Court likely to favour union proceedings over class actions (although not this one)
03 November 2023
03 November 2023
Two or more competing class actions are relatively common, and the Court's multi-factorial approach for choosing to stay or consolidate claims is now well established. We discuss that in our article.
There have also been a number of regulatory enforcement proceedings and class actions, which have tended to be managed together, although practices have varied (including via consecutive hearings or joint hearings).
However, while unions have special standing to bring quasi-representative proceedings, they have rarely done so until recently. The Elliott-Carde case is the first decision dealing with overlapping union and class action proceedings.
While the nuances of the case meant there was no stay here, the following key themes emerged in terms of general guidance:
The Court said that unless there is a good reason, two or more cases of a representative nature should not be allowed to go forward when one will suffice. Duplicative proceedings are a vice and there is a risk of inconsistent outcomes, vexation to a respondent and increased costs.
Federally registered employee organisations have played, and continue to play, a special and central role in protecting the interest of workers. That role should be given full effect and not diminished.
"All else being equal", registered employee organisations may be the preferred vehicle for running claims seeking employee compensation and penalties where they do not take out a funding commission or legal costs from the compensation awarded.
That said, any deductions for funding or legal costs in the class action would require Court approval to ensure they are fair and reasonable.
Lee J considered it wrong for the union to contend that it would not be bound by judgment in the class action and could re-litigate claims for workers (removing finality). In particular:
This is particularly significant, as it has been argued by unions that they have their own entitlement to agitate claims on behalf of workers even if those workers have resolved them – which posed a potential barrier to settling employment class actions.
In Elliott-Carde, the union did bring representative proceedings and it did not seek a funding commission. But the class action was still not stayed and both claims will travel together.
Had circumstances been different and there been a choice between two actions commenced in a timely fashion, namely (a) a funded class action; and (b) an "unfunded" class action run by the union, the interest of group members would likely have required a stay of the funded class action.
The Court was also not asked to consider a stay of the union proceedings in favour of the class action.
The case also provides guidance on the Court's developing expectations on parties when distributing notices to group members. While informed by the nature of the class in this case (comprising minors), his Honour's comments may be more broadly applicable.
First, opt-out notices need to be more accessible, including the use of graphics and animation. Applicants' solicitors need to "think laterally and realistically about digital communication and the use of social media".
Secondly, it may be appropriate to appoint an independent lawyer, armed with a 'frequently asked questions' document settled by the Court, who will be in a position to respond to telephone or email queries as to any matters raised by group members relevant to the notice.
Elliott-Carde v McDonald's Australia Limited (Stay Application)  FCA 1210
Authors: Ian Bolster, Partner; John Pavlakis, Partner; Sally-Anne Stewart, Senior Associate; and Andrew Westcott, Expertise Counsel.