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French government to introduce legislation to allow class actions


PARIS—The newly elected French president has put reform of France's consumer protection laws--and the possibility of class-action style lawsuits--back on the political agenda.

The government plans to draft new legislation that would allow class-action lawsuits by the end of the year.

In a July letter, French President Nicolas Sarkozy instructed his minister of economy, finance and employment, Christine Lagarde, to prepare a series of measures to modernize the French economy, among them "class actions à la Française," as part of consumer-protection legislation.

The potential introduction of class-action style lawsuits was a contentious issue in the run-up to this year's presidential elections.

In January, the government of then-Prime Minister Dominque de Villepin, a fellow member of Mr. Sarkozy's conservative Union pour un Mouvement Populaire party, withdrew a bill including a form of class action about to be considered by Parliament.

The bill had been fiercely resisted by business and insurance representatives, but criticized as being too weak by consumer groups.

While consumer groups this month welcomed news of a reinvigorated class-action project, business representatives reserved judgment.

"We will be paying particular attention, but we need to know what (the government) plans to put into the law before we weigh in with an opinion," said Gerard Lancner, newly elected president of the Assn. pour le Management des Risques et des Assurances de l'Entreprise.

Consumer representatives, however, welcomed the government's move.

Cedric Musso, manager for institutional relations at French consumer body Union Federale des Consommateurs--Que Choisir, was one of several consumer group representatives to meet in July with Luc Chatel, secretary of state in charge of consumer affairs and tourism under Ms. Lagarde's ministry, to discuss plans for consumer legislation.

"Mr. Chatel's involvement, which Mr. Sarkozy encouraging because, as a UMP deputy in Parliament last year, he proposed a real class-action bill that included many of the features we think are necessary, including the opt-out principle, and with no limits placed on damages," said Mr. Musso.

An opt-out principle allows consumers to benefit from a class action without having to formally join it or appear before a judge, as the bill abandoned in January would have required.

Businesses are not likely to support an opt-out principle "because they know they will have to compensate all damages caused by their errors," said Mr. Musso.

Under the bill abandoned in January, judges could only hear complaints for consumer goods linked to a contract and only cases filed by government-approved consumer organizations, with damages capped at e2,000 ($2,720).

"We are hoping for a law that resembles the one Mr. Chatel proposed last year," said Mr. Musso. He added: "We don't want an American law with its excesses--no contingency fees for lawyers or elected judges and jury trials. There would be a series of brakes on abuses with professional judges."

A spokeswoman for Mr. Chatel noted that "Mr. Chatel is a government official now. He will solicit consumer associations' help as he drafts new consumer-protection legislation. However, it is unlikely to be the same text as he proposed as a member of Parliament."