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:

• environmental matters; and
• public and private product consumer or provision of services relationships. 

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.

• Homogeneous individual rights are divisible individual rights with a common origin or cause. 
• Collective rights are defined as rights that may not be divided amongst the individuals that benefit from them and belong to a determined or determinable community. 
• Diffuse rights are rights that may not be divided amongst the persons that benefit from them and belong to an undetermined community.

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: 

• stating the name of the representative and explaining why they have standing;
• listing the members of the group or community that will appear as plaintiff;
• identifying the right that is considered affected;
• specifying the type of action filed;
• stating the relief sought;
• explaining the facts on which the claim is based; and
• detailing the legal basis.

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.

• In the event that the claim is not clear or some formal requirements were not met, the court grants the plaintiffs five days to make the corresponding amendments. 
• Within the next three days, the respondent is served with the claim.
• The respondent then has five days to comment on whether the requirements for the admission of the claim were met. In this period, the respondent may challenge the plaintiff's standing to bring a collective action and oppose the request for the case to continue as a collective action. 
• Once the respondent submits their comments, the court has ten days to certify that the formal requirements of the claim were duly met, and to analyse the right of action or standing requirements.
• The ruling issued by the court on whether the claim will be processed must be notified to the legal representative of the plaintiffs, who then has to ratify the claim, and to the community or group through the means the judge considers appropriate. 
• Within the next ten days, the court fixes a date for a conciliation hearing.
• Starting from the date on which the claim was processed, the respondent has 15 days to submit an answer.
• Once the respondent submits an answer to the claim, the plaintiffs have five days to submit a new writ in response, making the corresponding statements. 
• If the parties cannot reach an agreement during the conciliation hearing, the court opens the evidentiary stage, which lasts 60 days.
• Once the parties have submitted their respective writs offering evidence, the court issues a ruling deciding which evidence is accepted. Also, in the same ruling, the judge schedules a hearing for the reception of evidence within the next 40 days. 
• Once all the evidence has been produced or the corresponding terms have elapsed, the parties have ten days to submit their closing statements.
• The court then has 30 days to issue the final judgment, starting from the date of the evidentiary hearing. 

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:

• a common representative, acting on behalf of a class composed of at least 30 members; 
• non-profit associations duly incorporated at least a year prior to the submission of the claim, whose stated purpose includes the promotion or defence of the interests involved in the action, and properly registered before the Federal Judiciary Council;
• the Attorney General’s Office; and
• the Federal Consumer Protection Agency, the National Commission for the Protection and Defence of Financial Service Users, the Federal Attorney's Office for Environmental Protection and the Federal Antitrust Commission – these agencies can only bring actions in relation to consumer’s rights, financial service user’s rights, environment protection and antitrust protection, respectively.

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. 

Opt-In Mechanism

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.

Case Management 

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.

Test Cases

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. 

• If the damages total up to 200,000 times the minimum daily wage in Mexico City (in October 2021, approximately MXN24.6 million or USD1.2 million), fees can be up to 20% of the award.
• If the damages total between 200,000 and 2 million times the minimum daily wage in Mexico City (in October 2021, between MXN24.6 million and MXN246 million or between USD1.2 and USD12.3 million), fees are capped to 20% of the first 200,000 times the minimum daily wage and to 10% of the excess. 
• If the damages exceed 2 million times the minimum daily wage in Mexico City (in October 2021 approximately MXN246 million or USD12.3 million), fees are limited to 11% of the damages up to that amount and to 3% of the excess. 

Those caps also apply if a settlement is reached between the plaintiff class and the respondent. 

Third-Party Funding

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. 

Pre-trial Disclosure

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. 

Trial Disclosure

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. 

Privilege

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.

• In diffuse actions, with indivisible claims brought to protect diffuse rights or interests belonging to an undetermined community, the purpose is for the respondent to be ordered to repair the damage caused. Such repair may imply the restitution of the status existing prior to the causation of damages or, if this is not possible, the substitution of compliance according to the harm caused to the rights and interests of the community. 
• In collective actions in the strict sense, with indivisible claims brought to protect common rights or interests belonging to a determined or determinable community or group based on common circumstances, the purpose is for the respondent to be ordered to remedy the damage typically through the performance of or abstention from certain activities, as well as to obtain compensation for damages for each member of the group. 
• In individual homogeneous actions, with divisible claims brought to protect individual rights or interests that have a collective impact, belonging to individuals in common circumstances, the purpose is to obtain from the defendant the specific performance of a contract or its termination, along with all the relevant legal effects and consequences.

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. 

Enforcement 

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.