With judgment no. 10773/2018, the Court of Milan has, in fact, recognized the effectiveness in the Italian legal system of a settlement agreement relating to a U.S. class action on anti-trust matters, thus ruling on the compatibility with the Italian public procedural order of the opt-out mechanism adopted in the U.S. (i.e., the mechanism by which a judgment concluding a class action applies to all members of the class, except those who have expressly excluded themselves from the class action).
1. Factual background
The case began in 2010, when the European Commission fined some of the leading global airlines in relation to an anti-competitive agreement concerning the imposed “fuel” and “crisis” surcharges that violated Article 101 of the Treaty on the Functioning of the European Union (TFEU).
In this case, a class action was initiated before the District Court of New York. During the proceedings, a settlement was negotiated and a “notice of proposed class action settlement”(the “notice”) was sent to all members of the above-mentioned class.
Under the U.S. opt-out mechanism, the notice informed class members of their options. Thus, recipients could choose to:
- join the class action and agree to the settlement;
- be expressly excluded from the class, thus retaining their right to individual action;
- remain in the class, but object to the settlement; or
- not express any intention (so-called “do nothing option”), thereby waiving any claim for damages.
Following the decision of the New York District Court to approve the settlement, an Italian company, to which the same notice had been sent three times, sued a notorious airline company requesting compensation for antitrust damages.
The defendant claimed that the decision of the New York District Court was enforceable against the plaintiff, thus requesting its recognition within the Italian legal system.
2. Legal issues
The compatibility of the opt-out mechanism with the Italian public order procedure has long since been discussed for two main reasons:
- the application of a judgment extends to all persons/entities belonging to the class, independently of their stance on the proceedings;
- in general, class members are not individually aware of the class action.
In light of these elements, it is possible (and likely) for the proceedings to be closed with a decision, without the class members having the chance to assert their claims. This in fact raises doubts on the compatibility of such mechanism with the constitutional principle of the right to be heard. Nonetheless, the Court of Milan took an interesting position on the system’s compatibility with the procedural guarantees of the Italian legal system.
3. The Court of Milan’s decision
The Court of Milan upheld the defendant’s request. In order to reach this conclusion, the court assessed whether, in the case at hand, all requirements of Article 64 of Italian Law no. 218/95 had been met.
The court pointed out that, according to private international law, the rules on commencing a civil trial follow the laws of the State in which the trial takes place. Therefore, the national judge shall not blindly apply the Italian rules, but must verify compliance with the foreign rules, provided that the Italian procedural guarantees, first and foremost the right to be heard, are protected.
Moreover, according to a well-established case law of the Court of Justice of the European Union, the right to a defense is not absolute and may be limited if the party was given the chance to participate in the proceedings.
Therefore, according to the Court of Milan, the notice, although it was only provided in English, was worded in such a way that made the recipient/plaintiff’s options clear, thus enabling him/her to exercise his/her rights. As a result, the plaintiff’s inertia in choosing one of the options provided by the notice could only lead to the application of the effects of the settlement also him/her.
4. Concluding remarks
At least two final considerations can be surmised from the Italian court’s approach.
First, there has been movement towards recognizing foreign institutes that were previously regarded as incompatible with the Italian legal system. The trend began with the Court of Cassation’s well-known decision to recognize, under certain conditions, the compatibility of punitive damages. Therefore, although the Italian lawmakers have opted for an opt-in mechanism, as opposed to the mechanism adopted in the U.S., it does not, per se, exclude the recognition of a foreign ruling taken under the opt-out mechanism, as long as the minimum procedural guarantees are respected.
Secondly, while the concept of procedural order remains essential unchanged, it is flexible and capable of adapting to the interests that arise, from time to time, in the concrete case, such as the airline’s interests in not being sanctioned twice because of the plaintiff’s inactivity. This implies that if the party was able to participate in the proceedings (even with a notice provided in English or without individual notification) the judgment, as well as the settlement, is applicable to him/her.