Federal Court of Australia Orders Respondent in Shareholder Class Action to Hand Over Insurance Information

By John Freund |

The following piece was contributed by Anne Freeman of Australian law firm, Piper Alderman.

Virgin Australia, which has been sued by investors who purchased unsecured notes in the airline based on statements in a 2019 prospectus for a capital raising, has been ordered to advise the lead applicant in the class action whether its has made a claim against its insurer for its costs and any liability in the class action, and whether its insurer has agreed to grant indemnity.  It has also been ordered to produce copies of any insurance policies which might respond to the claims made in the class action[i].

The orders made are in contrast to a 2020 decision of the Court[ii], which found that the case management powers of the Court did not empower it to order the disclosure of the respondent’s insurance policies in class actions.  In that case, very similar orders were sought, namely for production of policies and for communications regarding the insurer’s position on the grant of indemnity.  The applicant in that case relied upon a 2019 Federal Court authority, Simpson v Thorn Australia Pty Ltd trading as Radio Rentals[iii] , which had resulted in orders for the production of insurance information, to argue that the documents were relevant to inform the applicant whether further prosecution of the proceedings was commercially viable and whether mediation was appropriate and, if so, what the appropriate quantum of settlement might be.  The applicant also argued that the documents were relevant to the approval of the settlement and to determine whether action against the insurer may be needed to obtain a declaration of indemnity.  The judge disagreed, taking the conventional position that insurance information is not relevant to the proof of a cause of action in the proceedings and is therefore not discoverable, and noting that the case management powers of the Court were not designed to “confer an asymmetric commercial advantage in favour of one party at the expense of another” in mediations.  Beach J also rejected the suggestion that the documents were needed for any settlement approval, and distinguished the position in Simpson where leave had been granted to bring a claim against the insurer.

The orders are also in contrast to a decision of another Federal Court judge, who declined an application by a shareholder to access insurance policies under a discretionary power which may allow shareholders access to the books and records of the company, if the application is made in good faith and for a proper purpose[iv].  That decision was based upon a finding by the judge that the claims made by the class members did not arise from their rights and entitlements as shareholders but rather as potential investors, and that therefore the application was not brought for a proper purpose.

The orders in Virgin Australia were made in the context of a Deed of Company Arrangement and the need to consider which claims against the company were covered by insurance.  That made the insurance position relevant, and distinguishes it from the decision in Evans.  However, the decision does show that accessing insurance information is a matter to be considered carefully in the circumstances of the individual case.  There are mechanisms available to obtain insurance information, which is obviously valuable in considering the recoverability of any funded claim.  Early consideration should be given in each class action as to potential means to obtain this information.

[i] Matheson Property Group Australia Pty Ltd as Trustee for The MPG Trust v Virgin Australia Holdings Limited NSD346/2022, order of Lee J, 28 June 2022

[ii] Evans v Davantage [2020] FCA 473

[iii] [2019] FCA 1229

[iv] Ingram as trustee for the Ingram Superannuation Fund v Ardent Leisure Limited [2020] FCA 1302

 

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Altroconsumo Secures Impressive 50 million Euro Settlement for 60,000 Participants to Dieselgate Class Action in Italy

By Harry Moran |

Altroconsumo and VW Group have reached a ground-breaking agreement, providing over 50 million euro relief to over 60,000 Italian consumers affected by the emissions fraud scandal. Celebrating this major win for Italian consumers, Euroconsumers calls on Volkswagen to now also compensate Dieselgate victims in the other Euroconsumers countries. 

The settlement reached by Altroconsumo, arising from a Euroconsumers coordinated class action which commenced in 2015 ensures that Volkswagen will allocate over 50 million euros in compensation. Eligible participants stand to receive payments of up to 1100 euros per individual owner.

This brings an end to an eight year long legal battle that Altroconsumo together with Euroconsumers has been fiercefully fighting for Italian consumers and marks a significant milestone in seeking justice for those impacted by the ‘Dieselgate’ scandal.

We extend our massive congratulations to Altroconsumo for reaching this major settlement in favor of the Italian Dieselgate victims. Finally, they will receive the justice and compensation they deserve. This milestone underscores the importance of upholding consumer rights and the accountability of big market players when these rights are ignored, something Euroconsumers and all its national organisations will continue to do together with even more intensity under the new Representative Actions Directive” – Marco Scialdone, Head Litigation and Academic Outreach Euroconsumers

Together with Altroconsumo in Italy, Euroconsumers also initiated Dieselgate class actions against the Volkswagen-group in Belgium, Spain and Portugal. While the circumstances are shared, the outcomes have been far from consistent.

Euroconsumers was the first European consumer cluster to launch collective actions against Volkswagen to secure redress and compensation for all affected by the emissions scandal in its member countries. After 8 years of relentless pursuit, we urge the VW group to finally come through for all of them and give all of them the compensation they rightfully deserve. All Dieselgate victims are equal and should be treated with equal respect.” – Els Bruggeman, Head Policy and Enforcement Euroconsumers

Consumer protection is nothing without enforcement and so Euroconsumers and its organisations will continue to lead important class actions which benefit consumers all across the single market. 

Read the full Altroconsumo press release here.

About Euroconsumers 

Gathering five national consumer organisations and giving voice to a total of more than 1,5 million people in Italy, Belgium, Spain, Portugal and Brazil, Euroconsumers is the world’s leading consumer cluster in innovative information, personalised services and the defence of consumer rights. Our European member organisations are part of the umbrella network of BEUC, the European Consumer Organisation. Together we advocate for EU policies that benefit consumers in their daily lives.

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CAT Approves £25 Million Settlement in Boundary Fares Class Action

By Harry Moran |

As LFJ reported last month, the parties in the Stagecoach South Western Trains class action had reached a settlement agreement, with SSWT agreeing to pay up to £25 million to eligible class members who were overcharged on their rail fares by the train operator.

An article in City A.M. provides an update on the case, as the Competition Appeal Tribunal (CAT) has approved the proposed settlement. Now that it has been approved by the tribunal, class members will be able to register and submit a claim for payment in order to receive compensation from the settlement. The claim period will last for six months, from 10 July 2024 to 10 January 2025.

Within four months of the claim period ending, the class representative will then provide SSWT with the total amount to be claimed, up to the total of £25 million agreed in the settlement. SSWT will then have a period of 21 days following receipt of this information to pay the class representative the ‘notified damages sum’.

The class action was filed by Charles Lyndon, with Woodsford Group providing the funding for the litigation. 

Steven Friel, Woodsford’s CEO said: “This settlement approval confirms Woodsford as the most active and the most successful litigation funder in the CAT collective proceedings regime. Our actions have resulted in the first two, and as yet only, court-approved settlements in the regime.”The full collective settlement approval order from the CAT can be read here.

Reversal of $1.6 Billion IBM Judgement Puts Judgement Preservation Insurance in the Spotlight

By Harry Moran |

The value of litigation insurance, and the natural pairing of this coverage with litigation funding, is often highlighted as one of the core strengths of the current litigation environment. However, a significant reversal of a $1.6 billion judgement has shown that insurers must carefully balance the risks of uncertain outcomes when providing judgement preservation insurance.

Reporting by Bloomberg Law covers the ongoing impact of the decision by the US Court of Appeals for the Fifth Circuit to overturn a $1.6 billion judgement against IBM, which has left Liberty Mutual facing up to $150 million in coverage for judgement preservation insurance it provided. According to Bloomberg’s sources, Liberty Mutual has since withdrawn from “at least two potential litigation insurance deals” since the appeals court’s ruling. The $1.6 billion judgement was reportedly insured by a group of insurers to cover between $500 million and $750 million, with Liberty alone having covered between $100 million and $150 million.

Richard Angevine, a spokesperson for the insurer, said: “Liberty Mutual Insurance does not publicly discuss individual commercial insurance customers.”

Speaking to Bloomberg Law about the broader impact of this type of judgement on the litigation insurance market, Jason Goldy, a global team leader for Alliant Insurance’s Litigation & Contingent Risk Practice, said that insurers will continue to adjust their approach. Goldy said that “in the last six months you’ve seen these adjustments and I would think that you’re likely to see them accelerated if there are material losses,” but clarified that “the market will survive.” 

In a similar vein of thinking, Michael Perich, head of litigation insurance at Lockton, agreed that “the market is fluid and it's proven the ability to adapt to things.”