Onlne Lawsuits Fuel Debate in France


By LAURENCE FROST, AP Business Writer
Attorney Jean-Marc Goldnadel knew he was going to make waves when he
launched classaction.fr -- a French Web site that lets users sign up to
lawsuits online for as little as 12 euros ($14.50).
Sure enough, the site has ruffled France's traditionalist
establishment and raised the temperature of a debate on government
plans to let plaintiffs file U.S.-style class actions in French
courts.
But Maitre Goldnadel underestimated the backlash, and even several
consumer groups are trying to shut him down. A verdict is due next
month on their court challenge, the second against the site, and the
Paris Bar Council is scouring its pages for ethics breaches.
Opponents of the government's plans have also seized on classaction.fr
as evidence that a class action law would encourage the kind of
"excesses" that the United States is now trying to curb: ambulance-
chasing lawyers, ruinous damages awards and spurious lawsuits used to
blackmail companies into settlements.
"This is grist for our mill," said Joelle Simon, head of legal affairs
at France's main employers' organization, Medef. "This is exactly what
we don't want -- we have no desire to see this kind of practice become
widespread."
President Jacques Chirac announced the introduction of class actions
earlier this year, but Simon, who represents Medef on a government
advisory panel, cautions that France would do well to avoid the
U.S. model.
"It's an incitement to blackmail," she said. "We know what the
American system costs their economy, and that is one import we can
really do without."
Just as class action lawsuits arrive in Europe -- Britain and Sweden
have recently opened their courts to limited forms of class actions
and Italy is considering them -- Washington has been taking steps to
rein them in.
U.S. President George W. Bush signed a law in February making it
harder to file "junk lawsuits" that stand little chance of winning in
court, but sometimes scare companies into settling anyway. Such suits
drove overall U.S. legal costs to $240 billion last year, Bush said.
But French consumer groups say class actions are the only way to
obtain justice when, for instance, a company overbills thousands of
customers by a few hundred euros (dollars) each -- hardly worth suing
for individually.
Whereas a single U.S. consumer can file a class action covering all
those who have suffered the same prejudice, French attorneys need a
signed mandate from each litigant. Rules barring them from advertising
or approaching prospective clients make it almost impossible to gather
plaintiffs.
Goldnadel and his associates work around the restrictions by getting
the clients to come to them. Close to 1,000 plaintiffs have signed up
online for two pending lawsuits.
The first accuses movie distributors of breaching consumer rights by
copy-protecting DVDs; the second seeks damages for misleading
financial information allegedly given to Vivendi Universal SA
shareholders.
But French consumer organization UFC-Que Choisir and four smaller
groups are accusing classaction.fr of unlawfully recruiting clients
and requiring plaintiffs to cede control of settlement decisions.
The site tells visitors who have bought DVDs that "you have suffered
the following prejudices, for which we are demanding damages in
court." It goes on to outline the case, inviting users to click on a
flashing red button to sign up and enter credit card details. Fees
start at 12 euros up front, plus 40 percent of any damages won.
Goldnadel is confident that he is operating within the law. "There is
nothing outrageous about telling people they've suffered a prejudice
in a certain way," he said in an interview.
"It is an attorney's job to do that -- it's not ambulance-chasing."
Despite its case against the site, UFC-Que Choisir is pushing for a
U.S.-style class action procedure in France that automatically covers
all potential victims unless they opt out.
French employers would rather see a more limited "opt-in" system
obliging attorneys to collect mandates from every plaintiff -- as
classaction.fr currently does. "If a company's involved in a court
case, it should know who it is up against," said Medef's Simon.
Others argue that the more powerful class action procedure would
actually help corporations contain litigation risk.
"It is in companies' interests to have an opt-out system," said
Paris-based attorney Ron Soffer, who is also qualified at the New York
bar.
An opt-out suit usually covers the "vast majority" of possible
plaintiffs, Soffer said. "Once it settles with the class, the company
has basically settled the entire case and will probably never hear of
it again."
But such a major step could require changes to existing French laws as
well as to the constitution. While the government is keeping quiet
before the working group makes its recommendations, expected this
month, comments by ministers suggest their approach will be gentler.
Finance Minister Thierry Breton has said the government is keen to
avoid the "abuse" of class actions seen in the United States. Their
introduction will go ahead "in a French context and in a more
controlled way," he told reporters recently.
"It is a wonderful business for the lawyers, but not always for the
consumer."
Copyright 2005 The Associated Press.
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