Fears a crackdown on class actions in Australia could let big businesses 'do what they like'
For Rebecca Oates, taking part in a class action against medical products giant Johnson & Johnson over a pelvic mesh implant that caused her years of pain was never about the money.
Despite winning the case last year, the hundreds of women who signed up to the class action – and potentially tens of thousands more who have also endured agony due to the devices – have yet to see a cent because Johnson & Johnson is currently appealing the decision.
“There’s so many other aspects, like bringing the issue to light, and coming together, and making change, especially at the government level,” she says.
“No amount of money is going to be compensation for our lives being ruined, no amount, and the effect it’s had on our families and our children.”
The meshes were supposed to help women with prolapse of pelvic organs. But Oates says that after doctors implanted mesh in her, six years ago, she endured endless pain, could no longer work at her job in retail and could no longer be intimate with her partner.
“Now there’s help, now people are believing us, now we’re getting treatment,” she says.
The vaginal mesh implants, which Oates says felt like a cheese grater digging into her flesh, have also been banned in Australia.
She says she is disturbed by the attack on class actions and the litigation funders who bankroll them mounted by business lobbyists, including the US Chamber of Commerce, which has hired lawyer Stuart Clark, a former president of the Law Council, to advise it in Australia.
While law firm Shine Lawyers took the risk of running the mesh class action without a backer, most class actions rely on a funder to put up the cash to run the case in return for a slice of any winnings.
“If these US lobbyists are coming and trying to put an end to that, I think it’ll just be detrimental for everything in the future,” Oates says. “It sort of just gives big businesses and corporations a way out, of being able to do what they like without any repercussions.
“People’s lives get ruined if they’re free to go about their business and do what they like without ever being held accountable.”
Ahead of public hearings at a parliamentary inquiry on Monday, law firms and litigation funders have launched a public campaign, Keep Corporations Honest, to fight back against claims including that class actions have cost the Australian economy billions of dollars and dramatically driven up the cost of insurance for company directors.
The treasurer, Josh Frydenberg, has already taken action to curb class actions and litigation funders. In May, he
ordered litigation funders to get a financial services licence, and a few days later followed up by watering down rules that require listed companies to keep the market up-to-date about their affairs, breaches of which often form the foundation of class action lawsuits.
But the US chamber, through its Institute for Legal Reform and its Australian representative, Clark, wants to go further.
Clark says he wants litigation funders to be tightly regulated, face a fit and proper person test and be forced to hold money in Australia against a case going against them.
He is scathing of profits in the industry that, when a case is successful, can see a funder make many times its initial investment.
However, class action participants and lawyers fear that clamping down on funded class actions will also limit the ability of law firms to take on cases such as the vaginal mesh one, which Shine ran without a backer.
Shine’s head of class actions, Jan Saddler, said running an unfunded action like the Johnson & Johnson case was “an enormous strain on the resources of the firm”.
“There are just, unfortunately, too many cases of wrongdoing for law firms to run unfunded,” she said.
Shine filed the Johnson & Johnson case in 2012, but it did not come to trial until 2018. After seven months of hearings, during which the court heard the US-based multinational used Australian women as “guinea pigs”, the federal court judge Anna Katzmann ruled in favour of the women in November last year.
A hearing of the appeal is due to take place in February next year.
Much of the ire of the business lobby is directed against shareholder class actions, where investors in a company sue it for failing to keep the market properly up to date about its financial situation.
But class actions have also been launched by taxi and hire car operators against Uber, by Volkswagen owners against the company for cheating on emissions tests and by workers against their employers for underpayment.
“Over the last 25 years, class actions have successfully transferred billions in compensation from corporations who broke the law to Australians who were hurt by the illegal action,” says Slater & Gordon’s head of class actions, Ben Hardwick, who is acting as the spokesman for the Keep Corporations Honest campaign.
In addition to Slater & Gordon and Shine, the campaign’s members include law firms Maurice Blackburn – which once launched a shareholder class action against Slater & Gordon – and Phi Finney McDonald, as well as many of the litigation funders operating in Australia. The country’s biggest funder, Omni Bridgeway (formerly IMF Bentham) is not a member.
“Litigation funders provide an efficient means of protecting litigants from risk, shielding the taxpayer from expense, and keeping corporations honest,” Hardwick said. “But you’ll never hear big business put forward a viable idea for an alternate source of class action funding, because their real agenda is for class actions to wither and die.”
Clark dismisses criticism of the US chamber and its institute’s interest in Australian law.
“Frankly the response of those who are critical of the ILR’s involvement is xenophobic,” he says. “The ILR has been involved in law reform projects around the world where it is seeking a just system.”
He says US organisations are entitled to take an interest in Australian law, just as Australian organisations do in the laws of other countries.
Australia is a closely watched jurisdiction for developments in litigation funding law because it is an Australian invention, he says.
“Litigation funding is a uniquely Australian institution, like penicillin, wifi and the stump jump plough.
“The rest of the world looks to what happens in Australia.”
Now there’s help, now people are believing us, now we’re getting treatment
Rebecca Oates