Collective protection of consumers in Brazil: the controversy on the territorial scope of rulings in public civil action

Back to Consumer Litigation Law Committee publications

Patricia Helena Marta Martins
TozziniFreire Lawyers, São Paulo
phm@tozzinifreire.com.br

Luciana Bazan Martins Bisetti
TozziniFreire Lawyers, São Paulo
lbazan@tozzinifreire.com.br

According to the most recent official data, there are more than 78 million lawsuits being processed in Brazil. Demands involving consumer actions represent a significant portion of this total, with more than four million new lawsuits being filed a year. This figure includes both individual and collective claims.

Collective protection was instituted in Brazil in 1985 through the Law of Public Civil Action (Law No 7.347/1985), which protects collective interests, including consumers’ rights.

The Federal Constitution, dated 1988, enhanced collective consumer protection, especially by establishing the legal standing of some entities to defend those interests, such as the Prosecution Office, associations and unions.

In 1990, with the publication of the Consumer Protection Code, collective protection assumed new contours, with the creation of a consumer protection microsystem containing more specific rules on the processing of this type of claim.

Among such previsions, the Consumer Protection Code listed the legal-standing entities that are allowed to file public civil actions on behalf of consumers’ interests. They are: (1) the Prosecution Office; (2) the Federal Union, states, municipalities and the Federal District; (3) public entities designed to defend the interests of consumers; and (4) associations.

The list established by the Consumer Protection Code is restricted and, unlike other jurisdictions, such as the United States with class actions, it does not include individuals or lawyers as legal-standing parties for filing public civil action.

The Brazilian list of legal-standing parties may not appear to be numerous but, in practice, it represents a significant number of entities acting on behalf of the consumers.

Brazil has 26 states, one Federal District and more than 5,500 municipalities.

The Prosecution Office is divided into federal and state branches, as well as public consumer protection entities, many of which also operate at the municipal level. According to the most recent data, PROCON, one of the main national consumer protection agencies, has almost 800 units, distributed over more than 590 municipalities.

In addition, there are dozens of associations that operate on behalf of Brazilian consumers.

Unlike other countries, such as France, Brazil does not require special authorisation or strict requirements to allow associations to litigate on behalf of consumers.

For associations to litigate, the Consumer Protection Code requires only that the associations are legally constituted for more than a year, which allows the existence of a high number of associations in the country.

Over the years, the existence of multiple entities collectively litigating has led to a large spraying of public civil actions across the nation, many of which are identical, filled against the same defendant and involving the same matter.

Often, big players in the economy, such as banks, telecoms operators, electricity distributors and builders, are collectively targeted over the same issue, but by different entities and in different areas.

In an attempt to reconcile the dozens of identical public civil actions, the opinion of jurists has been divided into two main lines of thought.

One defends the coexistence of these multiple lawsuits. It states that the effectiveness of the ruling in each of the lawsuits is restricted to the limits of the territorial competence of the respective court. This argument states that the effects of the ruling resulting from each lawsuit is local and does not go beyond the regional jurisdiction of the judge who rendered it. The legal basis for this opinion is Article 16 of the Public Civil Action Law.^[1]

Another line of thought calls for the national extension of the effects of the ruling in a public civil action. By this understanding, filing a single public civil action in a single location would be sufficient for the general and national protection of all consumers.

According to those jurists, this interpretation, in addition to being better aligned with the collective protection of the consumer, would avoid the dispersion of identical lawsuits across the country and the risk of conflicting decisions.

Over the years the judiciary has become split between these arguments, making jurisprudence about the matter unstable.

For example, in 2006, the Superior Court of Justice declared the local restriction of the effects of a collective ruling. Later, in 2011, the Court signalled the revision of the previous understanding and in 2016 changed its position to recognise the national effects of the decision.

Over the course of ten years, different positions were adopted by one of the highest Brazilian courts, which had an impact on judicial consumer protection.

The period of limitation for the defence of consumers in Brazil is, as a rule, less than ten years. In addition, it is very common for a public civil action to extend over more than a decade, which subjects the lawsuit to the incidence of different understandings along its course.

The impasse over the territorial scope of collective rulings may finally be coming to a close.

Recently, the Federal Supreme Court recognised the repercussions of this controversy and decided to judge it definitively in order to standardise national court precedents (Extraordinary Appeal No 1.101.937, Theme No 1.075).

The ruling has not taken place yet. Although there is no scheduled date, the pending action is on advanced stages and the expectation is that the trial will still take place this year.

For the time being, the Supreme Court has suspended all lawsuits whose territorial scope is awaiting definition until the final judgment, avoiding the proliferation of conflicted understandings on the matter.

There is no official data on how many lawsuits have been suspended; however, the number is relevant given that the issue is common.

Regardless of the merit of the decision that will be rendered by the Supreme Court, there is no doubt it will be of fundamental importance to the collective protection of consumers. 

With the precedent, parties will have prior knowledge of the extension of the effects of the lawsuit in which they are involved, whether as plaintiffs, defendants or beneficiaries.

Consequently, the parties will no longer be surprised by the abrupt territorial restriction or extension of the effects of the lawsuit, which often occurs only at the end of the process, already in the stage of ruling enforcement.

The definition of the matter, besides being able to standardise understanding of the issue, will also allow better conditions for the parties to defend themselves in court and to fulfil rulings, making the judicial protection more adequate and effective.

Back to Consumer Litigation Law Committee publications