Academic journal article Defense Counsel Journal

Thinking Locally, Suing Globally: The International Frontiers of Mass Tort Litigation in Australia

Academic journal article Defense Counsel Journal

Thinking Locally, Suing Globally: The International Frontiers of Mass Tort Litigation in Australia

Article excerpt

PRIOR to 1992, mass tort litigation in Australia was virtually unknown. The country had no class action system and little or no product liability litigation, save for a series of claims involving IUDs that were essentially driven by the Dalkon Shield settlement in the United States. All of that changed in one fell swoop when the governments of the day, both state and federal, introduced a package of reforms that were actually intended to increase the level of product liability litigation in Australia. These "reforms" included the following:

* Introduction of a class action system that is more plaintiff friendly than that in the United States;

* Adoption of a new product liability regime, based on the European Product Liability Directive;

* Introduction of a limited form of contingency fees; and

* Repeal of regulations prohibiting advertising by lawyers.

Needless to say, much has changed since 1992. Australia is now the place outside North America where a corporation is most likely to find itself defending a class action, and much of that litigation has been driven by a series of drug and medical device claims. These claims have included both those that had their origin in the United States or, to a lesser extent, the United Kingdom and some home grown proceedings. (1)

In most cases, these actions form or formed part of a broader, multi-jurisdictional or multinational problem for the defendant. In most cases, the Australian proceedings are or were but one part of a problem that, while usually having its focus or epicenter in the United States, also involved proceedings in a range of other countries. This creates both challenges and opportunities for those American-based lawyers acting for the defendants. The challenges take a number of different forms, some of which are addressed in this paper. The opportunities revolve around the prospect of working in another jurisdiction with lawyers from a diverse range of backgrounds and traditions. They also include the possibility of spending hours, if not days, on aircraft traveling to the far corners of the globe.

I. Why Australia But Not Other Parts of the World?

A question often asked by both corporations that find themselves embroiled in litigation in Australia and their U.S. lawyers is: Why Australia but not other parts of the world? How can it be that Australia, with a population of only twenty million people, can cause so much grief for general counsel, the corporation's management team and its external lawyers who would rather be focused on "the main game" in the United States?

A number of factors may be identified as contributing to the growth in mass tort litigation in Australia. Most of these factors emerged from the frenzy of law reform activity that Australia experienced in the early 1990s.

A. Favorable Legal Regime

One such development was the introduction of a strict liability regime for product liability claims. Australian governments consciously took steps in the early 90's aimed at increasing the level of product liability litigation. The federal government introduced a strict liability regime for product liability claims based on the European Union Product Liability Directive. In time, this directive also had the effect of breathing life into a series of older provisions that, on one view, also imposed a strict liability regime in product claims.

The operation of these provisions can have what appears to be confusing results to an American lawyer. Take for example the decision of the Federal Court of Australia in Medtel Pry. Ltd. v Courtney. (3) In interpreting Sections 74B and 74D of the Trade Practices Act 1974 (Cth.), the court (at both first instance and on appeal), held that a cardiac pacemaker was not of merchantable quality in circumstances where the device in question had never failed or otherwise malfunctioned. Rather, the pacemaker had, at all times up to and including the trial, functioned normally. …

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