Companies can harm a large number of consumers with just a single act of misconduct. To prevent everyone from having to sue individually, the legislator in Germany introduced the model case procedure (Musterfeststellungsklage) in 2018. One lawsuit bundles together many aggrieved parties. If the proceedings end in a judgment or a settlement, the result applies to all participants.
Reports of unfair charges and unlawfully increased prices are sadly commonplace today, and more and more consumers are asking how they can get redress.
Lengthy court cases, the high costs of bringing legal action and the uncertainty of knowing whether the law has actually been violated are often enough to deter an individual from pursuing a claim. Consequently, very few consumers ever seek legal redress and companies get to keep whatever gain they have made by violating the law.
It is particularly galling when a company’s practices affect a large number of consumers. The model case procedure was introduced precisely for this type of mass harm event, in order to establish the key facts and answer the legal questions in one case which will then have effect for all consumers who have suffered loss.
The model case procedure makes obtaining legal redress in such cases more efficient and more cost-effective. Moreover, claims that would be too time-consuming and costly for an individual to pursue can be asserted more easily.
The model case is brought not by individual consumers but by a consumer organisation. The court examines whether the arguments presented by the organisation have merit, and rules on the case. Consumers can join the claim by enrolling in a claims register. This has the effect of suspending the limitation period for their claims while the court is hearing the model case.
That is important because at present, consumers’ claims frequently become time-barred before a court has ruled whether a company is in breach of applicable law. Once the case has been decided, the finding is binding for all registered consumers as if they had brought the claim themselves.
The model case procedure spares consumers muchof the court case and the associated effort andfinancial risk. Once a model case has been won, it will be considerably easier for the consumers affected to enforce their claims.
A model case can also be (partially) rejected. It is important to note that a ‘lost’ case is also binding upon all registered consumers in the same way as if they had brought the claim themselves. That means that the registered consumers cannot go back to court on their own to ask for a ruling on the issues that have been settled in the model case.
In a normal legal action, the plaintiff demands some kind of performance from the defendant. That is generally payment of a sum of money, but may sometimes be the recovery of a specific item or something else.
A model case is brought not by the individual consumers who have suffered harm, but by a consumer organisation. The purpose of this procedure is not to obtain individual relief, but to establish the general prerequisitesfor obtaining the relief, such as whether a certain fee has been unlawfully imposed. The aggrieved consumers can register in this procedure without having to bring an action themselves. The court’s findings then also apply to them (declaratory judgment).
Important: Only general questions that affect a large number of consumers can be decided in a model case proceeding. The special features of each individual case cannot be addressed because that would make the court case too lengthy and complicated. Questions such as the amount of compensation or refund in an individual case will therefore not be calculated in the model case proceeding.
f a mass damage event has occurred, the model case procedure makes it easier for the consumers concerned to enforce their payment claim against the responsible company or to defend themselves against an unjustified payment claim from a company.
At present, each individual consumer has to bring their own legal action in order to enforce their rights. The court case has to deal with all the issues in dispute, which may be complex legal questions or may require evidence to be provided that is expensive to obtain. Such proceedings can be very complex, time-consuming and expensive. If the consumer loses in court, he or she has to cover legal costs (court costs, lawyers’ fees and the cost of obtaining expert evidence) themselves, unless such costs are covered by a legal protection insurance.
The model case procedure spares the consumer much of this effort and expense. Instead of bringing an individual action, the consumer merely has to sign up to the model case. This has the effect of suspending expiry of their claim. Furthermore, the entire court case is binding for registered consumers, who do not have to bring their own claim. The consumer organisation bringing the action pays the full legal costs if the court finds in favour of the defendant.
If the court finds that the law has been infringed and that the defendant company has a fundamental obligation to pay damages, consumers then only have to provide evidence of the loss or damage they have personally suffered. The other – general – matters in dispute have already been ruled upon.
If the court does not find that the law has been broken and dismisses the action, consumers know that they do not have a claim. Had they brought their own case, they would now have to pay the full legal costs. But in a model case proceeding, the association bringing the action bears these costs alone.
Further information on the model case procedure as well as an overview of all current proceedings of the the Federation of German Consumer Organisations (Verbraucherzentrale Bundesverband e.V. – vzbv) and the consumer associations can be found online at www.musterfeststellungsklagen.de.
Please note that the site is only available in German.
EU collective redress
In December 2020, the EU representative action directive became applicable. It provides for consumer associations to sue for damages and other benefits for injured consumers in mass claims cases. The new legal action thus goes significantly beyond the German model case procedure and complements it in a meaningful way.
We will keep you informed about possible lawsuits in this section.