Various recent judgments of German Regional Courts have raised questions about the validity of litigation vehicles and assignment of claim models under German law, in particular the German Legal Services Act (RDG).[1] On 24 February 2021, the Regional Court of Hanover was critical of a claimant, Cartel Damages Claims (CDC), in a lawsuit for damages against the sugar producers Pfeifer & Langen, Nordzucker and Südzucker.^[2] CDC had asserted claims from a total of 63 companies and groups of companies. The amount in dispute was around 180 million euros.

CDC had bundled and asserted assigned claims from numerous companies in its action vehicle Retail Cartel Damage Claims SA. The companies involved are numerous large and small manufacturers of confectionery and other sugar-containing foods, as well as food retailers such as Rewe.

As in the decision in the Kaufland suit of 20 May 2020,[3] the court took the view that there was a violation of the Legal Services Act because CDC was pursuing claims from direct and indirect sugar buyers at the same time. The court considered that the decisive factor for the existence of a conflict of interest in this case was that the claimant was indisputably asserting claims from cedants from different market levels for the same sugar supply.

The defendants had argued that manufacturers’ damages would be mitigated if the manufacturers had passed on inflated sugar prices to retailers. The Regional Court therefore considered the bundled assertion of assigned claims of food manufacturers and traders to be a prohibited representation of conflicting interests:

“If claims for damages are asserted by direct customers and indirect customers at the same time, this constitutes a fundamental and irresolvable conflict of interests.

(aa) This applies at least with regard to the question of a possible passing-on of damages, i.e. the so-called passing-on. With regard to passing-on, direct customers must claim that they did not pass on the cartel-related excessive prices they paid, as the claimant does here for the direct customers; indirect customers, on the other hand, must claim the exact opposite in order to substantiate the damage they suffered.

(…) In the present lawsuit, the claimant must therefore simultaneously assert the non-reselling and the reselling, which, however, is logically mutually exclusive.”

The fact that the conflict of interests actually applied only to “less than 3.5%” of the total purchase volume could not help the claimants. The court considered “this would not change the fundamentally conflicting interests” and that article 4 RDG does not provide for “partial incompatibility”.

The claimants, on the other hand, had emphasised that they were all pursuing precisely the same goal. The judgement is not yet final.

[1] See Press release of 7 February 2020, Regional Court of Munich, case Az. 37 O 18934/17 and Regional Court of Hanover 20 May 2020, case no. 18 50/16.

[2] Regional Court of Hanover 24 February 2021, Case 18 O 34/17.

[3] Regional Court of Hanover 20 May 2020, case no. 18 50/16.