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 (Woolworths Class Action).

Settlement Update

On 29 January 2021, the parties to the Woolworths Class Action announced that they had reached an agreement to settle the class action. The proposed settlement is for $44.5 million (inclusive of costs) and remains subject to Court approval.

A notice containing information about the proposed settlement and the rights of Group Members (Registration and Settlement Approval Notice) was sent to all persons who may have acquired an interest in Woolworths shares during the relevant period (see “Relevant Documents” below).

Registrations for the Woolworths Class Action have now closed in accordance with the Court ordered registration deadline of 4.00 pm (AEDT), 26 March 2021. Group members who registered for the Woolworths Class Action before that time will be contacted in due course by Maurice Blackburn. Group Members who did not register for the Woolworth Class Action before that time are (subject to any contrary orders of the Court) ineligible to receive a payment from the settlement sum (in the event that the settlement is ultimately approved by the Court).

If you have any questions regarding the settlement please contact Maurice Blackburn on 1800 931 357 or at Woolworths@mauriceblackburn.com.au.

If you are a registered group member, please read the ‘Important Information’ below.

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Relevant Documents

  1. Registration and Settlement Approval Notice
  2. Notice of Objection to the Proposed Settlement
  3. Further Amended Originating Application dated 25 May 2020
  4. Further Amended Statement of Claim dated 25 May 2020
  5. Woolworths’ Defence dated 3 July 2020
  6. Proposed Settlement Distribution Scheme 
  7. Orders of Beach J dated 12 February 2021
  8. Privacy Statement

Important Information (please read carefully)

A class action has been commenced in the Federal Court of Australia against Woolworths Group Ltd (formerly Woolworths Ltd) (ASX:WOW) (Woolworths) by Norman Leslie Wills and Jane Anne Danaher as trustees for the Minty Tin Superannuation Fund on behalf of all persons who (save for some limited exceptions):

  1. entered into a contract to acquire an interest in ordinary shares in Woolworths (Woolworths Shares) during the period 29 August 2014 to 5 May 2015 (inclusive) (Relevant Period); and
  2. suffered loss or damage by, or which resulted from, the conduct of Woolworths alleged in the class action (and which is summarised in further detail below under the heading ‘What is the Woolworths Class Action?’),

(Woolworths Class Action).

Group members should previously have received a Court-approved notice in relation to the Woolworths Class Action which set out some of the background to the class action, and advised you of your right to opt out of the class action if you did not wish to participate in it. The deadline for opting out has now passed. Accordingly, this information is directed only to those persons who:

  1. have been identified as a potential group member in the Woolworths Class Action; and
  2. did not opt out of the Woolworths Class Action (by lodging an opt out notice with the Federal Court) before the deadline of 4.00 pm (AEDT) on 13 December 2019 (any persons who did lodge an opt out notice with the Federal Court before that deadline are no longer part of the Woolworths Class Action, and are not affected by the class action (and any references to ‘Group Members’ below should be understood as excluding such persons)).

The Federal Court has ordered that the following information be published for the information of persons who might be members of the group on whose behalf the Woolworths Class Action is brought and may be affected by the action. If you received the Court-approved notice you did so because you have been identified as a potential group member in the Woolworths Class Action. You should read the following information carefully. Any questions you have concerning the matters set out below should not be directed to the Court. If there is anything that you do not understand, you should contact Maurice Blackburn, whose contact details are set out below, or alternatively seek your own legal advice.

This page provides important information about:

  • your status as a group member in the Woolworths Class Action;
  • what you need to do if you have not already registered, but wish to do so in order to participate in the proposed settlement described below (and potentially receive some compensation);
  • what will happen if you do not register to participate in the proposed settlement of the Woolworths Class Action; and
  • what you need to do if you wish to object to the proposed settlement of the Woolworths Class Action.

A class action is a legal action that is brought by one or more persons (Applicant(s), being in this case Mr Wills and Ms Danaher) on their own behalf (or in this case in their capacity as trustees) and on behalf of a group of persons (Group Members) against another person or persons (Respondent(s), being in this case Woolworths), where the Applicant(s) and the Group Members all have similar claims against the Respondent(s).

The Applicants in a class action do not need to seek the consent of Group Members to commence a class action on their behalf, or to identify a specific Group Member or Members. However, Group Members can cease to be Group Members by ‘opting out’ of the class action before the Court-imposed deadline. An explanation of how Group Members could opt out was contained in a previous notice to Group Members and, as noted above, the deadline for opting out has now passed.

The Woolworths Class Action was commenced on 10 September 2018 in the Victorian Registry of the Federal Court of Australia. The background to the Woolworths Class Action, in summary, is that:

  1. on 29 August 2014 (being the start of the Relevant Period) Woolworths issued a profit guidance for the 2014/15 financial year (FY15), which included a statement that it expected to achieve net profit after tax (NPAT) growth for FY15 in the range of 4-7% above the previous year’s NPAT (FY15 Profit Guidance);
  2. between 22 September 2014 and 27 November 2014, Woolworths made several statements in relation to its FY15 Profit Guidance;
  3. on 27 February 2015, Woolworths announced its half year results and issued a revised profit guidance for FY15 which included a statement that it expected growth in FY15 NPAT before significant items would be towards the lower end of the current analysts’ consensus range of 1.8-6.6% NPAT growth (Revised FY15 Profit Guidance);
  4. following that announcement, Woolworths’ share price declined by approximately 12% over the course of three trading days, from 27 February 2015 to 3 March 2015;
  5. on 6 May 2015 Woolworths held an ‘Investor Day’, at which it made various statements which the Applicants allege caused the market to doubt the Revised FY15 Profit Guidance; and
  6. on 6 May 2015 Woolworths’ share price declined by approximately 5%.

In the Woolworths Class Action the Applicants allege that:

  1. between 29 August 2014 and 27 February 2015 Woolworths made representations relating to the FY15 Profit Guidance without having a reasonable basis for those representations; and/or
  2. at all times between 29 August 2014 and 6 May 2015 there was information concerning the FY15 Profit Guidance that ought to have been, but was not, disclosed by Woolworths to the ASX; and/or
  3. between 27 February 2015 and 6 May 2015 Woolworths made representations relating to the Revised FY15 Profit Guidance without having a reasonable basis for those representations and/or there was information concerning the Revised FY15 Profit Guidance that ought to have been, but was not, disclosed by Woolworths to the ASX; and
  4. consequently, throughout the whole of the Relevant Period:

a) Woolworths contravened various provisions of the ASX Listing Rules, the Corporations Act 2001 (Cth), the Australian Securities and Investments Commission Act 2001 (Cth) and the Australian Consumer Law by failing to comply with its continuous disclosure obligations and/or engaging in conduct that was misleading or deceptive (or likely to mislead or deceive); and

b) the price of Woolworths Shares was inflated above their true value and/or the price that would otherwise have prevailed, thereby causing loss to persons who entered into a contract to acquire Woolworths Shares during that period (for which Woolworths is liable to compensate the Applicants and Group Members).

The detailed allegations are set out in the Applicants’ Further Amended Statement of Claim filed with the Federal Court on 25 May 2020. Woolworths denies the allegations made against it, and Woolworths’ responses to the allegations are set out in its Defence to the Further Amended Statement of Claim filed with the Federal Court on 3 July 2020. Copies of these (and other) documents can be downloaded from this page (under the heading ‘Relevant documents’ below), or by contacting Maurice Blackburn, whose contact details are set out below.

The Woolworths Class Action is currently ‘open’, which means that (save for some limited exceptions) it includes as Group Members all persons who entered into a contract to acquire an interest in Woolworths Shares during the Relevant Period.

Specifically, you are a Group Member in the Woolworths Class Action if (save for some limited exceptions) you satisfy the following criteria:

  • you entered into a contract to acquire an interest in Woolworths Shares during the Relevant Period (i.e. 29 August 2014 to 5 May 2015 (inclusive));
  • you suffered loss or damage by, or which resulted from, the conduct of Woolworths alleged in the Woolworths Class Action (and which is summarised above); and
  • you did not opt out of the Woolworths Class Action on or before 13 December 2019.

You may disregard the information set out below if you do not satisfy the above criteria and your rights will not be affected by the proposed settlement of the Woolworths Class Action which is described further below.

If you do satisfy the above criteria, you should read the following information carefully as it will affect your legal rights.

If you are unsure as to whether or not you are a Group Member, you should contact Maurice Blackburn, whose contact details are set out below, or alternatively seek your own legal advice.

The Applicants have retained Maurice Blackburn to act as their solicitors, but it is not necessary for you or other Group Members to retain Maurice Blackburn in order to participate as a Group Member.

The costs of the Woolworths Class Action have, to this point, been funded in part by Maurice Blackburn and in part by International Litigation Funding Partners Pte Ltd (ILFP) (in the latter case, pursuant to various Funding Agreements entered into between ILFP and the Applicants and between ILFP and some of the Group Members).

Specifically, throughout the course of the class action ILFP:

  • indemnified the Applicants and Group Members against any adverse costs orders that might be made against them in the Woolworths Class Action;
  • paid into Court amounts totalling $2.5 million as security for such adverse costs orders; and
  • paid the majority of the legal costs incurred in conducting the Woolworths Class Action (including the costs of solicitors, barristers and experts).

If the proposed settlement of the Woolworths Class Action is approved by the Court, it is likely that the Court will order that the total legal and funding costs of conducting the class action be deducted from the aggregate settlement sum, before calculating each Group Member’s entitlement. In other words, the legal and funding costs of conducting the Woolworths Class Action will be spread equitably among all participating Group Members. Thus, if you are eligible to participate as a Group Member in the distribution of the settlement sum, your share of the settlement (if any) will be calculated and paid to you after deduction of legal and funding costs – under no circumstances will you, by registering to participate in the proposed settlement, be liable to pay any ‘out-of-pocket’ costs, whether to Maurice Blackburn, to ILFP or otherwise.

The initial trial of the Woolworths Class Action was scheduled to commence on 2 February 2021. Shortly prior to that date, the parties agreed to a proposed settlement of the Woolworths Class Action under which Woolworths will, without admission of liability, pay $44.5 million inclusive of interest and costs (Settlement Sum) in full and final settlement of the claims of the Applicants and Group Members.

The proposed settlement does not come into effect unless it is approved by the Federal Court. If the proposed settlement is approved by the Court, there are likely to be some substantial deductions from the Settlement Sum before distribution of any monies to eligible Group Members:

  • Legal costs and disbursements: Maurice Blackburn will seek payment of the reasonable legal costs incurred in conducting the Woolworths Class Action, estimated at approximately $13.6 million up to 31 January 2021 (and, as indicated above, so that they are shared on an equitable basis by all Group Members). It will be a matter for the Court to determine the amount of legal costs which it considers is fair and reasonable, and which may therefore be deducted from the Settlement Sum.
  • Litigation funding charges: The costs and adverse costs risks of the Woolworths Class Action (including the provision of security for costs in the amount of $2.5 million) have been funded by ILFP pursuant to various Funding Agreements between ILFP and the Applicants and between ILFP and some of the Group Members. The Applicants will seek Court approval for a payment of approximately $7.42 million to ILFP (representing approximately one-sixth (or 16.67%) of the Settlement Sum) in return for its funding of the Woolworths Class Action. Again, it will be a matter for the Court to determine the amount of litigation funding charges which are reasonable in the circumstances of the case, and which may therefore be deducted from the Settlement Sum.
  • Applicants’ reimbursement payment: The Applicants will seek payment of an amount of up to $40,000 for the time, inconvenience and expense incurred by them in conducting the Woolworths Class Action on behalf of, and for the mutual benefit of, all Group Members, to be deducted from the Settlement Sum. Again, any such payment is subject to approval by the Court.

If the Court approves the proposed deductions from the Settlement Sum referred to above, there will be approximately $23.44 million available for distribution to Group Members (plus any interest accrued on the Settlement Sum, less any further legal costs incurred in obtaining Court approval of the proposed settlement and distributing the Settlement Sum to Group Members (with all such further costs likewise being subject to the Court’s approval)).

At the present time, it is not possible to estimate how much (if any) each registered Group Member will receive by way of a distribution from the proposed settlement, because that will depend on a number of factors including:

  • the amount of the payments to Maurice Blackburn and ILFP on account of legal and funding costs which the Court approves as fair and reasonable;
  • the number of Group Members who ultimately register to participate in the proposed settlement before the Court-imposed deadline; and
  • the time(s) at which, and the price(s) for which, each registered Group Member acquired and sold their Woolworths Shares during the Relevant Period.

The amount of the Settlement Sum which is ultimately available for distribution to registered Group Members will be distributed in accordance with a Settlement Distribution Scheme to be approved by the Court (Scheme), including a proposed Loss Assessment Formula (LAF) (which details how each Group Member’s entitlement to a share of the Settlement Sum will be calculated). A copy of the Applicants’ proposed Scheme (excluding the confidential LAF) can be downloaded from this page (under the heading ‘Relevant documentsbelow), or by contacting Maurice Blackburn, whose contact details are set out below. If you wish to obtain a copy of the confidential LAF, you may do so by requesting a copy from Maurice Blackburn and by signing and returning to Maurice Blackburn a confidentiality undertaking.

In addition, the settlement deed also provides for all Group Members to release and discharge Woolworths and its related parties (which includes Woolworths’ current and former directors and officers) from:

  1. each and every claim made by or on behalf of the Applicants or any Group Member in the Woolworths Class Action, including each of the claims articulated in the Applicants’ Further Amended Originating Application and/or Further Amended Statement of Claim; and
  2. any and all claims arising from, in connection with, in respect of or related to:

a) any matter which is or ever has been the subject of the Woolworths Class Action, including any matter specified in the Applicants’ original Statement of Claim or Amended Statement of Claim filed in the Woolworths Class Action; and

b) the Woolworths Class Action itself, including the administration of the Scheme and the costs of, and incidental to, the Woolworths Class Action.

Thus, if the proposed settlement is approved by the Court, Group Members (whether they register to participate in the settlement or not) will be bound by the settlement, and will not be permitted to make any subsequent claim against Woolworths in relation to the above matters.

The Court will only approve the proposed settlement if it is satisfied that the settlement is fair and reasonable in the interests of the Group Members, including as between the Group Members. If the Court is not so satisfied, it will not approve the proposed settlement (in which case, the Woolworths Class Action will continue and there will be no distribution of monies to Group Members unless and until the Applicants are successful in the class action, or a further settlement is reached and approved).

The Court will hear the application for approval of the proposed settlement at 10.15 am on 20 May 2021 at the Federal Court in Melbourne. As a result of the current COVID-19 pandemic, and depending on the circumstances at that time, that hearing may take place either in person or by video.

If you are a Group Member in the Woolworths Class Action, you have the right, if you wish, to attend that hearing and/or to make submissions as to why the Court should, or should not, approve the proposed settlement (or any particular aspect of it). If you wish to exercise that right, you need to follow the steps outlined below (under the sub-heading ‘Option C – Object to the Proposed Settlement’ below).

Registered Group Members

As advised in the notice which all Group Members should have received, Group Members who have previously registered with Maurice Blackburn to participate in the Woolworths Class Action need not do anything at the present time.

Such Group Members will be entitled to participate in the proposed settlement of the Woolworths Class Action in the event that it is approved by the Court (and provided they otherwise qualify), and specifically need not, and should not, re-register with Maurice Blackburn (as their existing registration remains valid).

Registered Group Members may, however, object to the proposed settlement (or any aspect of it), should they wish to do so, by following the steps set out below (under the sub-heading ‘Option C – Object to the Proposed Settlement’ below).

Unregistered Group Members

Group Members who have not previously registered with Maurice Blackburn to participate in the Woolworths Class Action may do the following three things:

  • Option A: Register to participate in the proposed settlement of the Woolworths Class Action.
  • Option B: Do nothing.
  • Option C: Group Members may (in addition to Option A or Option B) object to the proposed settlement of the Woolworths Class Action.

There are different consequences depending on which of the above you choose.

Option A – Register to Participate

Group Members who wish to receive a distribution from the proposed settlement of the Woolworths Class Action must register their claim by no later than 4.00 pm (AEDT) on 26 March 2021 by completing and submitting the online registration form.

If the proposed settlement is approved by the Court, any Group Members who register their claim by 4.00 pm (AEDT) on 26 March 2021, and who provide sufficient information to enable Maurice Blackburn to verify that they are a Group Member (i.e. that they satisfy the criteria set out above under the heading ‘Are you a group member in the Woolworths Class Action?’), may be entitled to receive a distribution from the Settlement Sum. The precise amount of that distribution (if any) is presently uncertain, for the reasons set out above under the heading ‘The Proposed Settlement’ (but, in any event, any such distributions will be calculated in accordance with the Scheme and the LAF as approved by the Court).

There is no cost to register your claim. Your registration must be completed and received by Maurice Blackburn before 4.00 pm (AEDT) on 26 March 2021. Registrations received after that time will not be accepted, and you will be treated as having not validly registered (see Option B below).

Option B – Do Nothing

Group Members who do nothing (i.e. do not register before the applicable deadline) will remain as Group Members for all purposes, but will not, unless the Court determines otherwise, be entitled to receive a distribution from the proposed settlement of the Woolworths Class Action. Thus, if the Court approves the proposed settlement, Group Members who do nothing will be bound by the settlement (and therefore not able to pursue the same or similar claims against Woolworths in the future), but will not be entitled to receive a distribution from the Settlement Sum.

Option C – Object to the Proposed Settlement

If you are a Group Member you have the right, if you wish, to make submissions as to why the Court should, or should not, approve the proposed settlement (or any particular aspect of it). If you wish to exercise that right, you must complete the Notice of Objection to Proposed Settlement form below, and email it to:

    1. the Federal Court (vicreg@fedcourt.gov.au); and
    2. Maurice Blackburn (Woolworths@mauriceblackburn.com.au),

by no later than 4.00 pm (AEDT) on 26 March 2021.

Any Group Member who so objects may also (but is not obliged to) appear before the Court at the hearing of the application to approve the proposed settlement at 10.15 am on 20 May 2021 at the Federal Court in Melbourne.

You may make such submissions whether or not you have registered to participate in the Woolworths Class Action.

Any objections received by the Court will be considered by the Court, along with all of the other evidence and submissions filed by the parties, in determining whether or not to approve the proposed settlement.

Former Group Members

As advised in the notice which all Group Members should have received, group members who submitted an opt out form prior to the Court-imposed deadline of 4.00 pm (AEDT) on 13 December 2019 need not do anything further. By choosing to opt out of the Woolworths Class Action, such persons are no longer Group Members in the class action, and will not be affected by the class action or the proposed settlement referred to above.

If you have any questions or queries, you may contact Maurice Blackburn as follows:

Email:  Woolworths@mauriceblackburn.com.au
Tel:      1800 931 357
Post:    Maurice Blackburn - Level 8, 179 North Quay, Brisbane QLD 4000