Reform sought to avoid problems around multiple class actions

A leading ­expert in class action litigation has called for statutory ­reform to resolve problems triggered by competing class ­actions.

Jones Day litigation lawyer John Emmerig.

One of the nation’s leading ­experts in class action litigation has called for urgent statutory ­reform to resolve the problems triggered by competing class ­actions, such as the litigation avalanche confronting AMP.

John Emmerig, who leads the class action practice at Jones Day, warned that because AMP was facing five class actions over the same allegations there was a risk that some claimants might find themselves ­required to pay ­commissions to two litigation funders.

Mr Emmerig said the Supreme Court had not yet ruled on what its approach might be if the four claims filed in the Federal Court were eventually moved to the NSW Supreme Court, which has a separate AMP class action,

But if only one class action were to proceed against AMP, the Supreme Court could find itself dealing with an issue that had been flagged by the Federal Court’s Justice Michael Lee in a landmark ruling known as GetSwift, Mr Emmerig said.

“Class members who have signed up with a funder in the class actions that do not run may end up paying two sets of commissions to funders,” he said.

“That is, once to the funder who funds the class action that runs and a second fee to the ­funder who signed the class member up for one of the class actions that doesn’t run.

“It seems odd that this should occur but the issue involves contractual rights that potentially sit independently from the court’s discretion to only allow one class action to proceed.

“What all of this points to is the urgent need for statutory ­reform of the law in this country to address the issues arising in competing class actions,” Mr ­Emmerig said.

Moves to bring the AMP class actions into the same court have already led to tensions between the Federal Court and the ­Supreme Court, with both courts raising the prospect of injunctions to protect their processes.

This comes amid growing moves to streamline the way courts deal with multiple class ­actions arising from the same ­circumstances.

On May 23, the Federal Court’s Justice Lee imposed a permanent stay on two shareholder class actions against technology company GetSwift and allowed a third — run by Phi Finney ­McDonald — to proceed.

Justice Lee considered Phi ­Finney McDonald’s financing ­arrangements with Therium Capital to be preferable.

But his judgment made it clear that other factors might also be relevant.

“It should be stressed that any principled assessment between class actions is not so crude so as to be determined by reference only to the relative size of the funding commission spruiked in promotional material,” Justice Lee said.

“It is inconsistent with the principled exercise of judicial power, and also unedifying, for the court to be perceived as akin to a metaphorical auctioneer going around the room adopting the curial equivalent of entreating: ‘Are we all done? It’s now going to go under the hammer!’

“To the extent a determination is required as to which open class securities class action goes forward, the weight to be given to a particular relevant consideration, including ‘headline’ commission rates of funders, will necessarily vary depending on the particular circumstances,” Justice Lee said in the GetSwift case.