Class actions are here to stay – King & Wood Mallesons launches Class Actions – The year in review 2011

​In recognition of the growing prevalence and scope of class actions, King & Wood Mallesons has today launched Class Actions – The year in review 2011. This inaugural report examines key class action decisions and provides an analysis of how the Courts’ management and determination of class action proceeding is affecting outcomes for both plaintiffs and defendants.

The report provides an overview of a wide range of cases from 2011, from shareholder class actions to cartel class actions and product liability claims as well as a number of new ground-breaking class actions including those concerning bank fees and in natural disasters. 

Class actions are now an established part of Australia’s litigation landscape, providing an attractive ‘low up-front cost’ alternative for plaintiffs to pursue individual claims.  They are also an attractive investment for litigation funders and other proponents of such claims.

In recent years commercial, reputational and legal risks associated with class actions has grown in line with the increase in regulatory scrutiny, a convergence of global enforcement and the criminalisation of conduct which previously had only civil consequences.

Class Actions – The year in review 2011 highlights the increase of class actions brought against professional advisors, including auditors, stockbrokers and financial advisors, often as the principal corporate wrongdoer is insolvent. In 2011 a class action claim was brought against a ratings agency for the first time.

The report also notes that while shareholder class actions have not flooded the courts as some predicted, there has been a steady rate of such cases filed along with a notable resurgence of more traditional consumer protection and product liability claims,  for example in the food and beverage,  medical products and pharmaceutical  industries. The high profile bank fee case marks a shift into the financial services sector.

While there was no single standout settlement in 2011, the total value of settlements in shareholder class actions surpassed $500 million.  The report also reveals that last year, putting settlements aside, only four class actions reached final judgement, and the plaintiff was on the losing side in each instance.

“These decisions, some of which point to the poor handling of class action litigation, provide a warning to class action participants that their lawyers need to have specific, technical expertise in managing such complex claims,” said Roger Forbes, Head of King & Wood Mallesons’ Dispute Resolution team and co-author of the report.

The Report also provides insights and predictions for the year ahead.

“We expect the Courts to take a much more active approach to managing class actions. This will include pressing parties to prosecute their claims quickly and efficiently, and making greater use of preliminary questions and perhaps the summary judgment procedure to determine issues at an early stage. We also anticipate class action proceedings to move more quickly as parties seek to use the relatively new Fast Track procedure recently introduced in the Federal Court which involves a strictly enforced timetable for the steps to hearing and judgement,” said partner Moira Saville.

In relation to the rise in the number of competing class actions being filed, partner Roger Forbes said:

“We expect this trend to continue in 2012 with multiple class actions being filed often off the back of intervention by regulators.  It will be interesting to watch whether the introduction of the new NSW class action regime creates any incentives to file in that jurisdiction.”