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Damage without compensation - compensation without damage - Do mass harm events require modifications of liability law?

Subject Area Private Law
Term from 2019 to 2025
Project identifier Deutsche Forschungsgemeinschaft (DFG) - Project number 429842187
 
Final Report Year 2024

Final Report Abstract

As part of the project, it was investigated how injured parties can be compensated in the case of mass damages, whether such compensation is necessary at all in the case of scattered damages and how it is possible to quantify damages in court proceedings in a way that is economical in terms of litigation. In the case of scattered damages, injured parties regularly refrain from filing individual lawsuits and participating in collective actions; thus compensation and preventive effects fail. Part 1 of the project examined the common practice in US law of so-called cy près solutions, in which residues of settlement funds are paid out to charitable organisations as a way of indirect compensation. The study affirms the constitutionality of such solutions in US law, but identifies numerous conflicts of interest in favouring private organisations. For German law, an opt-out representative action with a low-threshold registration and distribution procedure should be implemented instead of the profit skimming action (Sec. 10 UWG). According to the lesson learnt from US law, undistributed amounts should be paid into a state-administered, public-law special fund, which serves, among other things, to finance further class actions. The second sub-project focussed on quantification methods of damages and their compatibility with the objectives of collective redress. To this end, mathematical and statistical models from US law were analysed as well as statutory damages (lump-sum damages amounts in copyright and data protection law) which require restrictions when aggregated in a class action. German law must be cautious with abstract lump sums and should rely primarily on damage estimation (Sec. 287 ZPO), prima facie evidence and factual presumptions. In the case of violations of data protection law, however, representative actions are only possible if the immaterial damage is largely generalised on an abstract basis. Evidence-taking for each individual case is not practicable in mass proceedings and would prevent the “similarity” requirement for a representative action to be fulfilled (Sec. 15 VduG). The project furthermore outlines procedures for determining and distributing damages in representative actions based on the experience of US distribution mechanisms under class action settlements. As a result of the whole project, it became apparent that a cautious modification of the substantive law on damages in a sector-specific manner is what makes procedural enforcement possible in the first place and that a concretisation of the power of estimation under Section 287 ZPO is indispensable for judicial practice.

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