In November 2024, the German Federal Court of Justice made its first decision within the new leading decision procedure, which is intended to simplify mass proceedings. Another new procedural tool is the redress action. In future, companies therefore run the risk of several similar claims being enforced much more quickly and cost-effectively.
Mass proceedings with thousands of plaintiffs are a challenge for the judiciary. If, for example, unlawful clauses are used in contracts with internet providers, fitness studios, or insurers, numerous customers are often affected by the same legal issues, meaning that legal mass proceedings in the market have increased exponentially. A recent prominent example is the diesel engine emissions issue and the associated wave of lawsuits against car manufacturers. In this context, over 5,000 proceedings were pending at the German Federal Court of Justice (FCJ) in December 2023. Another, more recent example is an incident in which it was possible to access the personal data of 533 million Facebook users worldwide through scraping in 2018 and 2019. This data was subsequently made public on the darknet in April 2021. There are currently 25 further appeals pending before the recognizing senate of the Federal Court of Justice regarding the scraping incident. More than 6,000 parallel proceedings are still pending in the factual instances at various courts (BGH NJW 2024, 3595).
Without clarification from the highest court, the lower courts constantly have to deal with new proceedings on similar issues. To date, the FCJ has not even been able to decide in the case of settlements or withdrawals of claims. In some cases, this was also used by the parties as a procedural tactic. For this reason, the new so-called "leading decision procedure" (Leitentscheidungsverfahren) now gives the FCJ the opportunity to decide fundamental legal issues on its own initiative without taking into account any other settlement of the proceedings referred to. The new leading decision procedure is therefore an important element in being able to settle such proceedings even more efficiently in future. This will primarily benefit consumers but also the judiciary, as it will enable the courts of lower instances to make faster and more uniform decisions.
The FCJ may, after receipt of an appeal on points of law (Revisionsverfahren) or after the expiry of one month after service of the grounds of appeal, determine the appeal proceedings to be the leading decision proceedings by order. The leading decision procedure can also be carried out without the participation of the parties to the underlying legal dispute. As already mentioned, this ensures that the parties cannot prevent or delay the FCJ from dealing with individual legal issues that are important for mass proceedings through procedural tactics. The decision of the FCJ has no procedural significance of its own. In itself, it is an "obiter dictum" provided for by law (i.e., a legal opinion that does not support a specific decision in an individual case and was only expressed on occasion). It is therefore a clarification of certain legal issues as guidance for the courts of lower instances in pending or future parallel proceedings. In addition, this has the consequence that the underlying legal issues are no longer of fundamental importance. As a result, an appeal in subsequent proceedings is regularly ruled out without a renewed need for clarification.
Previously, proceedings at the lower instances could not be suspended on the basis of an anticipatory effect, as parallel appeal proceedings do not justify such an anticipatory effect. With regard to the leading decision procedure, however, there is now the possibility of such anticipation and thus suspension, which flanks the significance of the leading decision for proceedings still pending in the instances. As a result, this can also prevent large volumes of uniform proceedings that are to be decided in the same way from accumulating at the FCJ and making it considerably more difficult to process them there.
Another procedural instrument for dealing with mass proceedings was introduced by the Act on the Implementation of the EU Directive on Representative Actions, which came into force on October 13, 2023. This act’s central component is the introduction of a new representative action for performance (so-called redress action), which is regulated together with the previously existing model declaratory action in the newly created Consumer Rights Enforcement Act (VDuG).
Representative actions within the meaning of the VDuG can be brought in civil disputes concerning the claims and legal relationships of many consumers against a business, whereby small businesses are also entitled to bring an action. This includes, for example, the areas of data protection, environmental, social, and governance (ESG), antitrust damages, product liability, and tort law in general. The higher regional court in whose district the general place of jurisdiction of the sued company is located has jurisdiction. With the new redress action, these proceedings can be dealt with even more efficiently by the courts in future. Consumers will therefore be able to obtain their rights more quickly.
Previously, claimants with similar cases either had to take legal action themselves or they could register for a model declaratory action. However, the prerequisite for this is that a consumer association actually brings such an action. If the claimant association is successful, the essential requirements of the claim are bindingly established. However, as this was merely an action for declaratory judgment and no performance was awarded, it was not possible to enforce the claim if the company sued refused to perform. A further action was therefore necessary, for example, for damages. This was not only a burden for the individual, but also for the judiciary. After all, the same conflict had to be dealt with several times in court.
With the help of the redress action, consumer associations can now sue directly for the fulfillment of consumer claims. The court then determines a total amount for all claims asserted. Distribution is then carried out by a court-appointed administrator. This means that consumers do not have to sue again themselves if they are successful but receive the money to which they are entitled as part of the redress action.
Violations of the law in today's world do not affect the legal sphere of one individual but a large number of individuals. The rule of law must find ways and means to help individuals obtain justice more quickly in the event of mass violations of the law. At the same time, the capacities of the judiciary must be taken into account. The leading decision procedure and the redress action as new procedural means attempt to do justice to this reality. It remains to be seen how often these proceedings will be taken up in practice by associations and the judiciary in the future. Irrespective of this, companies are advised to familiarize themselves with the new procedures in order to be able to identify any procedural risks in their own business structure at an early stage and prepare themselves.
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