By: Amanda Beattie, Dylan O’Keefe and Gavin Davies


2023 Class Actions wrap

It feels like we say it every year (and we probably do), but it was another eventful year for class actions in 2023. From the filing of novel claims, such as data breach claims, to the lowest rate yet for a group cost order in Victoria, this is a quick-fire recap to get you across some of the key developments and what to expect for 2024.

Kinds of claims

Data breach actions

The actions against Medibank and Optus for the much-publicised 2022 cyber incidents were some of the biggest stories of the year. They are the first actions of their kind in Australia and we are watching with interest to see how they progress.1 The interplay between these Federal Court proceedings and the complaints lodged with the Office of the Australian Information Commissioner (OAIC) added an interesting dynamic to the cases. That issue came to a head in December with the hearing of an application by Medibank to restrain the OAIC from continuing its investigation in relation to the same incident. Judgment is reserved on the issue.

Employment actions

In recent years, we have seen an increase in employment actions, such as claims for underpayment of wages. 2023 was no different, with at least five claims being filed in this space and various others still under investigation by plaintiff firms. There are more than 20 employment claims currently on foot, with most having been filed in the Federal Court. Another interesting development in this space is the increased number of plaintiff law firms involved in employment actions, with at least 10 plaintiff firms having active proceedings in the area. The dominant cause of action is underpayment of wages, whether because of a miscalculation of entitlements or failure to provide rest breaks.

Securities

There were more than 10 new actions filed by investors/shareholders in 2023. That number includes actions against the same defendants (e.g., Downer EDI), and when that is taken into account, the number of actions in this area is holding steady. However, two decisions in late December 2023 are likely to give plaintiff firms pause for thought. On 19 December 2023, judgment was delivered in the long running Worley action and although Jackman J found that Worley had breached the Corporations Act, he formed the view that shareholders had failed to establish that any loss was suffered as a result. The following day, Anderson J made a similar finding in the IOOF case. In both decisions, the Court also found that the plaintiffs had failed to prove all of the alleged breaches. These decisions could impact the approach plaintiff firms and funders take to shareholder actions going forward, in particular the way in which they seek to prove loss. They have already had an impact this year with CBA being granted leave to make further submissions in relation to a class action that is awaiting judgment.

Judgments/settlements

There was no shortage of settlements reached last year, although the quantum of the larger settlements was lower than in previous years. The largest settlement of 2023 was in the stolen wages case ($180m), although this is still awaiting Court approval. The PFAS class actions against the Commonwealth in relation to eight defence bases was settled in May for $132.7m and the long running AMP fee for no service matter was settled in August for $110m. There were only two other settlements that reached the $100m mark. Both were in matters which arose out of the Financial Services Royal Commission, against Colonial First State in relation to super fees and the buyer of last resort claim brought by former AMP advisors.

Another development in the settlement space last year was the resolution of the contest to administer the $405m settlement in the Johnson & Johnson mesh claims. The settlement (agreed in September 2022) was approved by the Court in March last year, although Lee J noted his approval was given “not without hesitation” and went on to rebuff Shine’s attempts to recover $32m in interest as costs of running the proceedings. Following an order by Lee J in May 2023, former Federal Court Chief Justice Allsop considered almost 20 submissions from law and accounting firms vying to administer the settlement. Joint administration was awarded to 3 firms: BDO, JGA Saddler (being the ex-Shine lawyers who ran the case to trial) and Slater and Gordon. The upshot of this is that firms that run claims should not assume they will be the named settlement administrator, especially in respect of large settlement sums.

What’s new?

One of the biggest developments of the year was the Full Federal Court decision in relation to common fund orders (CFOs)2. The decision, which was handed down in October, found that the Court had the power to order a settlement CFO despite the High Court decision in Wigmans, which had put the position in doubt. While it was not an unexpected decision, it was a welcome clarification from the Court.

The Victorian Supreme Court continued to receive applications for group costs orders (GCO) as part of funding proposals for claims, and comparison of proposed GCOs has become a key element in carriage contests.  In the Star shareholder class action, three of the four plaintiff firms vying for carriage proposed GCOs. In the end, carriage was awarded to Slater and Gordon, who proposed a record-low 14%. Prior to that, all rates had been over 20%. One of the other plaintiff proposals in Star also included a rate below 20%, so it seems that competition among plaintiff firms is heating up and we could continue to see lower rates going forward.

More of the same

The courts continued to grapple with the issue of multiplicity of proceedings, including a number of four-way contests in securities actions. In the past year, we also saw instances of joint sittings of the Federal Court and Victorian Supreme Court to resolve issues of multiplicity where proceedings had been filed in both courts.

In the various carriage hearings throughout the year, courts continued to place reliance on the usual factors, including the experience of the respective firms and in particular experience in running similar kinds of claims. In the Hino class action, an Australian plaintiff firm partnered with an American firm running a similar claim the US. The Australian firm then propounded the benefits of their joint experience as compared to the experience of the firm against whom they were competing for carriage of the matter. The argument was not accepted in that case, in part, because orders in the US proceeding may have limited the extent to which information could be shared between the firms. In any event, it may not be the last time we see that kind of approach in cases which have been commenced in other jurisdictions. An appeal of the decision has been lodged this year.

The year ahead: what to expect in 2024

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Amanda Beattie
Head of Class Actions, Sydney

“Funding arrangements will be front and centre again this year, in particular the use of CFOs with the Full Court due to consider the question of whether a solicitor CFO can be ordered and also hear the appeal in the 7-Eleven class action, where a settlement CFO was rejected at first instance in early 2023. The next instalment in the Worley shareholder class action also looks set to kick off with an appeal having been lodged. Another appeal to look out for is the appeal in the Hino class action, which could result in further guidance from the Victorian Supreme Court about the factors taken into account in carriage disputes.”

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Dylan O’Keefe
Special Counsel, Melbourne

“There is potential for ESG claims off the back of increased ASIC enforcement attention in the area. ASIC 2024 enforcement priorities again include misleading conduct in relation to sustainable finance including greenwashing. We may also see some flow-on effect of the fairly novel actions in 2023 in the sporting and fast-food industries to other players in those industries.”

 

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Gavin Davies
Special Counsel, Brisbane

“We can expect to see significant further developments in data breach related actions, including the much anticipated decision from the Federal Court on the status of the OAIC’s Medibank investigation. We may also see additional plaintiff firms attempt to enter the ring with data breach claims. More generally, the heightened judicial scrutiny of settlement approval and administration processes that we saw in 2023 is likely to continue.”

 

Wotton + Kearney’s leading Commercial Litigation team has 26 lawyers, including three partners, across Sydney, Melbourne and Brisbane. For regular updates, sign up to our Class actions: Ones to Watch series here.


[1] You can read about the claims in more detail here https://www.wottonkearney.com.au/the-rise-of-data-breach-class-actions-legal-trends-and-implications/

[2] https://www.wottonkearney.com.au/long-awaited-mcdonalds-class-action-decision-is-a-green-light-for-settlement-cfos/