Just under a year ago today, the European Court of Justice (ECJ) issued its Schrems decision, which invalidated Safe Harbor and led to substantial developments in US-EU data-transfer mechanisms. In parallel to the ECJ Safe Harbor litigation, Mr. Schrems has maintained two further legal proceedings in the EU: (1) a challenge in the Irish courts to EU Standard Contractual Clauses, which permit data to be transferred internationally between contract parties; and (2) an attempt to certify an EU-wide consumer class action before the Austrian courts.
Today, the Austrian Supreme Court took a major step in Mr. Schrems’s attempted class action: it referred the matter to the ECJ. The Austrian consumer class action is not structured as Americans would view a class action, i.e. by Mr. Schrems filing a complaint, then having it certified for class consideration. The Austrian courts – like most systems outside the US – do not have a certification mechanism akin to Federal Rule of Civil Procedure 23. Instead, individual claimants must personally assign their claims to Mr. Schrems, who appears as the single plaintiff in the action asserting both his own claims, as well as those that have been assigned to him.
Mr. Schrems has been (and is currently) actively soliciting claim assignments from consumers throughout the EU, with the intent to assert them in a single proceeding before the Austrian courts. As part of his solicitation efforts, Mr. Schrems maintains a “submit-your-claim”-style website, accepts donations, gives paid speeches, and has written a book.
This is an unusual procedural structure for EU courts. Thus far, the Austrian district court dismissed Mr. Schrems’s class action in full, while the intermediate appellate court determined that Mr. Schrems could assert his own consumer claims, but not those that had been assigned to him by others.
The Austrian Supreme Court has now determined the proceeding raises questions of EU law that need to be decided by the ECJ. The Court is raising the questions under Articles 15 and 16 of the Brussels I Regulation, which regulate jurisdiction among EU member states in the context of consumer suits. The Court’s questions are:
- Under the Brussels I Regulation, is Mr. Schrems still considered a “consumer” entitled to raise consumer-rights claims if he has operated a website, published books, delivered paid speeches, and collected donations in connection with the solicitation and purported assertion of ‘consumer’ claims?
The Austrian Supreme Court notes that Mr. Schrems’s activities in soliciting claim assignments could be characterized as “commercial” or “professional.” Thus, it holds that the ECJ needs to clarify whether Mr. Schrems is still a “consumer” for purposes of bringing a purportedly consumer-rights action. To the extent the ECJ accepts this question, its answer may also have an impact on rules in multiple EU states that generally prohibit the ‘commercialized’ assertion of third party rights, i.e. persons or companies may not solicit the assignment of consumers’ legal claims, and assert such claims in court, as a regular part of a for-profit business.
- Under the Brussels I Regulation, is a consumer who resides in one EU member state entitled to assert claims assigned by consumers who reside in other EU member states or in non-EU states, if (a) the claims are asserted against the same defendant, and (b) the plaintiff is not asserting the claims as part of a business or commercial activity?
The Austrian Supreme Court notes that if the ECJ considers Mr. Schrems a “consumer,” his claims will have to be asserted before courts in Vienna. However, the Court states that existing ECJ jurisdiction and venue jurisprudence does not provide sufficient clarity as to where other consumers’ claims would have to be adjudicated.
It is quite possible that the ECJ will accept the referral of Mr. Schrems’s Austrian suit. ECJ cases generally hold that when a member-state court refers a matter that arguably presents questions of EU law, the ECJ is bound to accept and decide the referral.
A copy of the Austrian Supreme Court’s referral order (in German) can be downloaded here.
Alston & Bird is closely following the Austrian consumer class action as well as the challenge to Standard Contractual Clauses in Ireland. For more information, contact Jim Harvey.