Standing of Consumer Associations

In the case “Asociación Civil Usuarios y Consumidores Unidos v. Chevrolet S.A. de ahorro para fines determinados y otros s/ordinario (file No. 24725/2019)”, a class action against saving plans providers, Chamber C of the Court of Appeals on Commercial Matters of the City of Buenos Aires rejected the standing of a consumer association to represent the class and allowed the objection of lack of standing as a preliminary and special ruling. There, the Court pointed out that the standing of the entity filing a class action is not automatic; it must be weighed according to standing guidelines.

Thus, the Court stated that "not just any subject masked under the name of association can, without further ado, use the special physiognomy of the class action to assume the representation of a universe of persons who have not authorized it, but, in order to be able to attribute to itself this massive management of other people's interests, it must prove the requirements arising from the aforementioned section 56 LDC, which are those that the law contemplates for the purposes of having its authorization in this regard accredited".

Article 43 of the Argentine Constitution confers consumer or user associations "anomalous" and "extraordinary" standing to file actions in defense of collective rights or interests. In turn, the Consumer Defense Law (LDC) No. 24240 established the requirements and conditions associations must meet to act as such. Among them, they must have as their purpose the defense, information, and education of consumers, and be authorized by the enforcement authority (art. 56 and subsequent, LDC). The enforcement authority created the National Registry of Consumer Associations (Regulatory Decree 1798/94).

It was the Court's opinion that a comprehensive interpretation of the LDC implies that it is not enough for an association to be registered to prove that it is sufficiently apt to guarantee the correct defense of the interests of the group it intends to represent.

Strictly speaking, associations should not only show they fulfill the requirements in article 56 LDC before the administrative authority in charge of the registry; they must also do it before the judge hearing the case. In this sense, the ruling quotes an important precedent (PADEC c. Swiss Medical S.A. s/nulidad de cláusulas contractuales, of August 21, 2013), where the Argentine Supreme Court of Justice held that the judge hearing the case must supervise the standing of whoever claims the representation of the collective, and check that such standing does not disappear later on.

Different chambers of the Court of Appeals in Commercial Matters had at times not considered the "adequate representation of the group" as an autonomous element consumer association should justify before the judge hearing the class action, when those associations had been authorized by the enforcement authority and were registered before the corresponding registry.

In this case, the Chamber C ruled that the consumer association was not an adequate representative because:

• The association had to be "independent of any form of professional, commercial, and productive activity" (art. No. 57 LDC), and a law firm only interested in creating its own cases did not meet such requirement.
• The complaint included passages from other collective actions (i.e., a fast-food restaurant and grievances related to prepaid medicine affiliates), unrelated to the complaint, which involved the nullity of a clause of a previous savings contract. The judges understood this showed a lack of standing to represent the collective.
• The association had not referred to a single case where the clause whose nullity it was seeking had the factual significance that it claimed, which was detrimental to the existence of the affected group and its identification.
• The group of members of the alleged class was very ambiguous and vaguely defined, which made it impossible to determine the homogeneity of the class.
• It was also not possible to determine the existence of a case, since the plaintiffs had failed to submit the name of even a single consumer harmed by the challenged clause, or any other element that would make it possible to prove that there were parties interested in the declaration of unlawfulness.

The Chamber C especially considered that this type of action is used to channel claims of enormous economic importance, under the waiver of court fees and costs. Therefore, to avoid abuses, the Court considered it reasonable to dismiss the action without further proceedings for lacking the graveness inherent to a class action.

This decision is not final: the plaintiff filed an extraordinary federal appeal before the Argentine Supreme Court of Justice.