Consumer advocates outraged after top court rejects class action lawsuit against Facebook

France's digital ambassador said the country will favour EU legislation to crack down on terrorists' use of social media platforms. France, the UK and Germany have led Europe's push to force tech giants to remove content promoting terrorism. [Marco Paköeningrat/Flickr]

Consumer advocates have urged the European Commission to propose legislation allowing for collective EU lawsuits after the bloc’s top court rejected a class action against Facebook on Thursday (25 January).

The US tech giant celebrated a partial victory after the European Court of Justice ruled that Austrian privacy lawyer Max Schrems could not represent 25,000 consumers in a lawsuit against the company.

The court argued that Schrems could not use “the consumer forum for the purposes of a collective action” but could only sue Facebook on his own. The other complainants each have their own contractual relationship with Facebook and cannot be represented by another person, according to the ruling.

Schrems filed the class action in 2014 with consumers from different countries, arguing that the social media company does not respect EU data protection law.

He said the decision “massively limited consumer rights in this case and missed a golden opportunity to finally allow collective redress in Europe.”

The ECJ’s finding has caused outrage among consumer groups that have campaigned for years for the Commission to propose legislation allowing for EU-level class action lawsuits involving complainants from different member states. They argue that collective redress will make it easier and cheaper for consumer to sue.

Monique Goyens, director of the European Consumer Organisation, called the ECJ decision “another stark illustration that there are legal and procedural barriers which prevent people from seeking collective access to justice”.

“A genuine European collective redress tool would shift the balance back in favour of the consumer,” Goyens added.

The Commission has been under pressure to create EU legislation for class action lawsuits since it emerged in 2015 that Volkswagen had cheated on emissions tests, affecting an estimated 8 million cars in Europe. Consumer groups announced last year that they are suing Volkswagen in a German court, but car owners affected by the diesel cheating still cannot join together as part of an EU lawsuit.

That could change soon. EU Justice Commissioner Vera Jourova is expected to propose legislation in April that will create a new model for collective redress. The Commission is expected to publish a report within the coming weeks detailing the options currently available in member states for consumers to sue collectively.

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According to data from the European Consumer Organisation, only five member states have legal procedures that allow consumer groups to file lawsuits: Belgium, Italy, Portugal, Sweden and Spain.

The organisation has a blacklist of nine member states—Cyprus, the Czech Republic, Greece, Hungary, Ireland, Latvia, Luxembourg and Slovakia—that have “no procedure or a procedure that cannot be efficiently used for consumers to get compensation” from companies.

In addition to the new rules for collective redress, it will soon become much easier for groups of consumers to file class action privacy lawsuits. When the sweeping new data protection regulation takes effect on 25 May, consumers will get the right to have a non-profit organisation  represent them in court if they sue companies that mishandle their personal data.

After Thursday’s decision, Facebook expressed relief that it will be spared a legal battle against 25,000 of its users.

A spokesperson for the company said in a statement, “We were pleased to have been able to present our case to the European Court of Justice and now look forward to resolving this matter.”

But the court ruled partially in Schrems’ favour, and rejected Facebook’s claim that he could not sue as an individual consumer because he had commercial links to privacy cases. He can now continue with his own lawsuit against the company in Austria.

Schrems was previously responsible for a different legal blow to Facebook. His complaint against the company’s transfer of personal data from the EU to the United States ended in a 2015 ECJ decision that toppled the Safe Harbour agreement for data transfers.

The court argued that the US did not respect the EU’s tough privacy standards. Safe Harbour was replaced in July 2017 by the EU-US Privacy Shield agreement.

Schrems recently announced that he will start up a new NGO in May that will focus on helping consumers file privacy-related lawsuits.

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