The Participants’ cooperation is required

Originally, the Foundation planned that, if out-of-court settlement negotiations with EY would not prove successful, a lawsuit would be filed on behalf of all investors in the form of a so-called subjective joint litigation in order to protect the claims from the limitation period and to jointly enforce them against EY. Such litigation would have been carried out on the basis of powers of attorney from the investors to the Foundation and the German law firm Nieding + Barth.

However, due to a recent change in the legal opinion of the Munich Regional Court I, filing a lawsuit in the form of a subjective joint action carries a significant risk of being split into countless individual lawsuits. This is precisely what the Foundation wants to avoid. In order to pursue and enforce the claims jointly – as a community – on behalf of all investors a different approach is necessary.

In order to pursue this joint approach further, the so-called "assignment model" has been developed.

Under this assignment model, the investors registered with the Foundation – i.e. the participants in the foundation – assign their claims in trust to a company established specifically for this purpose on a fiduciary basis. The special feature of such a fiduciary assignment is that the company may sue for the assigned claims in its own name and in a joint action but may only dispose of the claim vis-à-vis the assigning investors in order to enforce their damage claims. Under this assignment model, the relevant company continues to be authorized to dispose of the assigned claims by way of settlement, as was also provided for under the original model of subjective joint litigation. In this way, it remains possible for the Foundation to bundle the claims of all participants and keep the procedural costs for the financier at a manageable level. The originally intended approach is thus maintained with the assignment model.

Such a company has already been established in the form of Collective Redress Deutschland GmbH, Peter-Müller-Straße 14, 40468 Düsseldorf, Germany (hereinafter referred to as "CRD GmbH"). CRD GmbH has already applied for the necessary registration with the responsible authority under the German Legal Services Act (RDG), which registration is expected to be completed shortly.

The assignment model is made possible by sending the assignment agreement and the General Terms and Conditions (GTC) to the participants of the Foundation by email. The assignment agreement must be signed in wet-ink by hand and the original document must be sent to CRD-GmbH immediately, but not later than 1-12-2023. Furthermore, a scan or (clearly readable) photograph of the complete assignment agreement is to be sent in advance to [email protected]

As already explained, the approach was changed from a judicial assertion by way of subjective joint litigation to a judicial assertion on the basis of the assignment model, because, due to a change in the legal opinion of the Regional Court of Munich I that had been executed in the meantime, filing a lawsuit by way of subjective joint litigation carried a significant risk of being split into countless individual proceedings. In this respect, we became aware in the course of 2023 that the Regional Court of Munich I was increasingly tending to split the subjective joinder of parties into individual actions. In order to avoid such a splitting and to continue to pursue and enforce the claims for all registered investors collectively, it was necessary to adjust the approach to this change. This adjustment was implemented by means of the assignment model in good time before the action was filed.

In recent years, both the higher regional courts and the supreme court have had to deal with the so-called assignment models and their legal admissibility in various procedural constellations. The following is a brief overview:

In its decision of July 13, 2021, case no. II ZR 84/20, the Federal Court of Justice did not consider assignments to debt collection agencies in the context of ‘class action debt collection’ to be a violation of Section 3 of the German Legal Services Act (RDG). In the following year, the Federal Court of Justice again ruled in favor of the admissibility of the assignment model in its decision of June 13, 2022, case no. VIa ZR 418/21. In this case, the Federal Court of Justice had set aside a decision by the Higher Regional Court of Brunswick dated October 7, 2021, case no. 8 U 40/21, which had objected to the legal validity of the assignment of a Swiss customer's claims for damages to a German debt collection service provider for the purpose of enforcing them in Germany by taking legal action.

In Munich, the Regional Court Munich I had initially ruled against the assignment model in its decision of February 7, 2020, case no. 37 O 18934/17. However, this decision has since been reversed by the Higher Regional Court of Munich. In its judgment of March 28, 2024, case no. 29 U 1319/20, the Higher Regional Court of Munich had accepted the admissibility of the assignment model.

The Higher Regional Court of Stuttgart also decided in favor of asserting claims by way of an assignment model in its judgment of August 15, 2024, case no. 2 U 30/22.”