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Reforms in the Brazilian case law on collective proceedings filed by civil associations

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Fernando Dantas Motta Neustein
Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados, São Paulo
fdantas@mattosfilho.com.br

Isabela Campos Vidigal Takahashi de Siqueira
Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados, São Paulo
isabela.vidigal@mattosfilho.com.br

Laura Lambert da Costa
Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados, São Paulo
laura.lambert@mattosfilho.com.br

Brazilian Supreme Federal Court’s and Brazilian Superior Court of Justice’s positions on the nature and limits of civil associations’ standing to file collective proceedings related to individual homogenous rights (where individuals must file separate liquidation and enforcement procedures after the generic collective ruling is rendered by the court) have been subject to continuous changes over the last few years. This impacts directly on the effects of the decisions rendered in such proceedings.

The Supreme Federal Court, the highest court of the Brazilian Judiciary on constitutional matters, first tackled the issue in 2014, with the decision in Extraordinary Appeal No 573,232/SC.[1] At the time, the Supreme Federal Court relied on a literal interpretation of Article 5 (XXI) of the Brazilian Federal Constitution to rule that associations that file collective proceedings based on this provision act in procedural representation of their associates, since this is the specific term referenced in Article 5 (XXI). As mere representatives, associations would only have standing to file collective proceedings when expressly authorised to do so by their members and such authorisations should be given on an individual basis rather than inferred from generic mandates contained in the articles of association. Therefore, according to the Supreme Federal Court, only the association members who have authorised the filing of the collective proceeding would benefit from the favourable collective ruling.

This understanding was upheld by the Supreme Federal Court with the 2017 decision in Extraordinary Appeal No 612,043/PR.[2] In this case, the Supreme Federal Court confirmed the constitutionality of Article 2-A of Federal Law No 9,494/97, which limits the effects of favourable rulings rendered in collective proceedings filed by associations to the associates who, at the time of the filing, lived in the jurisdiction (city or state) where the proceeding was filed and whose names were listed in the complaint.

The precedents established in Extraordinary Appeals Nos 573,232/SC and 612,043/PR are binding to all Brazilian courts. However, as stressed by the Supreme Federal Court itself, they do not apply to collective proceedings filed by trade unions or writs of mandamus filed by civil associations, since such proceedings have different constitutional basis (ie, Articles 8 (III) and 5 (LXX), rather than Article 5 (XXI)).

Before 2014, the Superior Court of Justice, which has the attribution of standardising the interpretation of Brazilian federal law, held that the civil associations that file collective proceedings related to individual homogenous rights acted in procedural substitution (rather than representation), thus waiving the need for specific authorisation and also benefiting non-associates. However, with the Supreme Federal Court’s decisions in Extraordinary Appeals Nos 573,232/SC and 612,043/PR, the Superior Court of Justice changed its position to apply the Supreme Federal Court’s precedents indistinctly to all collective proceedings related to individual homogenous rights filed by civil associations, except collective writs of mandamus.

The case law started changing course yet again in June 2018, with the Supreme Federal Court’s decision in the Motion for Clarification in the Extraordinary Appeal No 612,043/PR.[3] In response to the Brazilian Institute of Consumer Defence and the Consumer Public Prosecutor National Association, the Supreme Federal Court clarified that the Extraordinary Appeals Nos 573,232/SC and 612,043/PR binding precedents should only apply to the rare kind of ordinary collective proceedings based exclusively on Article 5 (XXI) of the Brazilian Federal Constitution – and not to the much more usual collective proceedings (also called collective civil actions or class actions) regulated by the Public Civil Actions Law and by the Consumer Defence Code, in which the associations would indeed act in procedural substitution.

Due to this, the Superior Court of Justice has been steadily returning to its original position that associations that file class actions related to individual homogenous rights act in procedural substitution.[4] Pursuant to this position, class actions filed by associations seeking protection for individual homogenous rights are subject to the following rules:

  1. Pursuant to Articles 5 (V) of the Public Civil Actions Law and 82 (IV) of the Consumer Defence Code, the associations’ standing to sue should be established in their articles of association, regardless of any individual authorisation or inclusion of a list of names in the complaint.
  2. In case the original association is extinguished, excluded from, or simply abandons the case, another collective entity (including another association with the institutional objectives) or the public prosecutor office can take over as plaintiff of the class action, pursuant to Article 5, paragraph 3, of the Public Civil Actions Law and Article 9 of Federal Law No 4,717/65.
  3. Pursuant to Article 103 (III) of the Consumer Defence Code, the favourable rulings rendered in class actions should benefit all the class, rather than only the association members.
  4. Also pursuant to Article 103 (III) of the Consumer Defence Code, the favourable rulings rendered in class actions are effective throughout the country, rather than being limited to the jurisdiction where the proceeding was filed (Article 2-A of Federal Law No 9,494/97 does not apply).

The Superior Court of Justice is expected to settle the issue with the review of Special Appeals Nos 1,438,263/SP, 1,361,872/SP and 1,362,022/SP, which deal with the ‘non-associates’ standing to enforce favourable rulings rendered in class actions filed by associations acting as procedural substitutes’. The pending decisions in these cases will have binding effects and should determine once and for all whether the Extraordinary Appeals Nos 573,232/SC and 612,043/PR precedents apply to the class actions filed by civil associations seeking protection for individual homogenous rights.



Notes

[1]          Supreme Federal Court: Extraordinary Appeal No 573,232/SC, Reporting Justice Ricardo Lewandowski, Prevailing Opinion by Justice Marco Aurélio, Plenary, ruled on 14 May 2014.

[2]          Supreme Federal Court: Extraordinary Appeal No 612,043/PR, Reporting Justice Marco Aurélio, Plenary, ruled on 10 May 2017.

[3]          Supreme Federal Court: Motion for Clarification in the Extraordinary Appeal No 612,043/PR, Reporting Justice Marco Aurélio, Plenary, ruled on 6 June 2018.

[4]          Leading cases: Superior Court of Justice. Special Appeal No 1,554,821/RS, Reporting Justice Nancy Andrighi, 3rd Panel, ruled on 25 September 2018; and Superior Court of Justice: Special Appeal No 1,649,087/RS, Reporting Justice Nancy Andrighi, 3rd Panel, ruled on 2 October 2018.

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