First European consumer class-action: nuclear verdicts on the horizon?

To improve consumers' access to justice and avoid abusive litigation, the European Union has introduced the possibility for consumers to join forces with one single representative action, including the possibility of bringing both domestic and cross-border legal actions. Cross-border actions can be brought by qualified entities, which, for example, include many member state's consumer protection authorities, as well as Max Schrem's donation-funded organization NOYB. RAD is applicable to over sixty different regulations and directives, including the ones mentioned above. Not only can we expect consumer disputes to increase in number, but the consequences of one proceeding may be detrimental to businesses operating within the union.

For the first time, RAD has been used to bring a claim against the MedTech company Philips. The claim has been initiated by lawyers from the Global Justice Network and the Italian consumer association ADUSBEF. According to the filing, the class action seeks compensation for over 1.2 million users of a sleep therapy device and mechanical ventilators marketed by Philips for over a decade.  The claim arose after Philips had announced health risks of inhaling powder made of a toxic substance, with respect to the medical devices in question. The devices were recalled on a global scale, and Philips has already settled a similar matter in the US for 1.1 billion USD. Whereas this time, Philips is facing a request of 84 billion EUR from the complainants. 

This case certainly has sensitive characteristics, both with respect to the nature of the product and the severity of the consequences of such a product being faulty. Nevertheless, this is likely to draw attention to RAD on a union-wide basis, and that is why it is advisable to prepare your business.

The most important factor is to uphold strong compliance with consumer laws, including to monitor new judgements and guidelines to stay best in class. Compliance should preferably be "front-loaded" (i.e. through early and thorough going-to-market analysis prior to launch) and evidence based; hence it is advisable to document and assess risks associated with consumer products and services on a regular basis. 

To avoid dissatisfaction and disappointment on a larger scale, consider implementing an effective customer service. This can include prompt responses to consumer complaints, monitoring recurring issues, and keeping a close eye on online discussions and forums related to your business.

The above measures should not only be isolated to your business, but the entire chain of suppliers and retailers. Even if another entity is subject to a potential proceeding under RAD, you wouldn't want your trademark to be mentioned. Consider protecting your goodwill and reputation with contractual measures and setting up a joint reporting system to monitor consumer dissatisfaction across all markets. 

At Schjødt, we routinely assist clients as a one-stop-shop on all aspects from early-stage R&D to full-scale commercialization and market analysis. Should you have any questions or would like further input, contact our Scandinavian cross-border team of specialists within advisory and dispute resolution.