In the just over 30 years since Australians have been able to take class action suits, the country has become one of the world’s liveliest jurisdictions.
After the US, Australia is one of the biggest markets in the world for class actions with well over 130 representative proceedings before the courts.
Is it worth getting involved?
For corporations, it also makes it one of the most likely places to be sued.
Class actions, more formally known as representative proceedings, are designed to bring together large numbers of claims for people affected by similar alleged misdeeds, rather than requiring each individual to pursue their own legal course.
While the number of new class actions dropped significantly last year, the preceding years were particularly busy.
The main reason for that flurry stemmed from the banking royal commission, which found widespread misconduct when it reported its findings in early 2019.
“Where there is misconduct, actions will follow,” says Andrew Watson, national head of Maurice Blackburn’s class actions practice.
Some companies, such as AMP, are still defending multiple cases linked to issues revealed at the inquiry.
What types of class actions are there?
There have been class actions in Australia since 1992 when favourable laws were drawn up, prompting an array of litigation.
Originating in the US, Australia was an early adopter of the type of representative litigation that is now catching on around the world.
Australia has historically had many shareholder actions, whereby investors allege that a company failed to disclose relevant facts or misinformed the market amid a fall in the value of its share price.
For example, the A2 milk company is facing several class actions over allegations that include it engaged in misleading and deceptive conduct. It is claimed that shares in the company fell more than 60% in value in a short period as sales through its unofficial Chinese distribution route – via so-called daigou sales – pulled back.
The milk company says it complied with its disclosure obligations at all times and will vigorously defend the proceedings.
There has been a growing number of consumer and product liability cases, related to alleged physical and financial harm from medical devices and financial products, while climate class actions are also gaining a foothold in Australia.
Following the lead from the US, Australian law firms expect an increase in claims linked to environmental damage and failings by companies and governments to address threats of climate change.
Data breach
Several law firms have started or are weighing up actions against Optus and Medibank over massive data breaches that exposed the personal details of customers.
While those companies often say there was limited or no – financial loss – that’s not to say there hasn’t been harm. Some customers are particularly susceptible, such as victims of domestic violence or those in sensitive jobs such as prison officers who go to great lengths to keep their details private.
“Over the course of the last 20 years, we’ve voluntarily handed over huge amounts of personal data to corporations,” says Watson.
“It’s increasingly a problematic area in terms of the safety and security of that data and it’s fair to say corporations haven’t taken that seriously enough.”
How do you get involved in a class action?
A claim is typically brought by a representative plaintiff on behalf of a wider group.
After the proceedings start, the law firm is usually ordered to alert all affected people it can identify to tell them about the class action and the steps they can take to either participate – and receive the benefit from any settlement or judgment – or opt out.
Someone may opt out, for example, if they want to pursue their own litigation. Those who partake may also disagree with the settlement and/or course of legal action, but have little recourse.
In an action linked to so-called junk insurance, whereby customers allegedly paid for insurance on credit cards they weren’t eligible for, Slater and Gordon is now contacting affected consumers.
Slater and Gordon’s head of class actions, Emma Pelka-Caven, says the law firm is contacting more than one million Australians for that case as it seeks to distribute more than $100m from a negotiated settlement. The terms still need to be approved by the court.
What about the fees?
This is one of the most contentious areas of class actions.
A law firm may offer a “no win, no fee” arrangement, whereby it will recover its costs from any compensation received, be it through a settlement or court decision. The legal fees are charged at an hourly rate, though an exception exists in Victoria where the law firm can receive a percentage of the judgment.
Law firms may bring in a litigation funder for bigger and more complex cases, with the funder covering legal costs and taking on the financial risk that the action is unsuccessful. In return, the litigation funder will generally take between 25% and 35% of the final compensation, eroding the return to affected members of the class action.
Is it worth it?
Sometimes the reported big payouts that companies pay may turn out to be a trickle when it reaches a class action member, depending on the type of case.
In one example involving a class action prompted by the robodebt scandal, a single mother-of-four received 96 cents.
While many cases settle, some are unsuccessful, such as a large case mounted over excessive bank fees that went all the way to the high court.
Class action representatives typically argue that while the costs can be high, they are often the only way to receive compensation that would otherwise be too costly for someone to pursue.
For example, it would have been difficult for an individual Australian driver to take on Volkswagen over its emissions scandal, in which the carmaker manipulated tests. But class actions around the world, including one headed by Maurice Blackburn in Australia, have delivered compensation to owners of affected cars.
Slater and Gordon cites an upcoming trial on behalf of women who claim to have suffered debilitating physical injuries from the Essure contraceptive device as an example of a case that would be difficult to pursue alone.
“While the women we act for are very deserving of justice, it is highly unlikely that absent a class action regime any individual Australian group member would have had the financial means or the ability to take on a deep-pocketed multinational like Bayer and their veritable army of expensive defence lawyers,” says Pelka-Caven.
Bayer has said the company stands behind the product’s safety and efficacy.
