CLASS ACTION LAWSUIT

CUSTOMERS CAN COLLECTIVELY SUE THE BANK DUE TO NON COMPLIANCE

The Supreme Court judgment of 21 October 2015 accepted the admission of the accumulation of actions brought by several bank customers. According to the judgment, is sufficient that there is a connection between the title and the cause of action accrued in the lawsuit, it does not require that the title and the cause are identical. The determining factor in these cases, according to the judgment, is not the existence of different legal relationships but the connection between the matter of the actions accumulated as to the facts regarding the claims, which justifies the whole accumulated knowledge of the legal actions, which, at the same time, avoids the possibility of contradictory judgments.

The case involves several customers of a financial entity who sued the bank requesting a conviction against it, demanding responsibility for non-fulfilment of its obligations, due to the acquisition of complex and risky financial products. The background of the lawsuit was that all the claimants were retail customers and that all actions of the bank had in common the failure of to delivering documents related to the purchase of financial product, using accounts globally, lack information on risks and the negative performance of the purchased financial products.

The bank brought the exception of improper accumulation of actions and in the first instance such objection was dismissed, accepting entirely the lawsuit. However, the High Court upheld the bank’s objection, agreeing with the appellant, overturning the lower court decision on the grounds that some claimants were business entities, while others were retail investors, that the products were based on different amounts, the form recruitment was different and, in other words, there were different non-fulfilments.

The claimants went to the Supreme Court who estimated the claim. Basically, the Tribunal considered that this case was a "active voluntary joinder" in which several applicants use the possibility to attend to Court when petitions come from the same title or cause of action. Supreme Court doctrine regarding accumulation of actions says, among other arguments, that what matters is not whether or not there are different legal relationships, but if there is a connection between the controversial issues under the accumulated actions that justify the simultaneous treatment of legal actions brought, which also avoids the existence of contradictory decisions. The said Court has established a flexible criteria that allows the accumulation of actions in the same dispute, such as actions due to defects construction sued by different purchasers of properties in the same promotion, although in some cases such properties are f(housing) and some others are premises; or in some cases the buyers are consumers and not in others; or the nature of the defects may be different.

In the referred case, the basic facts are common to all cases, affecting the documentation of the investment made by bank customers, the features of financial products, the promotion and marketing used by the bank, information provided, etc. All this, in spite of the existence of different circumstances, such as amounts of investments, issuer of the product or different ways of contracting. It is not necessary, therefore, that the degree or cause of action is "identical", being sufficient that they are "connected".

This comes to mean, in short, that several bank customers (some individuals, some legal entities), acting either as consumers or not, with different types of contracts, came together to Justice invoking non-fulfilment of bank’s duties. For its part, the bank objected, saying that there was no joinder because there were missing requirements such as the same title and cause of action. That is, neither the titles (contracts) nor the cause of action were the same. The first instance court did not object to the accumulation, so the High Court did. The Supreme Court, as we said, ruled that accumulation is possible even if the title and the cause were not identical, being enough that they are related, referring to its doctrine applied in other cases and lawsuits against developers/builders. Now, this doctrine applies to the breach of banking agreements and can therefore accumulate these shares.

The ending, in the specific case, is the annulment of the High Court judgment and the retroaction of the file because due to the appeal decision it was not possible judge the grounds of the case, so the High Court has to decide on the facts and rule without appreciating the improper joinder.

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