Law firm carpeted over Treasury wines case

Maurice Blackburn has been carpeted for its class-action conduct, this time over a case against a big winemaker.

Treasury Wine Estates is accused of misleading its retail shareholders in 2013.

Law firm Maurice Blackburn has received another slap for its class-action conduct, raising the ire of the Federal Court over the way a case against a major winemaker was being run.

Three judges yesterday ­ordered that the Melbourne-based firm’s client, Brian Jones, “be ­restrained from taking any further steps” in a New York District Court process which was seen by Australia’s Federal Court as a bid by Maurice Blackburn to obtain evidence that otherwise would be unavailable. The Federal Court said its management of the class action had been “undermined” by Maurice Blackburn’s overseas conduct.

The class action, started by Maurice Blackburn two years ago, alleges Treasury Wine Estates, an Australian-listed company, misled its retail shareholders in 2013 by not disclosing relevant information about its distributor network in the US. The winemaker, which includes brands such as Penfolds, Annie’s Lane, 19 Crimes, and Devil’s Lair, controls vineyards in Australia, New Zealand, California and Italy.

The winemaker is strenuously defending the class action. It ­objected in the Federal Court to Maurice Blackburn and its lead plaintiff, Mr Jones, circumventing the Australian authorities by seeking orders from the New York ­District Court to get key evidence from current and former exec­utives of the company in the US.

The Federal Court yesterday ruled that litigation in Australia had undergone “a dramatic transformation in recent years”, and that judicial management was at the heart of the change. The rules required that parties in a civil proceeding must be “co-operating with the court”, particularly in ­relation to the discovery of information that could be used in a trial.

In the wine class action, ­according to the judgment, ­Maurice Blackburn and its client had sought “to invoke the powers of a foreign court to obtain compulsory oral discovery outside the (Federal Court) docket judge’s case-management control of this class action and without his knowledge or approval”.

“This court has exclusive control over proceedings before it — this is all the more so in relation to class actions (given the court’s roles),’’ the judgment stated.

Citing declarations by senior Maurice Blackburn solicitor ­Rebecca Gilsenan, and provided to the New York District Court, the Australian judges said yesterday: “In our view, the applications were patently made in order to obtain the benefit of processes not usually available in this court.”

The Federal Court judgment also suggested Maurice Blackburn’s argument to the New York District Court was misleading. The judgment said the firm’s action in invoking the US proceedings “without notice and without the imprimatur of this court has under­mined this court’s case management and supervision of the class action”.

The decision of justices ­John Gilmour, Lindsay Foster and Jonathan Beach yesterday follows concern expressed by class-action clients of the firm that they are being forced to wait too long to be paid their share of massive settlement sums.

The largest class-action settlement in Australia’s legal history led to a $794 million payout to victims of the 2009 Black Saturday bushfires in Victoria, but thousands are still waiting for their payments despite the first tranche of $494m being announced in 2014. The firm initially was paid $80m from the payouts, and it is continuing to run up costs of more than $1m a month in the administration of the settlement.

Many bushfire victims who are in financial stress and unable to ­access their funds from the settlement are angry that the firm’s senior equity-owning partners took more than $16m in personal dividends in the last ­financial year, arising from the payouts. Almost 600 of the firm’s clients in another class action, over contaminated Bonsoy drinks, are still waiting for a share of a December 2014 settlement of $25m, which will be reduced to about $16m after the legal fees and costs are taken out.

Maurice Blackburn said it was working diligently and efficiently to ensure all its clients received their funds as soon as possible.