Gill v Ethicon Sarl (No 3)

• Jurisdiction: Australia Federal only
• Judge: LEE J
• Judgment Date: 10 April 2019
• Neutral Citation: [2019] FCA 587
• Date: 11 April 2019
• Court: Federal Court

FEDERAL COURT OF AUSTRALIA

Gill v Ethicon Sàrl (No 3) [2019] FCA 587

File number:	NSD 1590 of 2012
Judge:	LEE J
Date of judgment:	10 April 2019
Catchwords:	REPRESENTATIVE PROCEEDINGS – application to expand the class in a representative proceeding – importance of Merck orders in Pt IVA proceedings – principles relating to Merck orders – principles relating to group definition – argument as to futility – whether new group members’ claims would be doomed to fail – application to expand the class granted in circumstances of registration orders made in advance of a proposed mediation
Legislation:	Federal Court of Australia Act 1976 (Cth) Pt IVA, ss 33X, 33ZB, 33ZF ; Federal Rules of Civil Procedure (US) r 23
Cases cited:	Ethicon Sàrl v Gill [2018] FCAFC 137 Femcare Ltd v Bright [2000] FCA 512; (2000) 100 FCR 331 Gill v Ethicon Sàrl (No 2) [2019] FCA 177 Mobil Oil Australia Pty Limited v Victoria [2002] HCA 27; (2002) 211 CLR 1 Peterson v Merck Sharpe & Dohme (Aust) Pty Ltd [2010] FCA 180; (2010) 184 FCR 1 Peterson v Merck Sharpe & Dohme (Aust) Pty Ltd (No 5) [2010] FCA 605; (2010) 87 IPR 234 Schanka v Employment National (Administration) Pty Limited (No 2) [2001] FCA 1623; (2001) 114 FCR 379 Timbercorp Finance Pty Ltd (in liquidation) v Collins [2016] HCA 44; (2016) 259 CLR 212
Date of hearing:	10 April 2019
Registry:	New South Wales
Division:	General Division
National Practice Area:	Commercial and Corporations
Sub-area:	Regulator and Consumer Protection
Category:	Catchwords
Number of paragraphs:	36
Counsel for the Applicants:	Mr D Graham SC
Counsel for the Respondents:	Mr S G Finch SC with Mr D Wong

ORDERS

		NSD 1590 of 2012
BETWEEN:	KATHRYN GILL First Applicant ; DIANE DAWSON Second Applicant ; ANN SANDERS Third Applicant
AND:	ETHICON SÁRL First Respondent ; ETHICON INC Second Respondent ; JOHNSON & JOHNSON MEDICAL PTY LIMITED ACN 000 160 403 Third Respondent

JUDGE:	LEE J
DATE OF ORDER:	11 APRIL 2019

THE COURT ORDERS THAT:

1. The parties provide to the Associate to Lee J a minute of order reflecting these reasons.

2. The time for bringing any application for leave to appeal from orders made reflecting these reasons be extended to a date 7 days after the delivery of revised reasons.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

Revised from the Transcript

LEE J:

1. This matter has once again come before me, this time by way of an application for leave to expand the current group definition.

2. The application was listed before me at 9.30am this morning, having previously been listed and adjourned part-heard on 1 April 2019. The application seeks an order that the group definition be amended by replacing the existing cut-off date (being the current date by which claimants need to have met the criteria for group membership) with what is identified as being a “date to be fixed”. This would have the consequence of expanding the class. The order is opposed, but for reasons that follow, leave should be granted.

3. The legislative policy underlying Pt IVA of the Federal Court of Australia Act 1976 (Cth) (Act) is plain. It provides a mechanism to avoid multiplicity of actions, and provides a means by which multiple claims may be dealt with together, consistently with the requirements of fairness and individual justice: see Mobil Oil Australia Pty Limited v Victoria [2002] HCA 27; (2002) 211 CLR 1 at 24 [12] (Gleeson CJ).

4. Foundational to the operation of a class action regime is the binding of class members to a determination of the court or a settlement approved by the court. A Federal Court in the United States is required, by Rule 23 of the Federal Rules of Civil Procedure (US), to designate those persons whom the court finds to be members of the class, so as to identify the claimants potentially bound by the outcome of the court’s determination or any settlement: see r 23(c)(3). In a proceeding governed by Pt IVA of the Act, the same result effectively is arrived at by reason of the operation of the most important provision within Pt IVA, being s 33ZB. This provision provides that a judgment given in a representative proceeding must describe or otherwise identify the group members affected by it and binds all such persons other than any person who has opted-out of the proceeding under s 33J. This provision was described by the Full Court in Femcare Ltd v Bright [2000] FCA 512; (2000) 100 FCR 331 at 338 [25] (Black CJ, Sackville and Emmett JJ) as, in one sense, the “pivotal provision” in Pt IVA.

5. In Timbercorp Finance Pty Ltd (in liquidation) v Collins [2016] HCA 44; (2016) 259 CLR 212, the High Court held that so long as it was reasonable for group members not to have raised individual defences in a group proceeding, group members were not precluded by way of Anshun estoppel or an abuse of process from subsequently raising individual claims. The reasoning of the Court was based on an analysis of both the structure and specific provisions of Pt 4A of the Supreme Court Act 1986 (Vic) (the structure and provisions being relevantly identical to those in Pt IVA). In particular, the High Court focussed on the notion that the representative applicant acts on behalf of group members, but only acts on their behalf in a limited way. French CJ, Kiefel, Keane and Nettle JJ explained at 235-236 [52]-[53] as follows:

Part 4A creates its own kind of statutory estoppel. Section 33ZB requires that a judgment in a group proceeding identify the group members affected by it and, subject to a provision not presently relevant, provides that that judgment “binds all persons who are such group members at the time the judgment is given”. In order to understand that to which the group members are bound, it is necessary to read s 33ZB in the context of Pt 4A as a whole and ss 33C(1) and 33H in particular. By that process it will be seen that group members are bound by the determination of the claims giving rise to the common questions.

The provisions of Pt 4A therefore confirm that a plaintiff in group proceedings represents group members only with respect to the claim the subject of that proceeding, but not with respect to their individual claims...

6. In this way, it can be seen that Pt IVA expressly contemplates and provides for the individuality of claims within a group proceeding. The focus of the proceeding is on answering either one or more common questions of fact or law for persons whose claims involve the same, similar or related circumstances. Section 33C recognises that each group member may, as an individual, have different claims against a respondent, but for a representative proceeding to be validly commenced it is necessary that any such claims (being claims which have an existence anterior to, and separately from, the proceeding) have the relevant commonality contemplated by the statutory provisions.

7. The other “gateway” provision, s 33H, requires three things: first, identification of group members to whom the proceeding relates; secondly, specification of the nature of the claims brought on behalf of group members and the relief sought; and thirdly, specification of the questions of law or fact common to the claims of group members. The importance of s 33H in the statutory scheme is that it provides the basis upon which the court can determine, immediately upon commencement of the representative proceeding, whether or not it has been properly constituted as a class action. Put another way, s 33H allows the court to identify whether s 33C (and hence Pt IVA) has been properly engaged.

8. A common misconception is that the s 33H common question or questions specified in the originating application or supporting documentation (for the “gateway” purpose explained in the preceding paragraph) define the common question or questions for the balance of the proceeding. A moment’s reflection will lead to the conclusion...