Early Stages of the Regulation of Class Actions
Collective redress appeared in the Mexican legal system in 1993, when the Consumer Protection Act gave the Federal Consumer Protection Agency (PROFECO, or the "Agency") – an administrative authority entrusted to promote and protect the rights and interests of consumers – standing to initiate collective proceedings on behalf of consumers.
Even though the mechanism was available, very few cases were filed in the following decades. In fact, in the period from 1993 to 2011, the Agency had only filed around ten collective actions. Most of those early claims were filed against construction companies and airlines.
Modern Regulation of Class Actions
On 29 July 2010, the Mexican Constitution was amended to regulate collective actions. A little more than a year later, on 30 August 2011, the Mexican Congress passed an amendment to the Federal Code of Civil Procedure and a few other federal regulations, including the Federal Antitrust Act, the International Organisation Act of the Federal Judiciary, the Consumer Protection Act, the Financial Consumer Protection Act and the Environmental Protection Act, to further regulate collective actions under the general framework established in the Constitution. The amendments to federal legislation entered into force on 1 March 2012.
This was considered a major step and a significant change for the Mexican legal regime and many expected a flow of collective proceedings in the following years. However, it has been more than a decade since collective actions started to be regulated in the Federal Code of Civil Procedure, and so far they have seldom been used as a dispute settlement mechanism.
The low number of collective actions filed is partly due to the limited areas in which they are available and to the cap established for plaintiffs' legal fees, which in practice means there is little interest in finding and filing collective actions. Unlike in other countries, there is no significant group of plaintiffs’ lawyers who regularly file collective actions.
The regime applicable to collective actions in Mexico was not closely modelled on another country’s regime. However, it was clearly influenced by the regulation applicable to class actions in the USA and collective actions in Brazil.
The provisions in the Federal Code of Civil Procedure that regulate the different types of collective actions borrow some legal terminology and concepts from collective action laws in other countries, especially other civil law countries such as Brazil and Italy. For example, the concept of a diffuse collective action was borrowed from Brazilian legislation to refer to proceedings aimed at protecting rights that are indivisible in nature, such as those related to the protection of the environment.
They also incorporate some aspects of US law, for example the encouragement of settlement and the possibility for the judge to order the parties to give notice to the class considering the size, location, and other relevant circumstances of the community. There are also some clear differences. One the main ones is that the Mexican regulation provides a much more expedited approach to class certification.
There is no applicable information in this jurisdiction.
The ultimate legal basis for collective actions in Mexico can be found in Article 17 of the Constitution, which mandates Congress to regulate collective proceedings and gives it the right to determine the areas in which they will be available and the specific procedural rules. It also gives federal courts exclusive jurisdiction to hear class action cases.
The main body of law that governs collective redress is the Fifth Book of the Code of Civil Procedure. However, there are also some relevant provisions in the Federal Consumer Protection Act, the Federal Antitrust Act, the Internal Organisation Act of the Federal Judiciary, the Financial Consumer Protection Act, and the Environmental Protection Act.
The applicable rules depend on the subject matter of the issue. For example, the Federal Consumer Protection Act establishes who has standing to submit collective actions related to consumer goods, but refers to the Federal Code of Civil Procedure for everything related to the procedural steps.
Areas of Law
According to the Federal Code of Civil Procedure, collective redress is only available for the protection of collective interests or rights in two areas:
At first glance, the scope seems to be very limited. However, matters related to financial services, antitrust issues, consumer redress and product liability are all considered as consumer relationships under Mexican law and therefore collective redress is available.
One relevant limitation for antitrust issues is that collective actions claiming damages arising from a monopolistic practice or an unlawful acquisition can only be filed once the Federal Antitrust Commission has issued a final ruling declaring an unlawful conduct in breach of the Antitrust Act. As a result of this additional requirement, collective actions related to antitrust matters have remained uncommon.
Types of Disputes
Collective actions can be filed to protect the following three different types of rights.
Under Mexican law, a collective action is a proceeding in which a common representative, a non-profit association or a government agency submits a claim to protect a right or interest that belongs to a community or group of individuals, who are united by a common cause or circumstance, and in which the judgment has legal effects on all the members of the community or group.
Some other proceedings available under Mexican law allow for the protection of collective rights, for example collective amparos. The amparo is a constitutional protection action before federal courts designed to protect human rights from acts of authorities and, in certain limited circumstances, private parties. However, they are regulated independently and do not share the nature and legal treatment of collective actions.
Filing a Collective Action
Collective actions can only be brought before federal district courts. To initiate a proceeding, a formal claim must be filed, meeting certain specific formal requirements, among them:
These requirements vary to a certain degree, depending on the type of action filed and the type of right that is considered affected.
Mexican law does not require giving prior notice to the respondent or an opportunity to cure the damage or breach before initiating the trial.
Statute of Limitations
The statute of limitations to file a collective action is three and a half years, starting from the moment in which the damage was caused. Individual claims, however, might have a different statute of limitations, depending on the subject matter. This means that, in some cases, the collective action proceedings under the Federal Civil Code might not be available anymore, but the members of the community or group could still file individual lawsuits claiming damages.
The procedural stages of collective actions are regulated in the Federal Code of Civil Procedure and cannot be modified by the parties. However, the court has the power to extend the terms during the proceedings, according to the circumstances of the case, for example should it consider the case to be complex.
A collective action case starts with the submission of the claim and follows these procedural steps.
The collective action procedural rules apply to all areas of law in which it is available. However, there are some minor differences depending on the type of action, namely, whether the action filed corresponds to diffuse, collective in the strict sense, or individual homogenous rights. These differences are especially related to the mechanisms applicable for joining the class.
According to the Federal Code of Civil Procedure, the following individuals or entities have the right of action or standing to bring collective action suits in Mexico:
Integration of the Class
There is no definition of class in the Federal Code of Civil Procedure, but one can be construed from the requirements for the admission of collective actions. A class is understood as a community or group of people who holds, in common, one or more claims, or a group composed of individuals who hold homogenous individual claims.
In the case of collective actions in the strict sense and individual homogenous actions, the class must be composed of at least 30 members. That requirement does not apply to diffuse actions because the rights or interests that are the subject matter of the claim belong to an undetermined community or group. There is no maximum number of claimants in a collective action.
Collective actions can be filed on behalf of individuals domiciled in different jurisdictions. The relevant factor to determine if they can be part of the class is not the domicile or nationality of the members of the group, but their character as holders of the same claim.
Mexican law adopted the opt-in mechanism for individuals to join the class. Therefore, consent to join the collective action must be communicated expressly.
The Mexican Congress expressly declined to enact an opt-out class action mechanism as available in the US. When the Federal Code of Civil Procedure was being amended to regulate class actions, the original bill and congressional declaration of purpose submitted to the Senate included the opt-out mechanism for class formation purposes. The legislators argued that it would give full force and effect to the class actions, because otherwise, the proceeding would be a mere group litigation, not fulfilling the mandate of the Constitution.
That original bill provided that any member of the community or group could request his exclusion for the purposes of a particular collective proceeding. Said request had to be made in writing to the judge and would be considered timely at any stage of the proceedings before the issuance of the judgment.
However, once the Senate studied this bill, it decided not to adopt the opt-out mechanism and to implement instead an opt-in mechanism. The decision of the United Commissions of Government and Legislative Studies to modify the bill and to limit the formation of the plaintiff class only through an express statement of consent was thought to be consistent with Mexican law and with certain domestic public order considerations.
Joining Further Parties
Members of the claimant group or community are allowed to join the trial during the proceedings or up to 18 months after the judgment is considered res judicata.
To make sure that all members of the community or group are informed that a collective action has been admitted and is being processed, the court may order the notification through any means it considers appropriate, taking into consideration the size, location and other relevant characteristics of the group or community. The notice has to be economic, efficient, and extensive, considering the circumstances of the case.
In order to join the class, members of the group or community have to submit an express communication, through any means, to the common representative or to the legal representative of the plaintiffs, which will be obliged to then file the request before the court. The court must analyse the request and issue the corresponding ruling.
In case a person requests to be excluded from the class at any stage of the proceeding, it is interpreted as a withdrawal of the action and said person will not be able to participate in any future collective proceeding arising from the same facts.
Parallel Individual Claims
Individual and collective actions cannot be joined, even if they arise from the same facts and imply a substantially identical factual and legal analysis. Therefore, in case there is a collective action and one or more individual actions being processed at the same time, the proceedings have to remain independent.
However, if the parallel collective and individual actions have the same subject matter, causes, and claims, and are being processed at the same time, the court must give the individual plaintiff the option to withdraw his or her lawsuit and join the collective action. Once a final judgment is issued in the individual proceeding, the plaintiff is not allowed to join the class or to start a collective action based on the same facts.
The Federal Code of Civil Procedure and the Mexican Constitution charge the federal courts with the defence and protection of collective interests. Specifically, federal district courts handle the first instance of collective proceedings.
Federal courts have broad management powers and they can, for example, request from the parties, third parties, or authorities all the evidence they deem necessary for the analysis of the case. According to judicial precedents, they also have a discretion to interpret the applicable provisions in a way that ensures the due and efficient processing of collective proceedings, as well as the protection of collective interests.
There are no test cases under Mexican law. This means that in every instance the collective action must be analysed as a whole. However, the plaintiffs do not have to offer individual evidence for each member of the group or community.
If all the procedural terms established in the Federal Code of Civil Procedure were strictly observed, without any deviation, a collective action could be processed in less than 200 days. In practice, this almost never happens because procedural terms tend to be extended and appeals and parallel proceedings tend to delay the process.
Given that there have been very few cases so far and therefore the sample is too small, it is not useful to calculate the average length of proceedings.
Nevertheless, the proceedings to date have varied significantly in length. Some have advanced rapidly during the early procedural stages and then stalled mid-trial, while others have taken several months or even years in the early procedural steps.
The duration of trials, as can be expected, really depends on the complexity and circumstances of each case, including the type of remedy claimed, the number of members in the class, and even the profile and strategic approach of the lawyers representing the plaintiffs and the defendants.
There are no specific mechanisms in place to deviate from the typical procedural steps for a collective action, such as an acceleration of claims, summary disposal or delaying of claims.
In practice, however, it has been very common for class actions to vary significantly in length due to the filing of appeals and constitutional protection actions throughout the trial, which have the effect of significantly delaying the procedural stages.
Costs and Attorneys’ Fees
According to the Federal Code of Civil Procedure, each party must cover the fees of its attorneys and class representatives. A successful plaintiff may pay the fees of its own attorneys out of the judgment, but an unsuccessful plaintiff will not be required to pay any portion of the defendant's legal fees. Similarly, a successful defendant cannot recover the fees paid to its attorneys from the unsuccessful plaintiff.
The Code establishes caps for the fees that attorneys may charge, which are linked to the minimum wage in Mexico City. These caps were meant to reduce the percentage of a judgment that goes to the plaintiffs' attorneys and to discourage plaintiffs’ attorneys from filing frivolous claims and turning collective actions into a business.
The referred caps are the following.
Those caps also apply if a settlement is reached between the plaintiff class and the respondent.
In principle, there is no impediment to third-party funding for collective actions. Furthermore, conditional fee arrangements and damages-based arrangements, which are very common, usually include “third-party funding”, in the sense that law firms bear part or all the costs of litigation, which they only recover if the claim is successful. In any case, the arrangements are subject to the caps outlined above.
Institutional third-party funding is not very common in Mexico and, as far as we know, collective or class actions have not been funded by companies in this business.
Before the litigation starts, there is not a procedure available under Mexican law for the disclosure of documents to be used in a collective action.
Nevertheless, it is possible to obtain documents from the future respondent, from third parties or from authorities. Parties can file a pre-trial action, in which they request a judge to order the production of documents. The pre-trial action is only processed if the party explains why the documents are necessary for the submission of a collective action. In case the future respondent or third party refuses to produce the requested documents, the judge has the power to use enforcement measures.
In Mexico, although the disclosure of evidence is not regulated as it is in other jurisdictions, the Federal Code of Civil Procedure gives courts the power to request third parties and authorities to produce relevant evidence. Also, the parties may inform the judge that there is a document in the power of their counterparty to which they do not have access, and they may request the judge to obtain it through enforcement measures.
Should a judge request the submission of evidence from one of the parties and the requested party refuses to submit it, the judge may apply enforcement measures, and if the document is still not submitted, judges will usually consider the corresponding facts that the party sought to prove as proven.
In Mexico, there is no formal concept of privilege as understood in other jurisdictions. Nevertheless, private communications are protected by the Federal Constitution and, in order to be revealed to third parties or presented before an authority or court, the consent of at least one of the parties involved in the communication is necessary. Otherwise, the communication can be deemed as inadmissible evidence.
The Constitution guarantees the protection and inviolability of communications and privacy, thus federal courts tend to be very careful with any kind of evidence that can be considered a breach of those fundamental rights.
There are no special considerations related to privilege in the context of collective actions. General rules of the Mexican legal system are applicable. And, of course, professional secrecy rules are applicable to the legal professionals involved in collective proceedings.
The relief sought in collective proceedings can include monetary damages, the restitution of the status existing prior to the causation of damage or, if this is not possible, the substitute compliance according to the harm caused to the rights and interests of the plaintiffs. Disgorgement of profits has not been expressly recognised in statutory law or by the Mexican courts as a remedy available in collective proceedings.
The remedies available to the plaintiffs depend mainly on the type of class action filed, as follows.
Declaratory relief is available in collective actions. In practice, plaintiffs usually apply for both declaratory relief and monetary damages or some other form of relief.
Settlement is encouraged in the regulation of collective actions. Once a claim has been submitted and the corresponding court has certified the class, the judge has the obligation to summon the parties for a conciliation hearing during which the judge is supposed to suggest potential solutions for the dispute. For these purposes, the judge may be assisted by external experts it deems appropriate.
Even if the negotiations held during the conciliation hearing are not successful, the parties can still reach full or partial agreements at any stage of the proceedings. Any settlement agreement must be reviewed and approved by the judge to ensure that the interest of the community or group are duly protected.
Other methods of alternative dispute resolution are not available in collective actions, because the Constitution and the Federal Code of Civil Procedure establish that federal courts have exclusive jurisdiction regarding the defence and protection of collective rights or interests.
Nature of the Judgment
The Federal Code of Civil Procedure states that a judgment issued in a collective proceeding that is not successfully challenged is res judicata. However, the nature and effects of a judgment issued in a class action are somewhat unclear, as they depend on the type of right asserted by the plaintiff group or community.
The Federal Civil Code does not expressly state whether a person who fails to opt in to a collective action in the strict sense or an individual homogenous action would be precluded from bringing future lawsuits. In principle, they should not be precluded, however, the factual and legal conclusions reached in the collective proceedings could have an impact on subsequent individual actions.
In any case, judgments issued in diffuse collective actions seem to have limited res judicata effect, precluding only subsequent collective actions, without having any effect on the right to bring individual claims.
There is no specific mechanism for the enforcement of judgments issued in collective proceedings, which means that the general rules of civil procedure apply and the judge may use all the enforcement measures available under Mexican law.
There have not been many policy developments or initiatives related to collective redress.
One of the issues that has been discussed between practitioners and experts, but has yet to be addressed by the Federal Judiciary or Congress, is the effect of collective action judgments issued in other jurisdictions.
There have been cases, especially in the USA, in which it is not clear whether a class action judgment can be enforced by Mexican courts and whether it may have a res judicata effect for the members of the group of community domiciled in Mexico. The main problem is that there are significant differences between the opt-out mechanism available in the USA for the members of the class, and the opt-in mechanism established in Mexico, raising questions about the effects of silence and the formation of consent.
There is currently no legislative reform in progress or foreshadowed in respect to collective redress.
In fact, since the amendments to the Constitution and the Federal Code of Civil Procedure in 2011, Congress has not revisited the regulation of collective actions.
A bill was presented to Congress in 2013 proposing an amendment to the Constitution to limit the areas of law in which collective actions are allowed to consumer protection, financial services/consumer redress and environment. Those limitations are exactly those established in statutory law, but the intention was to establish them in the Constitution to make them final and not subject to subsequent review by Congress. However, the bill was ultimately dismissed.
In October 2015, another bill was presented to Congress, this time to allow collective proceedings in administrative matters. If approved, plaintiffs would have been able to collectively challenge determinations of government authorities that affect the rights of groups of communities in the administrative sphere. This bill was also ultimately dismissed.
Brexit had no impact on the areas specifically related to collective redress in Mexican law.
COVID-19 and the global pandemic impacted the delivery of justice, including of course class actions, in two principal ways. On one hand, the courts were forced to close during certain periods, which significantly hindered access to justice and meant that the proceedings that were pending and those that began during the last year suffered considerable delays.
On the other hand, the courts were forced to move towards online trial processing in order to make personal court attendance unnecessary. Although there was already a history of this practice, the definitive steps were taken and the success of the system was tested during the pandemic.
An Update on Class Actions in Mexico a Decade after Their Creation
A decade after the Mexican Constitution was amended to include, in its Article 17, class actions as a procedure for the protection of collective interests, it is worth analysing how the mechanism has worked and what trends can be identified, both in its practical application and in the interpretation of the relevant rules made by the federal courts.
Class actions in Mexico have their remote antecedent in the Federal Consumer Protection Law, which from 1993 gave the Federal Consumer Attorney's Office (PROFECO) powers to file class actions on behalf of consumers. However, in the period from 1993–2011 very few actions were brought, most of which were directed against airlines and construction companies.
The big change in legislation came with the constitutional reform of 29 July 2010, when Article 17 of the Constitution was amended to establish the obligation of Congress to regulate class actions. In compliance with that constitutional mandate, in 2011 the Mexican Congress reformed the Federal Code of Civil Procedure to include a chapter dedicated to collective proceedings. In parallel, it reformed various other federal laws to give homogeneity to the new rules, among them the Federal Consumer Protection Act, the Federal Antitrust Act, the Internal Organisation Act of the Federal Judiciary and the Federal Antitrust Act.
At the time of the reform, there was speculation about the risk of a potential flood of class action lawsuits, which could imply a considerable risk for companies doing business in Mexico. However, in the ten years since the introduction of class actions as a mechanism for the protection of diffuse, homogeneous, or collective interests in the strict sense, the flood of lawsuits has never occurred.
In fact, there have been very few cases and even fewer have advanced and seen a judgment on the merits. It was only in 2017, several years after the secondary legislation was issued, that the First Chamber of the Supreme Court of Justice of the Nation first issued a judgment on the merits of a class action that did not relate to procedural issues.
In that case, members of a community filed an individual homogenous action against the commercial group that was in charge of providing public transportation services to the inhabitants of a city. The background of the claim was an accident in which some passengers suffered severe injuries, apparently due to the lack of safety measures, in spite of the high fares that the users were paying. The remedy sought was an order forcing the company to install better safety measures and to set their fares more fairly.
There are three key reasons that probably account for the small number of cases filed to date. The first is that the Federal Code of Civil Procedure provides that class actions are only appropriate in matters of consumer relations of goods or services and matters related to the environment. This imposes an important limitation on the type of claims that can be filed as a class action.
The second reason is that there is a limitation on the fees that can be charged by lawyers and the common representative of the collective, which depends on the amount in dispute. This cap was established to prevent the class representative from becoming the main beneficiary in class actions, rather than the members of the class, but it had the unexpected effect of discouraging the filing of this type of lawsuit. In Mexico, unlike in other countries, the representation of classes has not become such a lucrative business and there is limited interest in pursuing these types of claims, organising the groups and investing the large amount of time and work required to process these proceedings.
The third reason is that Mexico adopted the opt-in mechanism for members of the class to join the lawsuit. Unlike in other jurisdictions, the acceptance to join the collective action must be express, which implies significant logistical difficulties and expenses. Members of the class interested in joining are forced to submit an express communication to the common representative or to the legal representative of the plaintiffs, who then files the request to the judge. Considering the great diversity and geographic dispersion of a group with homogeneous interests, in many cases it is highly complicated for them to learn of the existence of the lawsuit and to carry out the necessary procedural steps to join it.
In these first ten years of implementation, we have seen only a handful of new claims per year. However, the few cases that are actually filed and move forward tend to have a very high profile. Among the collective actions that are pending is the highly politicised class action brought by a collective that holds the human right to a healthy environment and seeks to prevent the cultivation of genetically modified corn in Mexico.
That case began in 2015 and because it is very complex, with many facets, where interim measures have been litigated and where there are technical and scientific components that have to be carefully analysed, substantive resolutions have not yet been issued.
Another high-profile collective action initiated was brought by PROFECO in 2017 against a Mexican low-cost airline, in which it alleged violations of passengers' rights. It was finally resolved by judicial settlement prior to the issuance of a judgment on the merits.
A sector in which several class actions have been brought and settlements have been reached in favour of affected consumers has been the construction industry. Typically, these actions have been brought against construction companies that fail to deliver the properties purchased within the agreed term or fail to formalise the contracts in a public deed.
Similarly, several class actions have been filed in the telecommunications sector, mainly due to deficiencies in mobile telephone services and improper charges. Most of these concluded with the signing of judicial agreements, but some are still pending.
The lack of a sufficient number of cases to allow the courts of the Federal Judicial Branch to rule on the procedural and substantive issues surrounding class actions has meant that a sufficient body of judicial precedents interpreting and determining the scope of the relevant provisions has not yet been formed.
However, it is possible to distinguish certain trends in the approach that the federal courts have taken with respect to class proceedings. In general terms, in the criteria issued during the last five years, they have tried to give a flexible and protective interpretation with respect to the plaintiff collectives. This, at the outset, seems consistent with the constitutional mandate and makes sense for the protection of collective interests. However, the approach forgets that sometimes there are also individual or collective interests worthy of protection on the other side.
For example, in the case of the collective action related to the cultivation of genetically modified corn, we are faced with a real clash of rights. While the plaintiffs allege that transgenic corn could endanger native species, the defendants and a large group of scientists argue that transgenic corn is not only healthy and completely safe, but that without it, it would be impossible to feed the entire population.
One of the first judicial precedents that paved the way for this trend of flexible interpretation to favour the processing of collective proceedings was the precedent 1a. LXXXIV/2014 (10a) issued in 2014 by the First Chamber of the Supreme Court of Justice. In such criterion, the First Chamber held that judges hearing a class action have the obligation to interpret the rules and facts in a manner compatible with the principles and objectives of collective proceedings. This is with the objective of protecting and safeguarding the public interest and collective rights and interests.
The First Chamber explained in that precedent that due to the particularities of class actions, judges must try to make them more agile, simple and flexible so that the claims of the community have an effective access to justice. All of this translates into an approach that favours the processing and advancement of such actions, leaving aside potential procedural obstacles and formalisms that could stop or delay their processing.
A second relevant criterion, which follows the same trend, is precedent I.5o.C.91 C (10a) issued by the Fifth Collegiate Court in Civil Matters of the First Circuit in 2015. In that precedent, the Fifth Collegiate Court ruled with respect to a legal requirement for the granting of injunctive relief requested by the plaintiffs. In particular, the Federal Code of Civil Procedure requires that, prior to the issuance of an interim measure, the opposing party must be given a period of three days so that it has the opportunity to make statements. In the specific case from which the thesis was derived, this prior hearing had not been given. The Fifth Collegiate Court, interpreting the provisions in a flexible manner and seeking to favour the protection of collective interests, held that in exceptional cases where there is a risk of causing greater damage to society, the interim measure may be granted without giving the opposing party a hearing, as long as this omission is later corrected and the opposing party is allowed to make statements.
Finally, a third relevant judicial precedent that follows the same line, was thesis I.14o.C.32 C (10a), issued in 2019 by the Fourteenth Collegiate Court in Civil Matters of the First Circuit. The issue discussed in the specific case was whether a collective proceeding could lapse, in application of this relevant procedural figure that exists in most proceedings, typically due to the passage of a certain period of time without the trial being given procedural impetus. The Fourteenth Collegiate Court held that the question of lapsing could not be applied to collective proceedings because it was contrary to the principles and objectives of such proceedings, related to the protection and tutelage of collective rights and interests. Specifically, the Court considered that the lapsing of the proceedings was incompatible with the nature and purposes of collective justice.
It is reasonable to expect that in the second decade of class actions, which is about to begin, this tendency or approach of the federal courts will be tempered or limited somewhat, in order to also take into account the individual or collective rights that may be on the other side of the scale. This will depend, to a large extent, on the type of cases that are presented and whether they lead to substantive rulings or are resolved through the conclusion of judicial agreements, as has happened in many of the cases to date.
In conclusion, the experience in the first decade of class actions in Mexico has been limited, since the number of cases that some foresaw at the time of the constitutional reform far exceeded the number of actions filed, but several of them have had great relevance and impact. Although there are still not enough precedents to establish a body of case law on the subject, the trend in recent years seems to be towards the interpretation that most favours the processing of such actions and the protection of collective interests.