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Sept. 12 — The European Union's top court, the European Court of Justice (ECJ), will consider whether Facebook Inc. must face class-action-style privacy claims in the EU, the Austrian Supreme Court announced Sept. 12.
The EU doesn't recognize a class action proceeding akin to the U.S. litigation model, so opening the door to such litigation would be ground breaking development should the ECJ find that the particular claims involving Facebook's handling of personal data may be heard as a class of individuals.
The case is grounded in litigation brought by privacy advocate Max Schrems, the person whose litigation in another case pushed the ECJ to invalidate the U.S.-EU Safe Harbor data transfer program relied on by thousands of U.S. and EU companies (14 PVLR 1825, 10/12/15). In this case, Schrems argued that his attempt to take over the claims of plaintiffs wishing to file suit against Facebook was permissible.
Facebook argued that the Austrian courts lacked jurisdiction.
The Austrian Supreme Court is asking the ECJ for guidance on whether its consumer protection laws could be used by Schrems to challenge Facebook and whether he can represent a group of individuals across the entire EU, not just in Austria.
The question addresses the same kind of issues about extraterritorial reach of privacy laws implicated in other EU data protection legal disputes that underscore how local laws are increasingly being tested due to globalization.
A Facebook representative told Bloomberg BNA that Schrems’s claims have “twice been rejected on the grounds that they cannot proceed as ‘class action' on behalf of other consumers in Austrian courts.” The representative said that Facebook looks forward to “addressing the procedural questions presented” to the ECJ to resolve these claims.
Wolfram Proksch of PFR Rechtsanwälte in Venna, who represents Schrems, told Bloomberg BNA that “the core question is whether consumers have to file thousands of individual procedures before thousands of judges and courts in different countries, or if such issues can be dealt with in a joint procedure.” Proksch said that “it would be much more reasonable to have a collective procedure, because this lawsuit addresses the exact same questions and privacy laws are harmonized within the European Union.”
In the case, Schrems accused Facebook of using invalid privacy policies, and the illegal processing and sharing of personal data.
The Higher Regional Court Oct. 21, 2015 reversed a lower court's finding that it lacked jurisdiction over the complaint and allowed 20 of 22 counts to proceed (14 PVLR 1926, 10/26/15). It said the remaining two counts that it deemed a class action weren't admissible. It also said that the law doesn't allow for the assignment of claims to other consumers in a court of local jurisdiction.
But the court said that the class action issue hasn't been dealt with by the Austrian Supreme Court, and allowed an appeal.
The ECJ may address whether Schrems is a “consumer” recognized by the law in regards to claims transferred to him by would-be plaintiffs in Germany, India and elsewhere. It could also address whether Austrian courts have the jurisdiction to decide the case—Facebook's European operations are based in Ireland and Austria doesn't have legal mechanisms for class actions.
Attorneys said that a ruling in favor of Schrems could have major implications for businesses regarding risk assessment in data privacy compliance, and also open up new questions on jurisdiction, consent and other important data protection issues.
It could also open up consumer class actions across the EU, they said (14 PVLR 1927, 10/26/15).
The case could also increase fines and enforcement activities, especially in Austria, and may lead to increased claims by consumer organizations.
In Austria, consumer advocacy groups are authorized under law to seek only injunctions for consumer rights violations in cases in which the general terms and conditions violate consumer protection law or in the case of unfair business practices, but not against data protection violations.
To contact the reporter on this story: Jabeen Bhatti in Berlin at firstname.lastname@example.org
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