Bates v Dow Corning (Australia) Pty Limited
[2005] FCA 927
•30 JUNE 2005
FEDERAL COURT OF AUSTRALIA
Bates v Dow Corning (Australia) Pty Limited [2005] FCA 927
REPRESENTATIVE PROCEEDINGS – proceedings on foot in United States of America – group members settling in United States of America – whether necessary for Court to approve settlement pursuant to s 33V(1) of Federal Court of Australia Act 1976 (Cth) – proceedings discontinued
Federal Court of Australia Act 1976 (Cth) – Part IVA
Courtney v Medtel (2002) 122 FCR 168 referred to
BIANCA BATES v DOW CORNING (AUSTRALIA) PTY LIMITED & ORS
NG 641 of 1994
JACOBSON J
30 JUNE 2005
SYDNEY
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 641 of 1994
BETWEEN:
BIANCA BATES
APPLICANTAND:
DOW CORNING (AUSTRALIA)
PTY LIMITED (ACN 008 444 166)
FIRST RESPONDENTDOW CHEMICAL (AUSTRALIA) LTD
SECOND RESPONDENTDOW CORNING CORPORATION
THIRD RESPONDENTDOW CORNING STI
FOURTH RESPONDENTDOW CORNING WRIGHT CORPORATION
FIFTH RESPONDENTDOW CORNING WRIGHT/MEDICAL MATERIALS
SIXTH RESPONDENTDOW CHEMICAL CO (DELAWARE)
SEVENTH RESPONDENTDOW CHEMICAL CO (MICHIGAN)
EIGHTH RESPONDENT
JUDGE:
JACOBSON J
DATE OF ORDER:
30 JUNE 2005
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1. In accordance with s33V(1) of the Federal Court Act 1976 (Cth), I will give leave and approval for the applicants to discontinue the proceedings.
Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
NG 641 of 1994
BETWEEN:
BIANCA BATES
APPLICANTAND:
DOW CORNING (AUSTRALIA)
PTY LIMITED (ACN 008 444 166)
FIRST RESPONDENTDOW CHEMICAL (AUSTRALIA) LTD
SECOND RESPONDENTDOW CORNING CORPORATION
THIRD RESPONDENTDOW CORNING STI
FOURTH RESPONDENTDOW CORNING WRIGHT CORPORATION
FIFTH RESPONDENTDOW CORNING WRIGHT/MEDICAL MATERIALS
SIXTH RESPONDENTDOW CHEMICAL CO (DELAWARE)
SEVENTH RESPONDENTDOW CHEMICAL CO (MICHIGAN)
EIGHTH RESPONDENT
JUDGE:
JACOBSON J
DATE:
30 JUNE 2005
PLACE:
SYDNEY
REASONS FOR JUDGMENT
These proceedings are brought under Part IVA of the Federal Court Act 1976 (Cth) (“the Act”) as representative proceedings. They arise out of the fitting of allegedly defective breast implants manufactured by Dow Corning Corporation of the United States of America, ("DCC") or by “affiliates” or subsidiaries of DCC.
The proceedings were commenced in 1994. They were transferred to my docket when I was appointed to the court three years ago. The reason for the delay in the proceedings is essentially that there are parallel proceedings on foot in the United States of America which have been complicated by the fact that DCC has entered into Chapter 11 administration under the United States Bankruptcy Code ("the Bankruptcy Code").
A plan of reorganisation of DCC is being supervised by the United States District Court, Eastern District of Michigan, Northern Division (“Eastern District Court”). Judge Denise Page Hood is now supervising the administration of the Chapter 11 bankruptcy in that court.
On 23 March 2005, the applicant filed a notice of motion arising out of settlements reached by a number of group members pursuant to a special settlement facility for Australian claimants approved by Judge Hood. It is unnecessary to set out the orders which were sought in the motion because when the matter was before me on 26 May 2005, Dr Cashman, for the applicant, indicated that he wished to apply for leave to discontinue the proceedings under section 33V(1) of the Act.
The essential question which was raised by the notice of motion as filed in March was whether the approval of the court was required for the settlements reached by some group members in the circumstances which I will describe below.
The joint plan of reorganisation of DCC was initially submitted to the United States Bankruptcy Court and ultimately approved by it and the Eastern District Court. The joint plan was subsequently amended and its terms were approved in a series of judgments given by the United States Bankruptcy Court and subsequently by Judge Hood.
The essential features of the joint plan are that DCC and its affiliates and subsidiaries have agreed to provide an amount of over US$2.35 billion to meet claims resolved either by litigation in the United States courts or by settlement in the United States. A facility of US$400 million has been provided to meet the claims of persons who were successful in court proceedings. This is described in the various opinions of the judges administering the joint plan as “the Litigation Facility”. The balance of the sum of US$2.35 billion is to meet the claims of persons who agree to resolve their claims by way of settlement. That fund is described as “the Settlement Facility”.
On 17 July 2003, Judge Hood approved an amendment to the joint plan to provide for the processing of the claims of claimants who reside in Australia. The effect of Judge Hood's order is that a sub-fund of AUD$15.4 million was provided to meet the claims, including the legal expenses, of Australian resident claimants. Judge Hood's order provided for a cap of AUD$15.4 million on the settlement liabilities of DCC and the other companies under the sub-fund.
The evidence before me on the notice of motion disclosed that 1099 group members in the Australian proceeding have entered into settlement agreements with DCC and its affiliates or subsidiaries, under which each of the group members agreed to settle her claim and release DCC and the other named parties from all claims arising from the breast implants. I shall refer to those group members as "the settling group members".
The effect of the settlements agreed to by the settling group members appears to be that the whole of the sub-fund of AUD$15.4 million would be exhausted in meeting the claims.
I have before me an affidavit sworn yesterday by Dr Cashman which provides the most recent details of the position in relation to the settling group members. There were 79 settling group members whose settlements had not been processed when the matter was before me on earlier occasions. However, the position now is that the claims of those 79 persons are likely to be resolved and dealt with, pursuant to the sub-fund to which I have referred, in the very near future.
There are approximately 350 other group members, who I shall call "the remaining group members", who have not entered into agreements for settlement of their claims out of the sub-fund. I have evidence before me in Dr Cashman's affidavit that the remaining group members have elected to continue to pursue their claims through the options available to them in the United States under the joint plan; that is to say, pursuant to either the Settlement Facility or the Litigation Facility.
Dr Cashman's affidavit satisfies me that the remaining group members are legally represented and that they have not provided instructions to either Dr Cashman's firm or any of the other co-counsel firms engaged in connection with the present matter to continue with the conduct of the present proceedings or any other litigation in Australia.
The respondents to the proceedings did not appear when the matter was before me on the hearing of the motion, but a representative of their solicitors was in court as an observer of the proceedings. Dr Cashman informed me that the proceedings had not been served formally and that the respondents' position is that they do not wish to appear or participate in the hearing. However, the solicitors have been in touch with me by way of a letter forwarded to my associate, and it is clear from the solicitors' letter that the proposed discontinuance of the proceedings is supported by them.
Section 33V(1) of the Act provides that a representative proceeding may not be settled or discontinued without the leave of the court.
I am satisfied that my approval is not required for the settlement of the claims of the settling group members. There are two reasons for this. First, on the evidence before me on the motion, the settlements do not entirely resolve the claims of all group members: see Courtney v Medtel (2002) 122 FCR 168 at [45]-[46] per Sackville J. It is true that the affidavit evidence put before me this morning may suggest that in substance, the settlement is one of the whole of the proceedings, but I do not think it is necessary for me to decide that. This is because the second reason for my view that I do not need to approve the settlement is that the settlements entered into by the settling group members are really ancillary to the Chapter 11 bankruptcy of DCC which is being administered in the United States of America. Accordingly, I do not see that the provisions of section 33V(1) are enlivened in relation to the settlements of the settling group members.
In my view, it is appropriate to grant leave to discontinue the proceedings because, as Dr Cashman's most recent evidence discloses, there is no remaining group member who was given instructions to pursue the litigation in Australia. Accordingly, there is no utility in continuing the proceedings. The remaining group members seek to pursue their rights in the United States of America and there is therefore no point in continuing the proceedings in Australia. Thus, as I have said, I will, in accordance with section 33V(1) of the Act, approve and give leave to the applicant to discontinue these proceedings.
I certify that the preceding 17 (seventeen) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Jacobson. Associate:
Dated: 1 July 2005
Counsel for Applicant: Dr Cashman Solicitor for the Applicant: Maurice Blackburn Cashman Counsel for the Respondent No Appearance for the Respondent Date of Hearing: 30 June 2005 Date of Judgment: 30 June 2005
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