Class/collective actions in Brazil: overview

A Q&A guide to class/collective actions in Brazil.

The Q&A gives a high level overview of class/collective actions, including current trends; the regulatory framework; limitation periods; standing and the procedural framework for bringing an action; funding and costs; disclosure; damages and relief; settlement; appeals; alternative dispute resolution and proposals for reform.

To compare answers across multiple jurisdictions, visit the Class Actions Country Q&A Tool.

This Q&A is part of the Class Actions Global Guide.

Tito Amaral de Andrade, Gláucia Mara Coelho and Gisela Mation, Machado Meyer Sendacz Opice Advogados
Contents

Overview of class/collective actions and current trends

1. What is the definition of class/collective actions in your jurisdiction? Are they popular and what are the current trends?

Definition of class/collective actions

Generally, "collective actions" are the procedures aimed at the protection of collective rights, defined as follows:

  • "Trans-individual rights", which are held collectively and cannot be exercised individually, such as the right to a healthy environment. Trans-individual rights can be classified as:

    • diffuse (where its holders are not an identifiable group);

    • collective rights (strictu sensu) (where its holders can be clearly identified).

  • "Homogenous individual rights", which are individually held and share the same origin, such as those held by consumers who purchased the same defective product.

The most important procedural tool for the protection of these rights is a class action, established by Law No. 7,347 enacted in 1985 (Class Action Law). Other less commonly used means of protection of these collective rights (which will not be addressed in this chapter) include:

  • Popular actions (established by Law No. 4,717, enacted in 1965), which allow any citizen to file a claim to protect public property or legal entitlements.

  • Collective writ of mandamus (mandado de segurança coletivo), established in Article 5, LXX of the Brazilian Constitution, to protect against illegal acts and abuse of power from public authorities.

Moreover, the new Code of Civil Procedure (Law No. 13,105) entered into force in March 2016. This contains provisions that allow for repetitive individual appeals (related to the same legal issue) to be decided together (Articles 976 to 987, Code of Civil Procedure), which is considered by some scholars as another means of addressing collective issues.

Use of class/collective actions

The use of class actions has grown significantly since the enactment of the Class Action Law. Class actions are available for the protection of any kind of diffuse or collective right (see Question 3). Their use ranges from the protection of consumer and environmental issues to the recovery of damages caused by corruption. Class actions have become an important tool in shaping the behaviour of private and public bodies.

Current trends

Some of the most frequent types of class actions in Brazil are those filed for the protection of consumers and the environment. Because of the broad availability of class actions in the legal system, these suits are also used in many other areas. Interesting recent class actions include suits filed by:

  • Shareholders of a large oil and gas company against the controlling shareholder for misrepresentation and false information.

  • An LGBT association against a Congressman for allegedly homophobic statements.

  • A class union of rubber tappers against Brazil and the US for the violation of human rights.

  • Public prosecutors against several companies mentioned in the Car Wash investigations for administrative improbity.

 

Regulatory framework

2. What are the principal sources of law and regulations relating to class/collective actions? What are the different mechanisms for bringing a class/collective action?

Principal sources of law

The principal sources of law and regulation relating to class actions are the:

  • Law No. 7,347 enacted in 1985 (Class Action Law).

  • Consumer Protection Code (enacted in 1990).

In addition to providing for substantive rights, the Consumer Protection Code established procedural rules for class actions on consumer law, which were made applicable to any kind of class action (Article 21, Class Action Law).

Principal institutions

Class actions can be filed before State or Federal courts, depending on the parties involved. While the Public Prosecutor's Office has standing to file a class action, when the suit is commenced by another party, the Public Prosecutor's Office is still required to participate in and oversee the proceedings.

Different mechanisms

Bringing a class action simply requires the suit to be filed by one of the entities having standing under the Class Action Law (see Question 5). The Public Prosecutor can initiate administrative investigatory proceedings (inquérito civil) before deciding whether to file a class action. However, this is not a requirement for filing a class action.

 
3. Are class/collective actions permitted/used in all areas of law, or only in specific areas?

General laws

Law 7,347 of 1985 (Class Action Law) was originally enacted for the protection of the environment, of consumers and to protect the value and properties of artistic, aesthetic, historic, touristic and landscape features. The scope of the law was later expanded to any kind of diffuse or collective right.

After the enactment of the Class Action Law, Congress passed statutes on the substantive rights and protections of different areas of law, making reference to the fact that those rights could be enforced through class actions. Those statutes include, for example:

  • Article 47, Law 12,529 of 2011 (Anti-Trust Law).

  • Chapter VII, Law 8,069 of 1990 (Child and Adolescent Statute).

  • Title III, Law 8,078 of 1990 (Consumer Protection Code).

The Brazilian Constitution also provides principles concerning the protection of many of these rights.

In summary, the areas of law where class actions can be used are broad and encompass claims related to:

  • Product liability.

  • Environmental law.

  • Competition law.

  • Pension disputes.

  • Consumer law.

  • Illegal acts by the public administration.

  • Corruption.

  • Shareholder protection.

  • Consumer redress in financial services.

Other areas of law/policy

Generally, in civil procedure, once the occurrence of a crime and the identification of the perpetrator committing that crime have been decided on in a criminal case, they cannot be disputed in a civil claim (Article 935, Brazilian Civil Code). Therefore, criminal proceedings could theoretically serve as the basis for a class action. Since criminal proceedings are generally lengthy and because the standard of proof in criminal cases is higher than in civil ones, this rarely happens.

Class actions can also be used in actions for administrative misconduct (improbidade administrativa). If there is proof of administrative misconduct, the sanctions can include loss of employment for a public official and the loss or suspension of political rights.

 

Limitation

4. What are the key limitation periods for class/collective actions?

The default statute of limitation is ten years. Specific rules exist for claims under consumer law (five years) and tort law (three years). The statute of limitation can be suspended under certain circumstances: for example, there are court decisions that state that losses to the public treasury (which often occur, for example, in cases of administrative misconduct) are not subject to any statute of limitation period.

 

Standing and procedural framework for bringing an action

Standing

5. What are the rules for bringing a claim in a class/collective action?

Definition of class

There is no system of certification of a class within the class action procedure. There is also no preliminary decision on the definition and certification of a class. There is a general analysis of standing to sue, in accordance with the provisions of Law 7,347 of 1985 (Class Action Law) and the general rules of the Civil Procedure Code.

Potential claimant

The following institutions have standing to file a class action (Article 5, Class Action Law):

  • The Federal Union, the individual States and the municipalities.

  • Public companies, foundations and mixed capital corporations.

  • The Public Prosecutor's Office.

  • The Public Defender's Office.

  • Civil associations that have been incorporated for at least one year, and whose institutional purpose includes defending the values for which they have commenced a class action.

The new Code of Civil Procedure now includes a provision (Article 139, X) stating that, when facing multiple repetitive individual claims, a judge can notify the institutions referred in Article 5 of the Class Actions Law to consider the filing of a collective action.

Claimants outside the jurisdiction

There are no restrictions to a claim being brought on behalf of individuals from several jurisdictions. One example in which such a situation could potentially occur is a class action on behalf of victims of an airplane accident where some of the victims are foreigners.

Generally, Brazilian Civil Procedure rules require a minimum connection to Brazil for a claim to be filed. Under the Civil Procedure Code, Brazilian courts have jurisdiction when:

  • The defendant resides in Brazil (regardless of his or her nationality).

  • Brazil is the place of performance of an obligation.

  • The suit derives from facts occurred or acts performed in Brazil.

Professional claimants

Professional commercial claimants do not have standing to sue under the law. Class associations, which could bring a claim under the Class Action Law, are not required to buy the claims of the represented individuals they seek to represent. Some of the class associations are industry associations, and therefore could use a class action to represent the homogeneous individual interests of the participants of that industry. One such example is an association of companies that regularly purchases raw material from manufacturers that are allegedly in a cartel. In this case, a class action could serve as a mechanism for the protection of their individual private interests.

There are no direct monetary incentives for professional claimants. The monetary awards of a class action are paid into the appropriate collective rights fund (which is managed by the government and exists at the federal, state and municipal level and provides resources for projects that advance those rights) (Article 13, Class Action Law).

Qualification, joinder and test cases

6. What are the key procedural elements for maintaining a case as a class action?

Certification/qualification

Brazil does not have a system for certification of a class, such as the one used in the US (see Question 5). There is a general analysis of standing to sue, in accordance with the provisions of Law 7,347 of 1985 (Class Action Law) and the general rules of the Civil Procedure Code.

Minimum/maximum number of claimants

There is no minimum number of claimants required before an action can be brought.

Joining other claimants

The potential claimants with standing to file class actions are restricted to those referred in Question 5 and do not include individuals. Since trans-individual rights cannot be exercised individually, there are no opt-in or opt-out provisions concerning this type of class action.

For cases involving homogeneous individual rights, while there are no strict opt-in and opt-out provisions in the Class Action Law, the following rules establish the relationship between a class action and individual claims:

  • A decision on a class action for homogeneous individual rights only has res judicata effect over the members of the represented class if the claimant is successful, and therefore individual claims can still be brought where the claimant is unsuccessful (Article 103, III, Consumer Protection Code).

  • If the case is dismissed with prejudice, the members of the represented class are not barred from initiating individual claims.

  • Once a decision has been issued in favour of the claimant in a class action involving homogeneous individual rights, recognising the rights of those represented in the class action, each of the individuals can file for the payment of the damages individually suffered.

  • If an individual claim is pending when a class action on the same issue is filed, the individual claimant cannot benefit from the effects of a decision on the class action unless he requests that the individual law suit is suspended within 30 days from notice of the class action being given in the record of the individual case (Article 104, Consumer Protection Code).

Test cases

There are no test model cases for class actions. However, a decision in a landmark case could be used as a precedent in other similar cases.

Timetabling

7. What is the usual procedural timetable for a case?

While the Brazilian Civil Procedure Code establishes deadlines for the parties' submission of briefs and appeals, it does not establish a formal procedural timetable for judicial actions. Also, the time taken for each step of a lawsuit depends significantly on the place and branch of the judiciary where it is filed. Class actions usually require a comparatively lengthy evidence-producing phase. Therefore, a first instance decision generally takes a couple of years. In filing the class action, the claimant can make a request for injunctive relief, which is likely to be decided in a few weeks if not days.

Effect of the area of law on the procedural system

8. Does the applicable procedural system vary depending on the relevant area of law in which the class/collective action is brought?

Generally, the procedural system applicable to class actions does not vary depending on the area of law in which the class action is brought. However, the Consumer Protection Code allows for the inversion of the burden of proof to the defendant (Article 6, VIII, Consumer Protection Code), which can be requested for both individual and collective claims.

 

Funding and costs

Funding

9. What are the rules governing lawyer's fees in class/collective actions?

There are no specific rules governing lawyer's fees in class actions.

There are no specific rules prohibiting lawyers from charging contractually established contingency fees. Generally, the losing party in a judicial procedure bears the litigation costs of the prevailing party, including judicial and court-awarded attorney fees (Article 85, Brazilian Civil Procedure Code). Court-awarded attorney fees, which are collected by the attorneys directly, are typically granted as a percentage ranging from 10% to 20% of the amount awarded in the decision and paid by the losing party, and are not based on the actual fees paid by the prevailing party to its attorneys. However, in class actions the claimant is exempted from paying court fees, judicial expert fees and awards on legal fees (see Question 13).

Monetary awards of a class action are paid into the appropriate Collective Rights Fund (or, in individual homogenous rights cases, are due to each individual claimant) and, therefore, there are fewer incentives for lawyers to charge contingency fees in class actions (see Question 5, Professional claimants). An attorney could, however, have a contingency arrangement with individuals entitled to receive an award under a class action on individual homogenous rights. Since individuals do not have standing to file class actions, they can only be represented after a decision recognising their rights has been issued.

 
10. Is third party funding of class/collective actions permitted?

Third party funding is not a common practice. Monetary awards of class actions are paid into the appropriate Collective Rights Fund (or, in individual homogenous rights cases, will be due to each individual claimant). Therefore, the incentives for third party funding of class action are different than in other jurisdictions, where the third party funder can benefit from the monetary award.

 
11. Is financial support available from any government or other public body for class/collective action litigation?

There is no financial support from the government or any other public body for class or collective action litigation. However, some of the bodies with standing to file class actions are public authorities, funded by the State, such as the:

  • Public Prosecutor's Office.

  • Public Defender's Office.

The claimant in a class action is also exempt from paying court fees, judicial expert fees and awards on legal fees (see Question 13).

 
12. Are other funding options available to claimants in class/collective actions?

There are no other funding options available to claimants in class or collective actions.

Costs

13. What are the key rules for costs/fees in class/collective action litigation?

The claimant in a class action is exempted from paying court fees, judicial expert fees and awards on legal fees, except in cases of bad faith litigation (Article 17, Law 7,347 of 1985 (Class Action Law)).

Costs on judicial fees are managed by the judicial bodies themselves and the cap varies from state to state. Generally, the losing party in a judicial procedure bears the litigation costs of the prevailing party, including judicial and attorney fees (Article 85, Brazilian Civil Procedure Code). The claimant in a class action is exempted from such fees. In the case of a settlement, the allocation of costs provided in Article 85 of the Brazilian Civil Procedure Code does not apply.

While the defendant in a class action is likely to have to pay the ligation costs regardless of the result of the class action, the defendant can refuse to pay for the production of technical evidence that is requested by the claimant.

Key effects of the costs/funding regime

14. What are the key effects of the current costs/funding regime?

Because the claimant is exempted from paying judicial fees or, where the class action is not successful, the costs that are normally allocated to the losing party, filing a class action creates very little financial burden on the claimant. Therefore, class actions are quite frequently filed, sometimes with little consideration for the actual chances of success.

 

Disclosure and privilege

15. What is the procedure for disclosure of documents in a class/collective action?

Before litigation

Under the new Civil Procedure Code (Law No. 13,105) which entered into force on March 2016, there are procedures in place to request the production of evidence on facts that could justify or avoid the filing of a claim. Under the previous Civil Procedure Code (Law No. 5,869, enacted on 1973), the production of evidence before litigation was only allowed where it was likely that it would not be possible to produce it during litigation, such as a case involving perishable goods.

During litigation

The rules on disclosure and privilege in class actions do not differ from those applicable in ordinary proceedings. Brazil does not have a system of trial discovery similar to the US. A judge can, however, do the following:

  • Request that the parties present a particular piece of evidence and determine that the absence of this evidence is interpreted against that party.

  • Grant an injunction for the forceful production of a particular type of evidence.

 
16. Are there special considerations for privilege in relation to class/collective actions?

The law recognises professional privilege, commonly understood to be a duty of confidentiality owed by certain professionals such as attorneys and doctors for information in their possession. Since Brazil does not have trial discovery, there are no specific rules governing the refusal to disclose documents based on privilege. The failure to present a particular piece of evidence could be interpreted against the non-disclosing party (see Question 15, During litigation).

 

Evidence

17. What is the procedure for filing factual and expert witness evidence in class/collective actions?

A judge can appoint an expert to assist in technical issues raised during a class action. Parties to the procedure can make use of party-appointed experts that seek to assist the court-appointed expert in making his report. There are no explicit restrictions on the type of evidence that can be filed, as long as the evidence is material to the case and useful for the judge in reaching his decision. There is also no requirement of pre-trial witness statements or reports.

 

Defence

18. Can one defendant apply to join other possible defendants in a class/collective action?

Joining other defendants

A defendant can apply to join other defendants if one of the requirements established in Article 113 of the Civil Procedure Code are met, including:

  • There are common rights or obligations related to the claim.

  • There is a connection between claims due to their object or cause of action.

  • There are affinities due to a common point of fact or law.

A person or legal entity that is not a party to a class action can also ask to participate as an "assistant" to one of the parties if it is established that the assistant has a legal interest in the outcome of the case.

Rights of multiple defendants

Multiple defendants are allowed, but not required, to be represented by the same lawyers and instruct joint experts. There are no specific rules governing "joint defence agreements" or other agreements that allow the sharing of confidential information without waiver of privilege.

 

Damages and relief

19. What is the measure of damages under national law in the field of class/collective actions?

Damages

Both material and moral damages are recoverable. Although there is no express cap on the quantum that can be recovered from a single defendant, the courts, and the Superior Court of Justice especially, seek to establish a range for the amount that can be recovered in different types of damages.

Punitive damages are not expressly provided for in the law and there is a debate as to whether they could be allowed, with the majority view being that they could not. In any case, judges have often incorporated exemplary factors into their reasoning when awarding damages.

For a description of how damages in class actions concerning homogeneous individual rights are apportioned between claimants, see Question 6, Joining other claimants. For trans-individual rights, the damages are directed to the Collective Rights Funds.

Recovering damages

Contribution claims are allowed under the law. To recover from a person responsible for the conduct that has been complained about, the defendant must file a lawsuit with evidence of the:

  • Illegal act committed by that person.

  • Damage caused.

  • Causal link between the illegal act and the damage.

Interest on damages

While the payment of legal interests is recognised under the law, there are no special rules applicable to class actions in that regard.

 
20. What rules apply to declaratory relief and interim awards in class/collective actions?

Declaratory relief

Declaratory relief in a class action could include a declaration on the:

  • Existence of misconduct or an illegal act.

  • Nullity of a contract or legal transaction.

  • Default or violation of particular rules.

Requests for declaratory relief must be presented before the defendant is served and are normally granted with a final decision on the merits.

Interim awards

There are no restrictions on the kinds of interim relief that are available under the law. In class actions, the most commonly applied for interim requests include:

  • Ceasing of a particular conduct.

  • Imposing an obligation to behave in a particular way.

  • Ceasing of assets.

  • The urgent production of evidence.

Interim relief can, in principle, be applied for at any time and in most cases requests are decided within a few days or weeks, by means of an interlocutory decision.

 

Settlement

21. What rules apply to settlement of class/collective actions?

Settlement rules

There are no specific rules governing the settlement of class actions. The settlement of claims filed by the Public Prosecutor take the form of a Conduct Adjustment Term (Termo de Ajustamento de Conduta). A settlement on a pending judicial case must be approved by the presiding judge. However, a judge's review of settlements is generally limited.

Separate settlements

It is possible to settle against only one defendant when there are multiple defendants. The claim then continues against the remaining defendant(s).

 

Appeals

22. Do parties have a right to appeal decisions relating to class actions, such as a decision granting or denying certification of a class action?

There is a right to appeal against most decisions relating to class actions, including the decision on admissibility of the claim. The procedure of appeal requires filing within the appeal's deadline and the payment of the applicable judicial fees on appeal.

 

Alternative dispute resolution

23. Is alternative dispute resolution (ADR) available in class/collective actions?

Under the general rules of the recently enacted Brazilian Code of Civil Procedure, one of the first steps of any judicial lawsuit is a conciliation/mediation hearing for the amicable settlement of the dispute, aided by a specialised mediator or conciliator. While this conciliation hearing was optional under the previous Code of Civil Procedure, it is now mandatory, unless both parties agree to waive it.

There are no legal provisions expressly allowing for class arbitrations.

 

Proposals for reform

24. Are there any proposals for reform concerning class/collective actions?

In 2009, the Ministry of Justice proposed Draft Bill No. 5139 to amend the Class Action Law to, among other things:

  • Expand the persons with standing to sue.

  • Expand the scope of issues that could be claimed in a class action.

  • Allow claimants to change the pleading and cause of action at any time.

However, the Draft Bill has been under discussion before Congress and in 2010 a report against the amendments was issued by a Congressional Sub-Commission. In 2010 the Draft Bill was rejected by the House of Representatives' Constitution and Justice Commission, who issued a report against the proposed amendments. An appeal has been filed against this decision and is still pending.

The draft bill of the new Brazilian Code of Civil Procedure contained, in Article 333, provisions for the possibility of converting an individual claim into a collective claim. However, this provision was vetoed by the Brazilian President, with the support of the Brazilian Bar Association, on the grounds that its wording did not establish sufficiently specific criteria for the conversions.

 

Online resources

Planalto – Presidency of the Republic

W www.planalto.gov.br

Description. This is the government platform containing most Brazilian legislation. A direct link to the Class Action Law can be found at www.planalto.gov.br/ccivil_03/leis/l7347orig.htm. There is no official translation of the Class Action Law.



Contributor profiles

Tito Amaral de Andrade, Partner

Machado Meyer Sendacz e Opice Advogados

T +55 11 3150 7637
F +55 11 3150 7071
E tandrade@machadomeyer.com.br
W www.machadomeyer.com.br

Professional qualifications. Brazil, Attorney at Law

Areas of practice. Economic and anti-trust law; international trade law.

Recent transactions.

  • Advising a construction company on allegations of anti-trust violations related to the Car Wash Operation.

  • Acting on behalf of a gas supplier in connection with collective actions filed by a product purchaser alleging anti-trust violations.

Languages. English, Portuguese

Professional associations/memberships. International Bar Association; Brazilian Bar Association; Director of the Brazilian Institute for Competition, Consumer Relations and International Trade Studies (IBRAC, 2008-2010); Member of the International Law Committee of the Brazilian Bar Association (São Paulo); President of IBRAC, 2012/2013; Co-chair of the Anti-trust Committee of the American Chamber of Commerce in Brazil (Amcham).

Gláucia Mara Coelho, Partner

Machado Meyer Sendacz e Opice Advogados

T +55 11 3150 7198
F +55 11 3150 7071
E gmcoelho@machadomeyer.com.br
W www.machadomeyer.com.br

Professional qualifications. Brazil, Attorney at Law

Areas of practice. Dispute resolution; administrative law; consumer law; bankruptcy; judicial reorganisation law.

Recent transactions.

  • Acting on behalf of airlines representing more than 90% of the Brazilian market for domestic flights in a class action seeking to limit the prices on air tickets.

  • Advising companies on cartel allegations relating to São Paulo's metro.

  • Representing a company in a class action on administrative misconduct in relation to the construction of football stadium for the 2014 World Cup.

  • Defending an electronics manufacturer in relation to consumer class actions.

  • Acting on behalf of one of the largest producers of fertilizers in the country in a class action on alleged environmental damage.

Languages. English and Portuguese

Professional associations/memberships. Member of the São Paulo Lawyers Association (AASP); Brazilian Institute of Procedure Law (IBDP); São Paulo Lawyers Institute (IASP); Brazil Turnaround Management Association (TMA Brasil); and International Bar Association (IBA).

Publications.General Repercussion of Constitutional Issues in Brazilian Civil Procedure, Atlas, 2009.

Gisela Mation, Associate

Machado Meyer Sendacz e Opice Advogados

T +55 21 3572 3024
F +55 21 3572 3000
E gmation@machadomeyer.com.br
W www.machadomeyer.com.br

Professional qualifications. Brazil, Attorney at Law; New York, Attorney at Law

Areas of practice. Dispute resolution; bankruptcy; judicial reorganisation law; compliance; anti-corruption law.

Languages. English, Portuguese, French, Spanish, and German

Professional associations/memberships. Brazilian Arbitration Committee (CBAR); Young International Arbitration Group (YIAG); ICDR Young & International; American Society of International Law.

Publications.

  • Private Law and the Fight Against Corruption: Piercing of the Corporate Veil and Insolvency in the TRT case, in Maíra Machado et al (Org.), Studies on the TRT Case, São Paulo: Direito GV, 2014.

  • Civil lawsuits to cease anticompetitive conducts or to seek damage compensation: the Brazilian case law, SEAE Award 2008 Ministry of Finance, 2009.


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