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 prior notice to be given to the respondent nor does it require an opportunity to cure the damage or breach to be given to them 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 at 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 hold one or more claims in common, 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 exclusion for the purposes of a particular collective proceeding. Said request had to be made in writing to the judge and would be considered on-time 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 an opt-in mechanism instead. 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. The Mexican Supreme Court of Justice, by a precedent issued in June 2022, determined that notifications may be made by alternative means including the publication of notices in billing statements and the web pages on respondent companies.
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, where a collective action and one or more individual actions are 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 their 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 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. The Mexican Supreme Court of Justice even recently determined that requiring consumers who are members of a class to individually prove the damages they suffered and their amount is a disproportionate measure that hinders the right of access to justice.
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 it appears that collective or class actions have not been funded by companies in this business.
Before the litigation starts, there is no 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 proved.
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. Also, 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 where 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 interests 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 with 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.
There was a reform to the Judicial Branch of the Federation that went into effect in 2021 and implied certain changes in the administration of justice. However, it did not have a relevant impact on class actions.
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.
During 2022, Mexican courts periodically returned to in-person work. However, they have retained the computer platforms for the processing of trials and even the Federal Judiciary Council authorised the courts to continue to conduct hearings digitally, a decision that could make the delivery of justice more efficient.
The Mexican Supreme Court of Justice Sheds Light on Relevant Class Action Issues
In the last year, the Mexican Supreme Court of Justice resolved two contradictions of precedents in relation to criteria issued by Collegiate Circuit Courts in class action matters. Since, according to the Amparo Law, the criteria resulting from these contradictions becomes a binding precedent for all jurisdictional bodies, the Supreme Court's determinations will be very important in class actions in the future and could even have an impact on the proceedings already in progress.
The first of the contradictions resolved by the Court, which resulted in a binding precedent published in June 2022, has to do with the possibility of notifying class members through publications in billing statements and on the defendant company's website. Mexican legislation and judicial practice have traditionally been very strict regarding the rules of judicial notifications, so the possibility that a notification on billing statements or a web page was admitted was a controversial issue and generated considerable discussion.
In addition, it was considered particularly questionable that the defendant company should have the burden of notifying its clients, users or consumers. Such imposition, among other issues, could be considered as an excessive expense or an economic burden that, according to the usual rules of procedure in Mexico, is to be borne by the plaintiffs. However, in the case of class actions, where interests that go beyond the individual are protected and there is a particular protection by the judiciary of the members of the affected community, it was not entirely clear that this allocation of the burden should be maintained.
The conflicting criteria were issued by a Collegiate Court based in the city of Xalapa, Veracruz and a Collegiate Court based in the city of Culiacán, Sinaloa. The court based in Xalapa considered that the notification should be allowed to be served not only through notices or citations published in official periodicals or newspapers, but also through the inclusion of a notice in the billing statements (given that, in that specific case, the action was brought against a telephone company) and the company’s website; the Court based in Culiacán concluded that it was not feasible to give notice through annotations in the billing statements and the website of the company, since it considered that they constituted acts depriving the defendant company of its rights.
The First Chamber of the Mexican Supreme Court, through a resolution written by Justice Jorge Mario Pardo Rebolledo and approved by unanimous vote, determined that a notification by notices or citations published in official periodicals or newspapers was insufficient to guarantee the effective knowledge of the proceeding to the community and that, therefore, the judges may order that the notification be made through the mechanisms they deem pertinent to guarantee the full identification of the community or groups that could be incorporated, as beneficiaries of the determination issued for such purpose, even if this implies an additional burden for one of the parties. Among such alternative means, the Court included the publication of notices in billing statements and electronically on the web pages of the respondent company.
The precedent is very relevant because, as of its issuance, judges who handle class actions will be able to order the defendant companies to include information about the class actions against them in the billing statements or payment receipts and on their web page, to ensure that users or consumers are aware of the existence of the proceeding and can easily participate as members of the class. It is also an important advancement in terms of judicial notifications, which have traditionally been limited by formal requirements.
The second contradiction in relation to criteria dealt with the integration of the collective, the identification and consent of its members, for a collective association to promote collective proceedings on their behalf. Two binding precedents published in July 2022 resulted from it.
The Federal Code of Civil Procedures allows non-profit civil associations to file collective actions, provided that they have been incorporated at least one year prior to the time of filing the action and their corporate purpose includes the promotion or defence of the rights and interests of the matter in question.
Collective actions in Mexico can be filed to protect three different types of rights:
In order for an action for the protection of homogeneous individual rights or collective rights to proceed, it is necessary that the community be composed of at least 30 members. However, several civil associations had brought collective proceedings for the promotion or defence of collective rights and interests without proving that a group of at least 30 persons actually existed and that they had expressly granted their consent to represent them.
This is a very relevant issue for the certification of the class and the processing of the action, which is why it generated many different interpretations. Some practitioners argued that it was indispensable for the associations to prove the integration of the collective of at least 30 individuals and their consent to be represented, since only in this way could the prospect be avoided of the associations promoting actions without an effective link with the affected parties.
The contradiction of criteria derived from conflicting determinations issued by a Collegiate Court based in Culiacánand a Collegiate Court based in Mexico City. The Collegiate Court based in Culiacán held that it was necessary to indicate the name of all the members of the collective from the initial document of the lawsuit, when a homogeneous individual class action is filed by a non-profit civil association. On the other hand, the Collegiate Court based in Mexico City held that regardless of the type of class action filed (diffuse, in the strict sense, or homogeneous individual), civil associations are not required to comply with the formal requirement of specifying in their complaint the names of the members of the plaintiff collective, since their standing to file any class action derives from the law itself.
The First Chamber of the Mexican Supreme Court of Justice decided, in a resolution written by the Presiding Justice Ana Margarita Ríos Farjat, that a civil association that promotes an individual homogeneous class action or one in the strict sense must state in the complaint the names of at least 30 members of the plaintiff collective because it is a formal requirement of the complaint and of the standing to sue; this standing is independent of the conditions to act as representative, since these conditions refer exclusively to the standing of the association in the proceeding.
One of the central considerations within the reasoning of the First Chamber was that the identification of the members of the community constitutes an element that will allow the defendant company to have certainty as to who are the members of the affected community and, if applicable, to file the corresponding defences and exceptions as to the personality of the civil association filing the lawsuit.
In addition, the Supreme Court went beyond the mere requirement of indicating the names of the members of the collective in the complaint, and determined that the civil association filing a class action must also prove that the members of the collective gave their consent to be represented in the proceeding.
However, in order to avoid imposing excessive burdens that would hinder the processing of collective proceedings, the Supreme Court of Justice expressly stated that, in the interest of simplicity, flexibility and procedural economy required by class actions, the consent of the members of the collective for the promotion of the lawsuit and the designation of its representative does not need to comply with the formalities required by the substantive civil legislation, but it is sufficient that it be evidenced in writing and attached to the lawsuit, either in a single document signed by at least 30 members or in individual documents in which each member expresses its consent separately. It is even possible that the members of the collective choose to directly sign the complaint in their capacity as a formal and material plaintiff, and in it they designate the civil association that they authorise to represent them and act on their behalf in the subsequent procedural acts. With such precision, it is guaranteed that the requirements imposed do not discourage or hinder the promotion of class actions.
These three binding precedents are very recent and there are currently many collective proceedings underway, especially at the stage of admission and certification of the plaintiff group. With this in mind, the scope of these precedents' application and the effect they may have on this practice are yet to be seen. Surely, this will mean that the collective associations will be in greater contact with the members of the affected collectives and that proceedings will not be promoted in an abstract way. In principle, this is positive both for the individuals whose homogeneous individual or collective rights are affected, as well as for the companies operating in Mexico, which will have greater legal certainty.