The filing of an application for mandamus by associations has become increasingly common in the area of tax law. The existence of a favorable final and unappealable decision, capable of benefiting all members regardless of their date of membership, has attracted the interest of companies from the most diverse sectors, which, in many situations, have stopped filing individual lawsuits and have taken advantage of class actions filed by associations.
It is important, however, to evaluate the risks involved in this practice, especially considering the recent decision of the Second Panel of the Federal Supreme Court (STF), which found lack of standing of an association considered generic for the purpose of filing a collective application for mandamus.
Before we discuss this precedent, it is important to restate some premises and jurisprudential understandings related to the topic.
As we know, a collective application for mandamus is a type of class action, provided for in article 5, subsection LXX, of the Federal Constitution, which aims to ensure the right of members of a political party with representation in the National Congress, a trade union organization, class entity, or association legally organized and in operation for at least one year.
In relation to associations, defined by the Civil Code as a "union of people who organize themselves for non-economic purposes" (article 53), the Federal Supreme Court (STF) promulgated in 2003 Precedent 629, by means of which it defined "the filing of a collective application for mandamus by a class entity in favor of its members regardless of their authorization."
In 2009, with the creation of the Application for Mandamus Law (Law 12,016/09), it was established that associations duly formed and in operation for at least one year could file a collective application for mandamus as long as it is pertinent to their purposes in these cases, without the need to present authorization from the members.
Nevertheless, the debate involving the lack of standing of associations in collective applications for mandamus is not over. It then questioned the need for the association to submit the list of its members at the time the application for mandamus is filed and, furthermore, whether those who joined after the application was filed could benefit from any favorable judicial decision.
This issue was submitted to the STF's review in the record of Extraordinary Appeal 1.293.130 (STF Topic 1119), the framework for resolving cases with general repercussion. It was defined that "the express authorization of the members, their list of names, as well as proof of prior membership, is not necessary for the collection of past funds from a judicial instrument resulting from a collective application for mandamus filed by a civil association entity."
This understanding was supported by the interpretation given to article 5, subsections XXI and LXX, line "b", of the Federal Constitution, to the effect that, in a collective application for mandamus, contrary to what occurs in other class actions,[1] the petitioning association acts as a procedural substitute (and not as a mere procedural representative).
In fact, when it comes to procedural substitution, there is an express legal provision allowing the substitute to act in his own name to defend the rights of others, an exception to the rule provided for in article 18 of the Code of Civil Procedure. Thus, since this is an authorization under the law, it is unnecessary for the substitute to submit authorization.
The appellate decision in question was subject to a motion for clarification by the Federal Government, which sought, among other points, to rule out the application of the theory established for so-called generic associations. Although the motion was unanimously rejected, Justice Luís Roberto Barroso registered in his opinion that a situation involving the filing of a collective application for mandamus by "generic associations, which do not represent any specific economic and professional categories" had not been the subject matter in that issue, but could be reviewed in the future by the Supreme Court.
In this case law context, the Second Panel of the Federal Supreme Court, when considering ARE 1.339.496, decided by majority vote, on February 7th, on the lack of standing of an association considered generic for the purpose of filing a collective application for mandamus, ruling out the theory set forth in STF Topic 1119.
According to Justice André Mendonça, who cast the winning vote in the aforementioned ARE, the setting aside of the theory in question is due to the exception made by Justice Luís Roberto Barroso in the record of STF Topic 1119.
In his view, generic associations would not be subject to the theory established in the paradigm in question since, "without a reasonable determination of its social purposes, the association fails to inform the State as judge and the opposing party whom it in fact is substituting or representing. In the absence of this essential information regarding the association, the other subjects of the case have their corresponding adjudicatory tasks terminated, inasmuch as it is not known in advance to what end the association is oriented and therefore which members it, in fact, replaces. Hence, it is certain that the creation of an association without a minimally delineated determination of its objective will result in an offense to the basic principles of the process, of constitutional scope, such as access to justice, due process of law, an adversarial process, and a full defense.
Based on these premises, when analyzing the concrete case, the Justice pointed out that the association that filed the collective application for mandamus "does not categorize any individual or group of individuals, since it has been created by a congregation of individuals and legal entities that pay federal, municipal, and state taxes, legal entities or individuals, among others, that is, it can be an association of all Brazilians who pay taxes in essence.”
For this reason, the Justice concluded that "in view of the notorious lack of definition of its purpose, the aforementioned association could work on behalf of any and all taxpayers without the slightest identification of circumstance, class, or common origin (...) [which is why] the procedural substitution advocated in the collective application for mandamus, as set forth in article 5, LXX, "b" of the Constitution, does not apply in this case.”
Justices Nunes Marques, Ricardo Lewandowski, and Gilmar Mendes cast their votes in agreement with Justice André Mendonça's opinion. The dissenting opinion of Reporting Justice Edson Fachin was that the theory set forth in STF Topic 1119 should apply, recognizing the lack of standing of the applicant association. Publication of the appellate decision is awaited.
Although the decision did not assertively define what a generic association would be, which may give rise to much discussion, the fact is that some issues were mentioned as indications to classify the association as such. These are: few or no members, especially in the district in which the application for mandamus was filed, the existence of broad subject matter that does not allow delimitation of a certain and specific group, and the marketing of favorable court rulings.
Another issue that arises is whether associations that are considered generic will not be able to file a collective application for mandamus under any circumstances. Or whether, if the authorization and the list of members are presented, the possible defect will be considered cured, allowing the filing of the lawsuit.
Although the issue has not been decided in an exhaustive and definitive manner, it is undeniable that the judgment represents an additional point of attention for those who intend to rely on a final and unappealable decision in the scope of a collective application for mandamus filed by an association. This is because there is a risk that the use of the res judicata formed in the writ may be impeded due to the lack of standing of the association that filed the writ.
This situation reinforces the importance of previously evaluating the risks involved in the use of res judicata resulting from a collective application for mandamus, especially with regard to the characteristics of the association that filed the lawsuit.
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[1] RE No. 573.232 and RE 612.043.
