Double jeopardy in Volkswagen cases - CJEU in Volkswagen Group Italia and Volkswagen Aktiengesellschaft (C-27/22)

Last Thursday the CJEU adjudicated in the Volkswagen Group Italia and Volkswagen Aktiengesellschaft case (C-27/22 - see here). We have previously written about the Volkswagen scandal on the blog (see here) - that is, on the unfair commercial practice that Volkswagen engaged in by installing a defeat device in its cars, which led to marketing them as more environmentally-friendly in 2009. As our past blog posts mention, various national authorities were active in their investigation of Volkswagen's conduct. And here lies the problem that the CJEU tackled in this new case: Could different national procedures against Volkswagen (for the breach of consumer protection rules, esp. prohibition of unfair commercial practices) breach the principle of ne bis in idem? 

Eliott Van Buggenhout on Unsplash

Two national authorities' decisions were at stake here. The Italian authority (AGCM) imposed a fine of 5 million Euro on Volkswagen in August 2016 for the unfair marketing practices in Italy. This decision was promptly challenged in court by Volkswagen. Then, the German authority (Public Prosecutor's Office of Braunschweig) imposed a fine of 1 billion Euro for the 'negligent breach of the duty of supervision' in developing and installing relevant software worldwide. Volkswagen did not challenge this decision and paid the fine, which means it became final in June 2018. Part of the German decision indicated that the amount of 5 million Euro from the total fine would indeed penalise for the conduct mentioned in the Italian decision, whilst the rest of the fine aimed at taking away the economic advantage that Volkswagen derived from engaging in the unfair practice (para 19). This then led to Volkswagen claiming that the Italian authority's decision infringes the principle of ne bis in idem (embedded in Article 50 of the Charter of Fundamental Rights), as it would duplicate the penalty for the same acts against the same person when it became final. To be able to claim this, Volkswagen argued that administrative fines placed on it were of a criminal nature. 

The Court of Justice agreed that administrative fines for breach of unfair commercial practices may be of a criminal nature. What is necessary is that the penalty has a punitive aim and a high degree of severity (determined on the basis of its amount compared to maximum allowed penalty under relevant provisions) (paras 45, 53-54). If these criteria are fulfilled, the penalty should be seen as of a criminal nature, even if national law classifies it as an administrative penalty (para 48). The Court mentions that if the fine was merely trying to repair the damage (possibly take away the unfair advantage), then it would be unlikely that it had a punitive or deterrent character, which characterises criminal sanctions (para 49). However, e.g. the fact that there is a maximum amount that can be set as a fine suggests that it would not always allow for taking away the achieved unfair advantage (para 52).

Consequently, if the Italian and German procedures penalise Volkswagen on the basis of identical material facts, not just similar facts and regardless of the national legal qualification of these facts, Italian law would not be able to allow for maintaining of the proceedings (paras 66-67, 70). This would indeed infringe the principle of ne bis in idem. This would only be different if the following three conditions were satisfied (para 96): 1) duplication of proceedings would not excessively burden Volkswagen (interestingly, since the Italian fine amounts to only 0.5% of the German fine, CJEU would not consider awarding it alongside the German fine as an excessive burden - para 97); 2) there needs to be transparency and predictability of which acts or omissions could be subject to duplication of proceedings (could Volkswagen predict then that their practices could give rise to proceedings in various countries? - para 98); 3) proceedings should be duplicated within a proximate timeframe and coordinated (and it seems that the Italian authority did not engage in any attempts initiated by the German authority to coordinate these proceedings - paras 101-102).

Consumer organisations may bring actions concerning the protection of personal data - CJEU in Meta Platforms Ireland (C-319/20)

A brief update on Meta Platforms Ireland case: on April 28, 2022, the CJEU issued a judgment confirming that consumer protection organisations can bring actions in data breach cases under the GDPR. The Court thus endorsed the position of Advocate General Jean Richard de la Tour, which we reported on earlier.

As a reminder - under Article 80(1) of the GDPR, an organisation or association may lodge a complaint with a supervisory authority or bring an action before a court if the rights of a data subject have been violated as a result of improper processing of personal data. In such a case, the organisation or association should be authorized to act on behalf of the specific individual. However, pursuant to Article 80(2) of the GDPR, Member States may introduce appropriate provisions generally authorizing organisations or associations to take such actions - regardless of the authorization given by a specific individual. The condition is that such an organisation or association must be properly constituted in accordance with the national law, have statutory objectives which are in the public interest, and should be active in the field of the protection of data subjects' rights and freedoms with regard to the protection of their personal data [see Article 80(1) of the GDPR].

The legislation thus allows various entities to take action regardless of whether or not they are acting on behalf of a specific person. Consequently, in the Court's view, such an entity does not need to identify individually in advance the persons whose personal data is being processed in breach of the GDPR. The mere identification of a category or group of persons is sufficient (para. 69). Nor does the bringing of an action require the existence of a specific violation of rights under the GDPR (para. 70). An indication that the processing is likely to affect the rights of persons is sufficient, without the need to prove actual harm suffered by a specific person in a specific situation. In conclusion, the Court stated that this approach is intended to foster the strengthening of individuals' rights in relation to the processing of their personal data and generally contribute to ensuring a high level of protection of personal data. And since a breach of data protection rules may at the same time lead to a breach of consumer protection or unfair commercial practices prohibition rules (as was the case here), it would seem that consumer organisations are entitled to take appropriate actions. Provided, of course, that they act on the basis of the relevant provisions adopted by the Member State according to the Article 80 of the GDPR. 

EU Justice Scoreboard 2021

Today, 8^th of July, the EU Commission released the 2021 EU Justice Scoreboard (here). The Scoreboard is a comparative information tool, and it presents an annual overview of indicators measuring the efficiency, quality, and independence of justice systems in the EU.

According to the Scoreboard, ‘[a]n efficient justice system manages its caseload and backlog of cases, and delivers its decisions without undue delay’. The report presents data on the efficiency of consumer law litigation. In particular, the report shows data on the average length of judicial review cases against decisions of consumer protection authorities applying EU law (regarding the enforcement of the Unfair Terms Directive, the Consumer Sales Directive, the Unfair Commercial Practices Directive, and the Consumer Rights Directive). The data allows for a comparison between 2013, 2016, 2018, and 2019. The most recent data (2019) shows that the Member States where consumer litigation takes the longest are Cyprus (around 1800 days, approximately 5 years), Greece (around 1700 days, approximately 4,5 years); and Poland (around 900 days, approximately 2,5 years). On the other hand, the Member States where consumer litigation is the fastest are Hungary (around 100 days, or 3,3 months), Lithuania (around 150 days, or 5 months), and Romania (around 160 days, or 5,3 months). Even though these results are not representative of all EU Member States (for example, Germany, Luxembourg, and Austria were not included in the study because consumer authorities do not have the power to decide on consumer law infringements), one of the conclusions to take is the stark difference in the length of enforcement of consumer rights within the EU. Nevertheless, several represented Member States achieved faster procedures than when compared to 2016 (with the exceptions of, for example, Slovenia and Poland).

Additionally, the report presents data on the length of proceedings by consumer authorities, including decisions declaring infringements of substantive rules, interim measures, and cease and desist orders (regarding the same Directives). The data presented also covers 2013, 2016, 2018, and 2019. In 2019, among the Member States where consumer authorities take the longest to decide, there is Poland (around 600 days, or approximately 1,6 years), Greece (around 350 days, or 1 year), and Slovakia (around 200 days, or approximately 6,6 months). It is interesting to note the parallel with the length of court procedures presented above. On the other hand, among the Member States where consumer authorities are fastest to decide, there is Romania (around 20 days), Estonia (around 20 days), and Slovenia (around 20 days).

It is also noteworthy that, when measuring the quality of justice systems, the Scoreboard shows data on legal aid in consumer claims of 6 000 euros. It is worrying that, in 2020, several Member States (including France, Slovakia, and Romania) may not consider people with an income below the poverty threshold as eligible for any type of legal aid (partial or total). The Scoreboard includes many more interesting insights, and it is definitely worth a read.

CJEU on jurisdiction in Dieselgate disputes: C‑343/19, VKI v Volkswagen

Dear readers, 

as many of us prepare to enjoy some well-deserved holidays, we should not neglect to pay attention to a judgment by the Court of Justice from this week which can have important consequences on Dieselgate litigation. 

Since the scandal known as Dieselgate emerged a few years ago, several individuals, consumer organisations and law firms have started actions against Volkswagen to claim damages or other remedies in connection with the company's emissions fraud. While national courts are gradually also starting to render important decisions on the subject, this week the Court of Justice had to answer an important question: which national courts have jurisdiction to adjudicate on actions for damages brought by disappointed consumers?

image: pikist.com

Under article 7.2 of the so-called Brussels I regulation (n 1215/2012), a person domiciled in a Member State can be sued in a different member state, in tort cases, when this is the place where the "harmful event" has occurred or may occurred. 

In the case of Dieselgate claims, the referring Austrian court doubted what would have to be considered as the harmful event: is it the installation of a "defeat device" making the car's tracking of emissions unreliable, or is it, as claimed by the plaintiffs, the place where the defective vehicle has been purchased?

Recalling its earlier case-law, the CJEU (para 23) asserted that the concept of the "place where the harmful even occurred" covers both the place where the damage has occurred and the place where the damage-generating event took place.

The damage suffered by the buyers emerged immediately with the purchase of a vehicle whose value was lower than the price paid due to its defect and was not purely financial loss exactly because the vehicle was defective (para 35). For this reason, the damage emerging at the moment of purchasing the vehicle is suitable for establishing jurisdiction in the MS where the contract was concluded - in this case, Austria. 

According to the Court, this outcome does not undermine legal certainty as a manufacturer who sells in several Member States can expect to be sued in these MS and because, given the nature of the damage, courts of the state in which the contract has been concluded will be best placed to investigate the loss. Indeed, the CJEU observes, the possible loss of market price of the defeat vehicles depends very much on local market conditions, which means that courts of the MS where the original sale has been made can assess whether the consumer has suffered a loss of value. 

By taking away exceptions of jurisdiction, the CJEU has thus cleared one of the stumbling stones standing between consumers and effective remedies in this interesting saga. 

CJEU in Fashion ID (C-40/17): some consequences of embedding social plugins

Yesterday, the CJEU published its judgment in Fashion ID, a case concerning mainly the notion of "controller" under EU data protection law.

The facts of the case are relatively simple: Fashion ID had placed a "like" button on its website which was connected to Facebook. What Fashion ID's customers may not realise is that - even if they did not use it - the button's presence meant that information concerning them was being transmitted to Facebook. In the proceedings it was uncontested that this information qualified as personal data.

Verbraucherzentrale NRW, a consumer association, brought an injunction against Fashion ID demanding that it abandon such practice. The question whether Fashion ID has any obligations in connection with the data processing - including the duty to inform consumers that their data are being collected and/or require their consent - depends on whether the website is to be considered a data controller.

The referring court doubted whether this is the case since the website operator has no control over the processing of the data transmitted to the plugin provider (para 37).

The Court, in essence, answered that the operator of the website acts as a controller, and is thus responsible for informing the consumer or collecting their consent, insofar as the collection of information and transmission to Facebook is concerned. In particular concerning the collection of the user's consent, the court highlighted that it would not be in line with efficient and timely protection of the subject's rights if the consent would be given only to the second controller, which is involved at a later stage (para 102). Even more strongly, when a customer is not a Facebook user, their data will be processed by the social media operator without them having any direct connection to the latter- which makes the responsibility of the other provider all the greater (para 83).

However, the website operator is not responsible vis à vis the data subjects for any other uses that Facebook itself will make of the data, nor for collecting their consent in that respect (para 102).

While the website has no control on the use of the transmitted data, the purpose of such collection is in part related to the website's benefit as it allows better promotion of its products (para 77-81).

As concerns the collection of data without the subject's consent - ie data that is necessary for the pursuit of a legitimate interest - the court importantly clarified that where both the website and the provider of the social plugin are controllers, they must both be pursuing a legitimate interest for the ground of processing to apply (para 96).

The decision interprets relevant provisions in the "old" Data pProtection directive, which has meanwhile been replaced by the GDPR - but the concepts that it deals with have been kept in the Regulation, so the decision can be transposed to the new rules.

Quite unsurprisingly, the Court rejected Fashion ID's claim that consumer associations would not be entitled to bring any claims under data protection rules - while article 80(2) of the GDPR quite

famously invites MS to set collective enforcement mechanisms, nothing in the previous directive, which only contained general indications on enforcement, can be seen to stand in the way of Member States allowing consumer associations to bring such claims (see in particular paras 57-62).

The Court seems to be aware of the potentially high-profile nature of this case and has accompanied the publication of its decision with a press release. 

CJEU on equivalence as to consumer associations' intervention in individual proceedings (C-448/17)

One of the latest instalments in unfair terms adjudication was delivered yesterday by the Court of Justice in case C-448/17 (EOS KSI Slovensko), concerning a Slovak consumer who had concluded a consumer credit contract. 

In this case, the most prominent substantive problem with the contract itself was that it did not mention the APR. Only a mathematical formula was provided, with no further information that would allow the consumer to calculate the applicable rate. 

The creditor - a debt recovery company - sought an order for payment, which was granted though a procedure taking place on the basis of documental evidence, without a hearing. Under Slovakian law, this procedure involved not a judge but a civil clerk. Once the order was granted, without any assessment being carried out under unfair terms rules, nor consideration being given to the lack of APR, the consumer had 15 days to file their opposition. This, in turn, required an indication of substantive reasons for opposing enforcement. 

Intervention by an interested consumer association was rejected in follow-up proceedings on the basis of the fact that previous action by the consumer was required before other interested parties could intervene - in other words, the association could intervene in a case that was already pending thanks to the consumer's action, but not initiate a new case. 

A Slovak court took stakes with a number of issues in the scenario above: 

First, it asked whether it was open to Slovak law to restrict the possibility for interventions by consumer associations in the way it did, in particular in light of the fact that for claims regulated entirely by "Slovak" (vis à vis "European") law the criteria for considering a case to be pending are looser than in cases where EU consumer law plays a role. 

The Court of Justice answered this question by, on the one hand, re-affirming that article 7 of the UCTD does not require member states to allow consumer associations to intervene in individual proceedings (para 41 - no problems, thus, on the effectiveness front); on the other hand, the Court recalls, in these cases the member states are anyhow bound by the principles of effectiveness and equivalence. In particular, the latter principle precludes a national legislation which sets different pendency requirements for purely "national" cases and cases connected to EU (consumer) law. Thus, should the national court indeed find the existence of one such difference here, the stricter pendency rule would be incompatible with EU law (para 40). 

Second, the referring court asked the CJEU to test the procedure for granting the order for payment and, subsequently, the enforcement, for compatibility with the Directive. The CJEU recalls its previous case-law to the effect that the absence of unfairness assessment in the order for payment procedure is not per se problematic as long as the consumer is protected by the possibility of (ex officio) unfair terms control at the stage of enforcement.  However, insofar as Slovak law requires the debtor to file a motivated objection within 15 days, there is a concrete risk that no assessment will take place since the requirements make it rather difficult for the consumer to take action (para 53). This situation is not in line with the Directive. 

Third, concerning the specific contract at stake, the court asked whether the provisions in the credit contract could be considered as transparent in spite of the lack of mention of the APR and interest rate. Mentioning of the APR is required on the basis of the 1987 consumer credit directive - but what impact does a violation of that requirement have on  the unfairness assessment? According to the CJEU, the consequence of this omission is that the consumer cannot be considered as liable for having actually accepted the terms of the contract (para 67), with the consequence that, to the ends of unfair terms control, the missing APR can be considered as a decisive factor in assessing whether the interest terms are drafted in plain intelligible language. This finding, of course, will then open the way to a possible finding of unfairness.