Australia has a long history of class action litigation. Outside of the United States, Australia has one of the most active class action markets globally.
It is 25 years since the introduction of the class action regime in the Federal Court of Australia. Since its introduction, the class action regime has been used as a forum for a range of claims, including product liability claims, environmental claims, shareholder claims, complex financial product claims, investor claims and consumer claims.
A new type of product claim is now emerging in the Australian class action market, and one which has been part of the US class action landscape for many years now. Unlike previous product class actions where the safety of the product was typically in issue, the new product claims focus on statements or representations made in the marketing of the product and whether or not the statements or representations contravene the misleading & deceptive conduct provisions of the Australian Consumer Law.
“Marketing” cases outside of the class action context are nothing new in Australia. Ever since the introduction of the Trade Practices Act (the precursor to the Australian Consumer Law) in 1974, government regulators (such as the Australian Competition & Consumer Commission and more recently the Australian Securities & Investment Commission) have been taking companies to Court in relation to marketing which they consider falls foul of the misleading & deceptive conduct laws. Companies have also used the misleading & deceptive conduct laws to take on their competitors directly in relation to their marketing campaigns.
However, the use of the class action forum for “marketing” cases represents a new dimension in this type of case. The class action forum significantly alters the strategic and legal issues which need to be addressed in marketing cases.
Firstly, it goes without saying that the strategies employed in class actions will impact on the strategy for prosecuting and defending claims of misleading and deceptive marketing. For example, a class action defendant may challenge whether such actions are appropriate to proceed as class actions: in particular, whether there is a common issue to be decided for all group members or on the basis that the cost to the defendant of identifying the group members and distributing any amounts to be paid would be excessive having regarding to the likely total of those amounts.
Secondly, there are legal issues which typically play little or no role in “marketing” cases which are now critical to the success of “marketing” class actions. For example, in the class action forum it is now critical to be able to prove that the allegedly misleading marketing caused damage (“causation”) and then to be able to quantify the damage suffered. The primary purpose of a class action is to recover a damages sum for group members. This is also how litigation funders make their money out of class actions, assuming litigation funding can be obtained for such actions.
By contrast, in an ACCC action or competitor action for allegedly misleading marketing, the main focus is on stopping the marketing and not on proving and quantifying damage. It is generally recognised in such actions that proving and quantifying damage will be a complex and complicated exercise, and potentially impossible to do. It will be interesting to see how the issue of proof of damage plays out in “marketing” class actions and whether any arguments based on indirect causation will be used to circumvent the need to prove “actual” causation – HIH Insurance Limited (In Liquidation) and others  NSWSC 482.
The most high profile example of this new breed of class action is the Nurofen class action. The Nurofen class action is in its early stages and “piggy backs” off the successful ACCC action, in which Reckitt Benckiser, the makers of Nurofen, was fined $6 million for making representations on its website and product packaging that Nurofen Specific Pain products were each formulated to specifically treat a particular type of pain, when this was not the case.
While Reckitt Benckiser has admitted that the representations were misleading (in line with the ACCC action), they are contesting whether any damage was caused by these representations. The plaintiffs’ case is that damage arose because, but for the misleading representations, the plaintiffs would not have bought the Nurofen Specific Pain products but would have instead purchased cheaper pain relief products.
There are also marketing class actions threatened in relation to other products. Many of these again seek to “piggy back” off successful ACCC actions or to “piggy back” off overseas class action judgments or settlements.
For example, one class action law firm is currently calling for group members for a class action against Bet365 in relation to their “Free Bets” online betting campaign. In the ACCC action, Bet 365 was fined $2.75 million in respect of its “$200 FREE BETS FOR NEW CUSTOMERS” offer to customers in Australia. The Court held that this marketing campaign was misleading and deceptive because there were a number of restrictions and limitations that applied to the offer that were not brought to the customer’s attention. The aim of the threatened class action is again to recover the damages and losses said to have been suffered by group members.
The number and scope of this new breed of class action is yet to be seen. Although, many of these claims may result in relatively low damages pay outs or settlement sums compared to class actions in the product liability or financial contexts, the reputational consequences may be significant for the companies and products involved. And, given the proliferation of such class actions in the United States, it is likely that this will be a growth area for class actions in Australia.
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