Facebook shouldn't face collective-action lawsuits in EU, top court opinion says

14 November 2017 11:40am
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14 November 2017. By Magnus Franklin.

Facebook has secured a preliminary victory at the EU's highest court in rebuffing a collective consumer lawsuit against it.

Austrian lawyer Maximilian Schrems can bring his own data-protection case against Facebook in Austria but can’t represent users in other EU countries, Advocate General Michal Bobek said in an opinion for the EU Court of Justice.

"A consumer who is entitled to sue his foreign contact partner in his own place of domicile, cannot invoke, at the same time as his own claims, claims on the same subject assigned by other consumers," Bobek said.

The opinion isn’t binding, but offers an expert view of how EU law could be interpreted in such a case. The court will hand down a final ruling at a later stage.

Bobek's opinion is a preliminary victory for Facebook that warned the court against a wave of "forum-shopping" among consumers, who would pick the jurisdiction where they were more likely to win the case.

Jurisdiction targeting

Bobek said that allowing collective actions would allow plaintiffs to “concentrate claims in one jurisdiction” and “choose the place of the more favorable courts, by assigning all claims to a consumer domiciled in that jurisdiction."

"Today’s opinion supports the decisions of two courts that Mr. Schrems’s claims cannot proceed as a 'class action' on behalf of other consumers in Austrian courts,” a Facebook spokeswoman said.

"It could lead to unrestrained targeted assignment to consumers in any jurisdiction with more favorable case law, lower costs or more generous jurisdictional aid, potentially leading to the overburdening of some jurisdictions," Bobek’s opinion said.

Schrems, who made his claim on behalf of around 25,000 Facebook users in Austria, in other EU countries and India, said consumers should be allowed to sue the social network in any EU country.

"The opinion by the advocate general on the admissibility of the class action, is unfortunately hard to understand," Schrems said in response to the opinion.

"The consequence would be that thousands of courts in the whole European Union would have to deal with an identical, but local lawsuit against Facebook," he said.

Schrems says the social-media company broke EU privacy rules and that certain contracts between Facebook and its users are invalid in the light of EU rules governing consumer contracts. He sought an average amount of 500 euros ($586) in damages for each Facebook user that assigned their claim to him.

Consumer status

Bobek sided with Schrems on another part of the case: whether he is allowed to challenge Facebook under consumer-protection rules before Austrian courts. Even though he used his personal page on the site to carry out certain professional activities, "consumer status as a general rule depends on the nature and the aim of the contract at the time it was concluded," Bobek said.

As a result, Schrems was within his rights to challenge the social network's data-transfer policy as a consumer issue, and it will be for the Austrian courts to verify that Schrems indeed signed up to the service as a consumer rather than a professional user.

Bobek said that "well designed and implemented" collective redress systems may "provide further systemic benefits to the judicial system." However, it is for EU lawmakers to develop such a system, and not for the EU courts on the basis of existing laws, the advocate general said.

The case number is C-498/16.

CCPA Report