Tech and social media: a new wave of class actions in Portugal?

Introduction

Class action lawsuits are an interesting legal tool for consumers to use to pursue legal claims against a large company defendant. In Portugal, the use of class actions is becoming increasingly popular. As one of the few legal systems in the EU that provides an opt-out mechanism (along with the UK and the Netherlands), Portugal is becoming a major gateway for class actions against multinational companies operating in Europe.

Traditionally a footnote in its legal practice, Portugal has been swept in recent years by a surge of class actions, marked by high-value claims in the millions of euros and an influx of third-party financiers. These class actions have been primarily filed as follow-on damage claims arising from various legal violations, such as breaches of competition regulations, product liability, and consumer rights. In the tech and social media sector, there are a few high-profile cases worth exploring.   

The Portuguese class action regulatory framework

In Portugal, class actions are known as ações populares and are regulated by Law no. 83/95 of 31 August 1995. This legislation has consistently provided a framework for the use of class actions since its enactment in civil, commercial and administrative litigation, and only received an amendment in 2015. The law was designed to prevent, cease, or judicially prosecute offences against public health, consumer rights, quality of life, and the preservation of the environment and cultural heritage. Additionally, this law is responsible for ensuring the defence of the assets of the State, autonomous regions, and local authorities.

Law no.83/95 allows for the formation of a representative plaintiff who can act on behalf of the entire class by default, without the need for express mandate or authorisation from each singular individual of the class. The final judicial decision will bind all individuals, except for those who decide to ‘self-exclude’ from the proceedings (i.e. opt-out).

The opt-out procedure is initiated right after the initial plea is presented. The judge will fix the deadline for individuals to declare exclusion from collective representation or to singularly act in the proceedings alongside the representative plaintiff. Service of process is executed through any social media or judicial edicts.

The Public Prosecution may intervene in class actions proceedings and replace the representative plaintiff in case the latter withdraws, settles or acts against the interests of the class. In addition, judges have reinforced powers of evidence collection since they will not be bound by the initiative of the parties in this regard.

Judicial court fees and a word on litigation funding

In Portugal, legal costs tend to be relatively low compared to other jurisdictions. Court fees to present a claim are subject to a progressive table depending on the claim value. As of May 2023, the maximum initial fee amounted to EUR 1,632. At the end of the procedure and whenever the value of the dispute exceeds EUR 250,000, the final court fees are subject to remainder fees, calculated in proportion to the claim value. The remainder fees may then significantly increase the cost to litigate in a Portuguese court and discourage the submission of high-value claims.

However, within the context of a class action, the claimants are exempt from payment of the initial court fee and may also be exempt from the remainder fees if the claim is at least partially successful. If the claimants are totally unsuccessful, the court will fix the court fees between 10% and 50% of the court fees that would normally apply (bearing in mind the economic situation of the claimants and the reasons why the claim was unsuccessful). 

The legal regime for fees when it comes to class actions is more favourable to claimants when compared to the legal regime in common claims and may favour the submission of high-value claims through the class-action method.

A class action may imply a multitude of other costs, such as lawyers’ fees and experts’ fees, and it is common to find litigation funders operating in different jurisdictions and financing class actions who will cover these costs. This is especially important since Portuguese law does not provide a specific framework for litigation funding, which increases the risk associated with financing agreements. 

In addition, class-action law provides that consumer’s non-reclaimed amounts are to be delivered to the Ministry of Justice to promote access to justice, increasing the remuneration challenge for financiers since the possibility to receive the non-claimed amounts appears to be excluded by the law.

Despite these challenges, class actions in Portugal seem to remain attractive to financiers of litigation (the opt-out regime is of course one of the reasons behind such interest) and there are pending claims where the existence of litigation funders and the contents of the funding agreements have been disclosed.

Recent high-profile cases within the tech and social media sector

In recent years, there have been several high-profile class actions in Portugal, including one involving the social-media platform Meta (previously Facebook).

In 2018, in the aftermath of Cambridge Analytica leak, the Portuguese consumer association DECO filed a class-action lawsuit against Meta (then Facebook), alleging that the company violated data-protection law by failing to adequately inform and obtain consent from users to share their personal data with certain entities. The lawsuit sought EUR 200/year compensation for each affected user. It was initially estimated that 63,000 Portuguese users were affected by the breach. Support from users in the lawsuit was high since more than the initial of 63,000 users joined the association. The lawsuit was withdrawn in 2021, after Meta and DECO reached an agreement to co-operate in a three-year programme to improve Portuguese users’ digital life.

In March 2022, Ius Omnibus (a non-profit association created in March 2020 to defend consumers in the EU) filed a lawsuit in the Portuguese Competition, Regulation and Supervision Court to defend Portuguese consumers against Apple's alleged anti-competitive practices. The lawsuit addressed the company’s practice to produce and sell devices that work exclusively with the Apple operating system (iOS), specifically iPhones, iPads, and iPods Touch. The association asked the Court firstly to declare Apple's practices in this context an infringement of consumer protection and competition laws; secondly, to order Apple to stop these alleged anticompetitive practices; and thirdly, to compensate affected Portuguese consumers.

In April 2023, the same association Ius Omnibus filed two class actions against TikTok. The platform is accused of allegedly adopting misleading commercial practices, which violates privacy and mishandles personal data of Portuguese users. The court is being asked to declare the alleged ongoing abuse and to condemn TikTok to put an end to these illegal actions. Additionally, TikTok has been asked to pay compensation to all represented consumers, which can reach EUR 1.12 billion, according to Ius Omnibus.

Summing up

The Portuguese class action regulatory framework provides a stable opt-out mechanism for individuals to pursue legal claims collectively. Legal costs tend to be relatively low, allowing easy access to the judicial system with reduced initial budgeting.

The recent examples of class actions involving social media platforms like Meta and TikTok demonstrate the growing trend in Portugal to present lawsuits representing millions of euros in compensation. Associations are becoming more active, engaging with their popular support and drawing the media’s attention. There are also indicators that consumer support may be high, leaving the curious impression that things are about to get hot in the Mediterranean.