the possibility of a uniform and indivisible decision of the case. In these cases, there is little difference between collective rights and homogeneous individual rights.

The homogeneous individual rights are divisible individual rights with a common origin. Homogenous individual rights are the very same individual rights that have traditionally been known in the civil law system as “droits subjectifs”. “Common origin” is correlated to the broader but more precise notion of “common questions of law or fact”.

The Brazilian class action for individual damages is largely an “issue class action”, as opposed to its American counterpart, since its scope is limited to declaring the defendant’s liability. American class action experience, however, has shown that sometimes the calculation of individual damages can be relatively straightforward, such as when a formula may be devised, when statistical methods can be used, or when simply consulting the defendant’s records is enough to provide individual calculations of damages. Rather than the rule, as it is in Brazilian law, issue class actions should be the exception in class actions for individual damages and should be an option only in cases in which calculation of individual damages or the proof of causation cannot be achieve within the main class proceeding.

Collective Standing

Article 82 of the Brazilian Consume Code exclusively confers “standing” upon the Public Prosecution, the Federative Republic of Brazil, the states, municipalities, and the Federal District, administrative agencies, and private associations (nongovernmental organizations).  Now we have to add the Public Legal Defense. These entities can bring a class action alone or jointly.

To ensure fair treatment for absentee class members, the Code requires that the Public Prosecution be notified of the filing of any class suit and invited to intervene as an “overseer”. Moreover, any of the mentioned entities has the right to intervene to assist the original plaintiff.

Adequacy of representation is not so important in Brazil, because the individual rights of class member will not be compromised by a contrary decision. Moreover, there will be no res judicata at all if the action is lost due to insufficient evidence.

Associations must have been legally incorporated for at least one year. Prior authorization, recognition or certification by the government is not required, nor previous authorization from the general assembly of its members. Once an association initiates a class action in Brazil, the rights enjoyed by the entire group will be adjudicated in the action, and not only that of the associates.

Recent enacted legislation places restrictions on associations’ collective standing to bring suits against the government.

Although private associations have brought class actions, the Public Prosecution (state and federal branches) has played the primary role in protection of group rights in Brazil. Anyway, associations are the natural protectors of group rights, and it would be unwise to place this responsibility exclusively on the shoulders of public officials.

Res judicata

The primary differences between civil law and common law systems are most visible in the concept of “cause of action”, which has a much broader meaning in common law, as it refers to the whole controversy between the parties. The common law doctrine of res judicata includes both issue preclusion, also known as collateral estoppel, and claim preclusion. As a counterbalance to broad application of res judiciata, in limited situations, common-law courts can avoid the application of the strict rules of claim and issue preclusions if the particular circumstances of the case suggest that this is the most adequate course of actions. In contrast, in civil law systems the rules of res judicata are applied mechanically.

Article 103 of the Brazilian Consumer Code prescribes that a class action judgment shall bind all member of the class, but the decision cannot prejudice their individual rights. If the class action is decided against the group, class members are not prejudiced by the class judgment, and can bring their own individual actions in protection of their individual rights. If a class member had intervened in the class action, however, he or she will be bound by the unfavorable judgment. If the group looses, the group right will perish, and any additional class litigation on the same controversy is precluded.

There is no res judicata effect if the class claim is deemed groundless due to insufficient evidence. According to Brazilian commentators, it is imperative that the court expressly acknowledge  in the reasoning that the adverse decision was based on lack of evidence. In American Civil procedure it is a recognized rule that a court cannot predetermine the binding effects of its own judgments.  It is not necessary that the plaintiff demonstrate that the evidence was available and could not have been obtained with reasonable diligence for use in the first proceeding.

Lis Pendens

There are two types of lis pendens. The “true” lis pendens occurs whenever one group request identical relief in two or more class actions based on the same cause of actions. The diversity of representatives is irrelevant. The second type of lis pendens arises when a class suit is initiated upon the same factual issue as a corresponding individual action. If the defendant notifies the plaintiff, in the individual action, of the existence of a pending class action, the class member must decide within 30 days between persisting in individual action or requesting a stay of the individual proceeding. Only if he requests a stay he will benefit from a favorable decree in the class action.



[1] GIDI, Antonio. Class actions in Brazil: a model for Civil Law Countries. The American Journal of Comparative Law.  v. 51, n. 2 (Spring, 2003). pp. 311-408.

[2] Lei da ação Civil Pública, Lei n. 7.347, de 24 de julho de 1985.

[3] LEI Nº 8.078, de 11 de setembro de 1990.

Conselho Editorial

Dr. Carlos Alberto Molinaro
(PUCRS)
Dra. Elaine Harzheim Macedo
(PUCRS)
Dr. Humberto Dalla Bernardina Pinho (UERJ/UNESA)
Dr. Sérgio Cruz Arenhart
(UFPR)
Dr. Daniel Mitidiero
(UFRGS)
Dr. Fredie Didier Júnior
(UFBA)
Dr. Lúcio Delfino
(UNIUBE)

 Dr. Antonio Gidi

(Syracuse University College of Law - EUA)

Dr. Darci Guimarães Ribeiro
(Unisinos)
Dr. Gilberto Sturmer
(PUCRS)
Dr. Marco Felix Jobim
(PUCRS)