The law, which required an amendment to Mexico’s constitution, will allow consumers to bring class action lawsuits in Mexico for the first time.
Under the law, groups of at least 30 people can obtain restitution or compensation of damages, and injunctive relief, through consumer products and services claims, environmental claims and some financial services and antitrust claims.
The law splits claims into three categories of class actions:
- Diffuse actions, which protect rights that belong to society in general, not to any individual (for example, environmental claims);
- Collective actions, which protect rights that belong to a group of persons linked by a non-contractual relationship (for example, many consumer protection cases); and
- Homogeneous individual rights actions, which protect a group linked by a contractual relationship (for example, standard form contract cases)
The most significant aspect of the new law concerns the short time frames that defendants have to submit their arguments and evidence.
For example, defendants have only a small 5-day period in which they must take a position as to whether a class should be admissible. Additionally, parties only have a 60- to 80-day discovery period before trial, and trials can’t exceed 40 days.
The short time frames put a heavy burden on defendants to respond quickly to complaints.
To control the overflow of class actions and hedge against possible abuse, the law features a modified loser-pays rule that could deter frivolous claims.
Mexico’s law also features a catchall provision that, loosely translated, permits judges to refuse class action treatment if it would be improper under the circumstances
As Inside Counsel notes, although the law affords some protection to businesses, companies that operate in Mexico should understand the law’s structure and the possibility of increased litigation.
While it will be difficult for U.S. companies to anticipate how Mexico’s new class action law will affect business and how Mexican courts will interpret the law, it will be important to monitor the country’s federal and private agencies, which have standing to bring class actions under the law.
As the D&O Diary comments in the post, Class Actions in Australia and Mexico, the new law is significant tool in the hands of private litigants, consumers’ rights groups, as well as governmental entities
For an in-depth discussion on the impact of Mexico’s new class action law, I recommend the video below . The panel of experts provide an overview of the new law along with insights into the many legal issues the Mexican courts will need to address.
The panel also discusses how companies doing business in Mexico can prepare for the potential risks of class action abuse.