In a recent decision, the São Paulo State Courts recognized the bad faith of an association that sought compensation in the millions, as it found that it was a front association whose sole purpose was to enrich itself without cause. The entity was ordered to pay a fine, court costs, and attorneys' fees.
The background to the case was the alleged misuse of personal data by a bank, which claimed to use databases to offer services and products to various consumers. The statement was made in a post on Twitter in response to a user.
Based on this posting, the association filed a public civil actionagainst the bank under the allegation that the exchange of data with other institutions, without the express consent of the owners, would violate the principles set forth in the Brazilian Civil Rights Framework for the Internet [“Marco Civil da Internet”] (Law 12,965/14), such as privacy and inviolability of personal data.
Among other prayers for relief, the association required the bank to stop collecting personal data, excluding that already stored in its system, and to pay compensation for non-economic damages in the amount of R$15,000 to each consumer who had their personal data violated, in addition to compensation for collective non-economic damages in an amount not less than R$10 million.
In its defense, the bank presented as its main argument the plaintiff’s lack of standing to sue, which, in fact, would be an extension of the law firm handling the case. Besides, the entity did not present its member list, which would justify its standing, nor the express authorization from the members to file the lawsuit.
The State Public Prosecutor's Office (MPE), which, in a first moment, manifested a position in favor of the association, also opined in favor of extinguishment of the case in its final opinion, on the understanding that there the association lacks standing. In its response, the MPE made a point of mentioning the case law of the Superior Court of Appeals[1] regarding so-called “off-the-shelf associations".
At the trial level, the suit was extinguished without a judgment of the merits, precisely because of the understanding that the association had no standing. The basis used was that of Topic 82 of the Federal Supreme Court, according to which "the submission of express authorization is necessary for the filing, by the association, of a collective action in defense of the interests of its members.”
The MPE also pondered that "the plaintiff Institute did not present a list of members to justify its standing, or even a single complaint allegedly made by one of its members against the defendant" and that "the lawsuit was filed not to protect the interests of members, but as a source of revenue, which, without the danger of defeat, seeks compensation in a million-dollar sum, without any authorization from the interested parties, but with the aim of receiving substantial attorneys' fees.”
The decision, which still awaits confirmation by the São Paulo Court of Appeals, enforced the provisions of article 18 of Law 7,347/85, according to which, in public civil actions, associations should not be ordered to pay costs and fees, unless bad faith is proven.
The association was ordered to pay ten times the initial costs and a fine for bad faith litigation and attorneys' fees, fixed, respectively, at 5% and 10% of the updated amount in controversy.
In general terms, even though the case law is not unanimous as to the requirements that give associations standing in court, the decision in question shows that the São Paulo Court of Appeals is attentive to the malicious actions of the parties and their lawyers.
The decision is representative, in that it points out that associations cannot make use of the exemption from costs and the payment of fees for loss of suit provided for by law in order to bring unfounded lawsuits, filed not to defend the interests of the members, but to unduly enrich themselves through the Judiciary.
[1] REsp 1.213.614/RJ.
