Woolworths class action

Maurice Blackburn, Australia’s leading class action law firm, has filed a shareholder class action against Woolworths Group Limited (formerly Woolworths Limited) (ASX:WOW) (Woolworths) for alleged breaches of its continuous disclosure obligations and for allegedly engaging in misleading or deceptive conduct.

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Investors that purchased shares in Woolworths in the period of 29 August 2014 to 5 May 2015 (inclusive) can register for a class action to recover losses alleged to have been suffered after Woolworths’ share price dropped on the back of its announcements on 27 February 2015 and 6 May 2015 that it would not meet its FY15 NPAT guidance and that it would take time and significant investment to restore sales momentum that had been lost during the relevant period.

Companies are required to have a reasonable basis for their guidance and must notify the ASX as soon as they have or ought to have information which would cast doubt on prior guidance.

Our investigations raise serious questions as to whether Woolworths had a reasonable basis for its initial guidance and whether it should have notified the ASX sooner that it was likely to miss that guidance.

If Woolworths lacked a reasonable basis for its guidance, investors may have paid an inflated price for Woolworths shares, and they may be able to recover their losses through this class action.

For further information and background to the class action, refer to the FAQs at the bottom of this page.

Update

A mediation of the Woolworths Class Action has been scheduled to take place before the end of this year, at which the parties to the Woolworths Class Action will attempt to negotiate a settlement of the action. As a result, Group Members have three options:

  • Option A: register to participate as a Group Member in the Woolworths Class Action;
  • Option B: opt out of the Woolworths Class Action; or
  • Option C: do nothing.

There are different consequences depending on which option you choose.

Option A

If you wish to remain as a Group Member in the Woolworths Class Action and potentially receive a distribution payment from any settlement that may be agreed to at the forthcoming mediation or within three months from the commencement of the forthcoming mediation you must, by no later than 4.00 pm (AEDT) on 13 December 2019, register to participate in the Woolworths Class Action by:

a. registering on this website by clicking here or on the red ‘Register Now’ link above; or
b. emailing or mailing a completed registration form to Maurice Blackburn, which can be downloaded here or from the ‘Relevant documents’ section below.

Important: Any Group Members who have already registered with Maurice Blackburn to participate in the Woolworths Class Action need not, and should not, register again, as their existing registration remains valid. Instead, such Group Members need not do anything before the court-ordered deadline of 4.00 pm (AEDT) on 13 December 2019 (unless they no longer wish to participate in (and thus wish to opt out of) the Woolworths Class Action, in which case, please read Option B below).

If you register your interest:

a. you will continue to be a person or entity whose claim against Woolworths is a claim the subject of the Woolworths Class Action, and you will maintain the opportunity to benefit from any judgment or settlement in the Woolworths Class Action (in due course, the Court may require you to take further steps to participate in the Woolworths Class Action, but if this occurs, a further notice will be sent to you at the same address to which this notice has been sent);

b. you may choose to (but are not required to) enter into the Funding Agreement and the Retainer Agreement; and

c. you may be bound by any judgment or settlement in the Woolworths Class Action; thus, if the Woolworths Class Action is ultimately unsuccessful, or is not as successful as you might have hoped, you will not be able to pursue the same claims, and may not be able to pursue related claims, against Woolworths in other legal proceedings.

There is no cost to register.

Option B 

Any Group Members who Opt Out of the Woolworths Class Action will not be bound by the outcome of the Woolworths Class Action, and will not be entitled to receive any monetary compensation that might result from the Woolworths Class Action. Group Members who opt out will no longer be Group Members in the Woolworths Class Action following their opt out, but will preserve their legal rights (if any) against Woolworths.

If you wish to opt out, you must complete the form that appears at Attachment B to the Group Member Registration and Opt Out Notice, which can be downloaded here or from the ‘Relevant documents’ section below.

Opt out notices must be submitted to the Victorian District Registry of the Federal Court of Australia (Owen Dixon Commonwealth Law Courts Building, 305 William Street, Melbourne Vic 3000) before 4:00 pm (AEDT) on 13 December 2019. Opt out notices received after that time will not be accepted, and you will remain as a Group Member in the Woolworths Class Action and will be treated as having not responded to this notice (see Option C below).

Option C

Any Group Members who do nothing (i.e. neither register nor opt out before the deadline of 4.00 pm (AEDT) on 13 December 2019) will remain as Group Members in the Woolworths Class Action. Thus, if you do nothing, you may be bound by any judgment or settlement in the Woolworths Class Action; consequently, if the Woolworths Class Action is ultimately unsuccessful, or is not as successful as you might have hoped, you will not be able to pursue the same claims, and may not be able to pursue related claims, against Woolworths in other legal proceedings. Also:

a. you will (unless the Court orders otherwise) be precluded from receiving a distribution payment from any settlement that may be agreed to: (i) at the forthcoming mediation; or (ii) within three months after the commencement of that mediation; but

b. if no such settlement is agreed to, you may still be entitled to receive a distribution payment from any settlement that may be agreed to at a later date, or from any subsequent judgment, in the Woolworths Class Action.

How do I register my interest?

Registration is open to persons who purchased Woolworths shares between 29 August 2014 to 5 May 2015.

If you wish to participate in the distribution of any amount which is paid in settlement of this proceeding either at the mediation scheduled for December 2019 or within three months after the commencement of the mediation you must, by no later than 4.00 pm (AEDT) on 13 December 2019, register as a participating group member by:

a. registering on this website by clicking here or on the red ‘Register Now’ link above; or

b. emailing or mailing a completed registration form to Maurice Blackburn, which can be downloaded here or under the ‘Relevant documents’ section below.

If you are a duly authorised agent or trustee of a claimant, you may complete this registration on the claimant’s behalf.

If you are an institutional investor, please contact Maurice Blackburn on 1800 931 357 or at Woolworths@mauriceblackburn.com.au to provide your contact details and receive an Institutional Investor Funding Pack. The Funding Pack includes copies of the Agreements and a trade data template for you to complete and return to us.

As part of the registration process, you may (but are not required to) enter into the following two agreements:

  • a Funding Agreement with International Litigation Funding Partners Pte Ltd (ILFP), which is funding the class action; and
  • a Retainer and Costs Agreement with Maurice Blackburn, who are acting as the lawyers for the applicants in the class action.

A copy of each of those agreements can be downloaded from the ‘Relevant documents’ section below. There are no out-of-pocket costs to you by entering into those agreements, and if you enter into those agreements you will thereby retain Maurice Blackburn, and you will be entitled to:

  • request a preliminary estimate of your loss from Maurice Blackburn, based on the trade data you provide to us;
  • receive updates in relation to the progress of the class action, and speak with Maurice Blackburn’s staff about your claim(s); and
  • request any other information or advice from Maurice Blackburn in relation to the class action and your claim(s).

You have the right to seek independent legal advice before entering into the agreements.

Relevant Documents

  1. Amended Originating Application dated 23 August 2019
  2. Amended Statement of Claim dated 23 August 2019
  3. Woolworths’ Defence dated 26 September 2019
  4. Orders made 22 October 2019 
  5. Group Member Registration Form
  6. Group Member Registration and Opt Out Notice
  7. Maurice Blackburn Retainer and Costs Agreement
  8. ILFP Funding Agreement
  9. Conflicts Notice
  10. Privacy Statement

Contact details

For any queries please feel free to call Maurice Blackburn on 1800 931 357 (Toll free) or email us at Woolworths@mauriceblackburn.com.au.

FAQs - your questions answered

The claim is against Woolworths Limited (ASX: WOW) (Woolworths). Proceedings are being conducted as a class action in the name of a Representative party on behalf of class members. The class action will determine the claim of the Representative and the common issues. Current and former Woolworths shareholders who acquired shares in Woolworths in the relevant period (see below), may be entitled to seek compensation for damages or losses caused by Woolworths’ alleged breaches of the Corporations Act 2001 (Cth) and/or other Federal and State statutes.

To be eligible to participate in the claim, you must have acquired Woolworths shares anytime between 29 August 2014 and 5 May 2015 inclusive. 

No. Eligibility in this regard is not determined by whether or not you still hold shares in Woolworths. So long as you acquired an interest in Woolworths shares during the relevant period you are at this stage eligible to register to participate in the Woolworths Class Action.

Woolworths used "net profit after tax” (NPAT) and growth of NPAT (NPAT Growth) as key measures of its performance. On 29 August 2014, Woolworths made statements to shareholders and the market that Woolworths' FY2014 NPAT Growth demonstrated that it was delivering strong and sustainable NPAT Growth in established parts of the business and that it expected that FY2015 would be another year of growth with NPAT expected to increase by 4% to 7%. Woolworths repeated or did not qualify these statements on three later occasions: in September 2014 with the release of the company’s 2014 Annual Report and again on 3 and 27 November 2014 with the release of the company’s first quarter sales results and at the company's AGM respectively. 

Then, on 27 February 2015, with the release of its FY2015 half year results, Woolworths downgraded its FY15 NPAT guidance to "the lower end of the current analyst NPAT growth forecast range for FY15 of 1.8 – 6.6%" and said that it would be making investments into its Australian Supermarkets business which would impact its second half FY2015 results. Following the announcement on 27 February 2015, there was a substantial increase in trading in Woolworths shares, and the share price plunged by almost 10%. On the next day of trading, 2 March 2015, the price of Woolworths shares continued to fall, with an overall decline of almost 14% over the two trading days from 27 February to 2 March 2015. 

Woolworths deferred clarification of its decision to downgrade NPAT guidance and its strategy to improve its performance until its Investor Strategy Day on 6 May 2015, at which time it revealed that:

  • prior to February 2015,
    • it had lost focus on its customers;
    • its prices in FY15 had been rising by more than its competition;
    • the number of items being purchased by customers in its stores was declining by more than its competition;
    • the number of times customers were shopping in its stores was significantly below its competitors; and
    • a significant amount of labour had been taken out of stores;
  • it needed to:
    • restore sales momentum;
    • invest money to neutralise its competition on pricing;
    • put more labour hours back into stores;
    • dramatically improve on-shelf availability for customers;
    • rapidly address matters affecting customers' in-store experience; and
    • rebalance the number of new store openings with refurbishments to existing stores, which had been deliberately cut back;
  • it would take time to build customer trust and regain sales momentum; and
  • it was on a 3 year journey.

At the same time, Woolworths also released disappointing 3Q15 sales results, which were indicative of the extent of the problem and the fact that, notwithstanding investments being made, it would take time for Woolworths to improve its customer retail offer and competitive position.

The price of Woolworths shares dropped 5% on 6 May 2015 and continued to fall on the next day of trading, resulting in an overall decline of 7% between 6 and 7 May 2015.

The Woolworths Class Action focuses on the NPAT guidance given by Woolworths on 29 August 2014. The action alleges that, during the relevant period, Woolworths breached various provisions of the Corporations Act 2001 (Cth), ASX Listing Rules, the Australian Securities and Investments Commission Act 2001 (Cth) and the Australian Consumer Law

These alleged contraventions involved making false and/or misleading statements, engaging in misleading or deceptive conduct, and/or breaching continuous disclosure obligations in relation to information that a reasonable person would expect to have a material effect on the price or value of Woolworths shares.

It is alleged that these contraventions prevented Woolworths shareholders and the market generally from being in a position to make informed investment decisions on the basis of complete, accurate, and timely information.

Where seven or more people have claims that arise out of similar circumstances (such as, in this case, acquiring Woolworths shares during the relevant period), a class action can be brought by one claimant on their own behalf and as a representative of others. The class action process saves time and expense and avoids the need for the courts to determine common issues of fact or law more than once and enables disputes and claims involving large numbers of people to be resolved via a single case.

Shareholder class actions are an important part of the legal system and alongside regulatory action ensure corporate accountability. Maurice Blackburn has the leading shareholder class actions practice in Australia. We are the only law firm in Australia to have successfully recovered in excess of $100m in a single shareholder class action, and have done so on several occasions to date.

Participating in the Woolworths Class Action will not expose you to any out of pocket costs. Unless and until there is a successful outcome, all costs will be borne either by Maurice Blackburn or the litigation funder, International Litigation Funding Partners Pte Ltd (ILFP). In the event of a successful outcome, any costs payable to either Maurice Blackburn or the funder will be deducted from, and will not exceed, the Resolution Sum. 

If the class action is successfully resolved, ILFP will receive, pursuant to the Funding Agreement, a return of the costs and expenses it has paid and a percentage of your recovery. Clause 10 of the Funding Agreement sets out ILFP’s entitlements.

In light of the evidence currently available, Maurice Blackburn considers that a successful outcome in this instance is probable. However, we do not, and cannot, guarantee or predict that a successful outcome is certain. In addition, ILFP has chosen to invest significant resources in prosecuting the claim.

It is difficult at such an early stage to predict how much you may ultimately recover as a result of losses that may have been suffered in relation to Woolworths shareholdings.

Assuming that Woolworths is found to have breached the Corporations Act 2001 (Cth) and/or other laws which caused you loss, the size of your claim will depend on how the Court assesses your loss.

The methodology that a Court may ultimately adopt when assessing your loss is not fully settled in Australian law and may depend on the evidence you are prepared, or able, to give. It may, for example, be the difference between the amount you paid for the Woolworths shares and the amount you received when you sold them (or the value of the Woolworths shares you still hold). Alternatively, loss might be assessed on the basis of the difference between the price you paid for the shares and their true or real value at the time of purchase (that is, the price you paid for the shares was inflated).

There are also other methodologies that a Court might adopt. 

At the appropriate time, we will be able to provide you with a loss calculation, to give you an idea of your possible loss on one of the methods which might be employed by the Court. However, all claims will be the subject of further investigation and legal advice and your loss figure may change.

If you wish to opt out, you must complete an Opt out notice which can be downloaded from the ‘Relevant documents’ section above. Opt out notices must be submitted to the Victorian District Registry of the Federal Court of Australia (Owen Dixon Commonwealth Law Courts Building, 305 William Street, Melbourne Vic 3000) before 4:00 pm (AEDT) on 13 December 2019. Opt out notices received after that time will not be accepted, and you will remain as a Group Member in the Woolworths Class Action and will be treated as having not responded to this notice.

If you choose to opt out, you will no longer be included in the class action and your Funding Agreement will terminate. However, some terms of the Funding Agreement you signed will continue to apply, with the effect that if you receive a settlement or judgement from Woolworths after you opt out, you will remain liable to pay your share of ILFP’s commission and costs that ILFP has paid, from any recovery you receive (see clause 18.7 of the Funding Agreement).

You also have a cooling off period of 21 days after signing the Woolworths Funding Agreement (see clause 3 of the Funding Agreement).

We will only use and/or disclose your personal information strictly for the purpose of the legal proceedings, or as required by the Court or by law. In all other cases, we will seek your consent before disclosing any of your personal information.