Clayton Utz finds class closure can be a hard call to make properly

An application by Clayton Utz for ‘hard’ class closure order was dismissed as "wholly inappropriate".

This is a class action on behalf of women who were surgically implanted with one of nine medical devices made from knitted polypropylene, in order to treat stress urinary incontinence and/or pelvic organ prolapse, and suffered injury as a result.

This judgment concerned an interlocutory application filed by the respondents seeking a ‘hard closure’ of the class; whereby each class member’s rights to benefit from any settlement or judgment in the proceeding would be extinguished unless they took steps to register to participate in the proceeding. By way of contrast, the usual mechanism (i.e. ‘soft closure’) provides that class members must register by a specified date in order to share in the benefit of any settlement of the proceeding, but in the event that no settlement is achieved, the closure order is spent and all class members (even those who have not registered) remain entitled to share in the benefit of any judgment obtained following a trial of the proceeding.

Justice Lee dismissed the respondents’ application, holding that “a “hard” closure order is, in my view, wholly inappropriate” (at [25]). His Honour observed (at [6]):

… it is very difficult to see how it is appropriate for a court, exercising a protective and supervisory role in respect of group members, to take the step of extinguishing the property rights of persons on a final basis, unless it is in the context of approving a settlement prior to an initial trial. When this is appreciated, and it is understood that “soft” closure orders can be adapted to serve the admittedly desirable end of facilitating such a settlement, it is not evident to me why a “hard” closure order would ever be appropriate (at least in an open class proceeding or a closed class proceeding with a large number of group members).

Ultimately, his Honour held that, although the evidence suggested that no offer would be made by either side to resolve the whole proceeding prior to judgment being delivered, the better course was to require that some form of registration take place as soon as possible. His Honour stood the matter over and invited the parties to propose orders providing for a registration process.

Finally, his Honour ordered that the respondents pay 75% of the applicants’ costs of the application (not including certain costs incurred as a result of the filing of confidential evidence and submissions which contained material which was subject to settlement privilege pursuant to s 131 of the Evidence Act 1995 (Cth)).

Case details

Gill v Ethicon Sarl (No 2) [2019] FCA 177
Federal Court of Australia, Lee J, 4 February 2019
Applicants’ Solicitors: Shine Lawyers;
Respondents’ Solicitors: Clayton Utz;
Applicants’ Funder: N/A

 

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