A long time ago, in a mass tort far, far away, the plaintiffs’ lawyers were not content with collecting plaintiffs from within the US.  They also brought a putative product liability class action in federal court in the U.S. on behalf of European plaintiffs.  As a result, your bloggers learned a little bit (a very little bit) about product liability law and collective/representative actions in Europe. 

Our main take-away from the then-applicable E.U. Product Liability Directive was that it seemed like something academics would dream up in their ivory towers, far removed from the reality of litigating product liability actions in the United States.  A great deal of debate went into issues that the E.U. drafters seemed to believe would have case-determinative effect, whereas in our experience litigation is never so easily resolved. 

For example, the “state of the art” defense (or “defence”, we should say) was so hotly debated that the 1985 E.U. Product Liability Directive made it optional:  Member States could elect to enact that provision or skip it, depending on whether they thought a manufacturer should be able to avoid liability by declaring the risk was unknown at the time the product was made.  It seemed to us the debate was premised on the assumption that a manufacturer could say “But I didn’t know!” and the lawsuit would be over.  Perhaps things do work that way in the courts of the Member States of the E.U. But in the U.S., when a manufacturer says “But I didn’t know!”, the plaintiffs (and the court) respond “that’s nice”, and then the parties just continue on for years with discovery into what was known or could have been known decades earlier. Eventually, various experts materialize and declare that signals should have been seen and tests should have been run long ago, and then the whole thing–including what was the state of the art at a certain time–goes to the jury anyway.

Now, after 40 years under the prior regime, the E.U. is re-booting its Product Liability Directive, due to concerns that the 1985 version made it too difficult for claimants to bring claims. We, of course, do not share the view that the long-standing E.U. Product Liability Directive needs to be loosened to make product liability litigation in Europe more common. 

The new Product Liability Directive has been fully adopted by the EU, but it has not yet been published in the Official Journal.  From the date it enters into force (20 days after publication), each E.U. Member State will have two years to “transpose” it their national law (effectively, enact it in the national language and their legal system).  The new Product Liability Directive will apply to products sold in the E.U. as of the end of 2026. 

The Directive is meant to be almost fully “harmonized”, meaning each nation is expected to enact a law that adheres to its provisions–except with respect to the state of the art defense, which apparently is still so hotly debated that it remains optional, in each Member State’s discretion. 

Key substantive features in the new Product Liability Directive are:

• It is a strict/no-fault liability scheme.  The question is whether the product is defective and caused harm, not whether the defendant was at fault.
• Defectiveness:  The test for a product defect is that the product “does not provide the safety that a person is entitled to expect or that is required” under EU or national law, and the Directive cross-references other E.U. safety directives and rules.  All we can say is, while this is pretty vague, at least it isn’t a consumer expectations test (we think).
• The definition of “product” now includes intangible goods, such as software, an approach more liberal than generally is allowed in the U.S, as we discussed in this post.
• The Directive applies to goods and related services.
• Potential defendants are any “economic operators”, a term which includes manufacturers, component part manufacturers, providers of related services, authorized representatives, distributors, and fulfilment service providers (which seems to include online sales platforms).
• Allowable damages include:  Death, personal injury, medically recognized damage to psychological health, certain damage to or destruction of property, and destruction or corruption of data used for professional purposes.

Key procedural features of the new Product Liability Directive are:

• A 3 year statute of limitations (expiry of claim); this limitations period runs from the date the claimant knew or reasonably should have been aware of the damage, the defectiveness, and the identity of the relevant economic operator.
• Latent personal injury claims may be brought within 25 years (the long-stop limitations period).
• Individual and collective actions are allowed (whereas in the U.S., personal injury claims are deemed inherently too individualized to allow for class treatment).
• Disclosure requirements:  In place of U.S.-style discovery, the Directive allows national courts to require both claimants and/or defendants to disclose “necessary and proportionate” “facts and evidence” which are “sufficient to support the plausibility of the claim”.  Member states are allowed to—but not required—to protect trade secrets and confidential information. 
• There is a minimum damage requirement (500 euros) but the prior maximum damage threshold (70 million euros) has been abolished.

The new Product Liability Directive also provides three “rebuttable presumptions” and these provisions, in our view, are perhaps the worst part of the new Directive.  The new presumptions are:

• A rebuttable presumption of defectiveness, which will arise where there is non-compliance with disclosure requirements or mandatory legislative and safety requirements, and “obvious malfunction”;
• A rebuttable presumption of causation, which will arise where it is established that the product is defective and the damage caused is of a “kind typically consistent” with the defect; and
• A rebuttable presumption of both defectiveness and causation, which will arise where the claimant faces “excessive difficulties, in particular, due to technical or scientific complexity” with the product, and the claimant can demonstrate that it is likely that the product is defective or that there is a causal link.  One example given?  Medical devices. 

Our response:  Ugh. 

Instead of recognizing that a plaintiff’s difficulty in proving up product defect or causation usually results because they have no valid claim—because there is insufficient proof that the product actually has anything wrong with it or causes harm—the E.U. has decided that difficulty proving up defect and causation means the standards should be lower.  

In fact, if a claimant can say “the product is beyond my technical understanding” and get a presumption of defectiveness or causation, doesn’t that flip the burden of proof entirely on its head?   Does no one involved with the new E.U. directive follow what has happened in the U.S. with out of control mass torts, or with regard to pharmaceuticals and medical devices driven from the market only to have the precipitating scientific studies withdrawn and their conclusions debunked? 

In addition to the Product Liability Directive revisions, and probably making matters worse:  The E.U. also adopted the Representative Actions Directive, which already took effect on June 25, 2023.  “Directive (EU) 2020/1828 of the European Parliament and of the Council of 25 November 2020 on representative actions for the protection of the collective interests of consumers and repealing Directive 2009/22/EC,” Official Journal of the European Commission (November 25, 2020). The E.U. Representative Actions Directive is designed to make consumer class actions easier to bring—something we also do not think was necessary. 

The Representative Actions Directive provides minimum standards to be adopted by Member States to supplement to any national procedures that already may exist (some Member States had no previous representative action mechanism). 

There are notable differences from U.S. class actions, however.  First, the claims have to arise from one of 66 specific E.U. Directives and Regulations, which limits the subject matter and in theory should constrain the creativity of the plaintiffs’ bar to conjure up imagined harms.  Second, only “qualified representative entities” (or “QREs”, such as public agencies or consumer groups) may bring representative actions on behalf of EU consumers.  Third, the E.U. Representative Actions Directive specifically permits single-nation/domestic and cross-border representative actions, something that doesn’t exist in the U.S., if for no other reason than differences between U.S. tort law and that of other nations.

Taken together, these are quite substantial changes that portend an increase in litigation in the E.U. We understand that litigation funders already are opening branches in cities like London and Amsterdam, so undoubtedly we all will be talking more about Europe in the years to come. 

If this has piqued your interest, Reed Smith is holding a CLE on this topic this morning at 9:30 Eastern time; the link to register and join is here.