Gill v Ethicon Sàrl (No 10)

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FEDERAL COURT OF AUSTRALIA

Gill v Ethicon Sàrl (No 10) [2023] FCA 228

File numbers: NSD 1590 of 2012
NSD 310 of 2021
Judgment of: LEE J
Date of judgment: 16 March 2023
Catchwords: REPRESENTATIVE PROCEEDINGS – two open class representative proceedings brought against manufacturer and supplier of pelvic “mesh” implants – where group members afflicted by physical, psychological and psychosocial difficulties – application under s 33V of the Federal Court of Australia Act 1976 (Cth) to approve settlement – bifurcation of question of approval of settlement and distribution of settlement sum – where hundreds of group member objections received – where liability findings already made and upheld on appeal – whether headline figure fair and reasonable inter partes and inter se – borderline case – settlement approved
PRACTICE AND PROCEDURE – achieving the overarching purpose in case management of class actions –role of contradictor in guiding Court through complex settlement process – utility of reference process in identifying paradigm cases in large scale litigation – tender process for administration of settlement scheme
Legislation:

Competition and Consumer Act 2010 (Cth) Pt VIB, ss 87L, 87M, 87Q, 87S, 87V

Federal Court of Australia Act 1976 (Cth) Pt IVA, 33V, 33V(1), 33V(2), 33X, 33Y, 33ZF, 33ZF(1)(f), 37AF(1), 37AG(1)(a), 54A, 87P(1), 87P(2)

Trade Practices Act 1974 (Cth) Pt VIB

Federal Court Rules 2011 (Cth) Div 28.6

Civil Liability Act 2002 (WA) ss 11, 11(3)

Civil Law (Wrongs) Act 2002 (ACT) s 98

Civil Liability Act 2002 (NSW) ss 12, 12(3)

Civil Liability Act 2003 (Qld) s 54

Civil Liability Act 1936 (SA) s 54

Civil Liability Act 2002 (Tas) ss 3, 25

Personal Injuries (Liabilities and Damages) Act 2003 (NT) ss 18, 20

Wrongs Act 1958 (Vic) ss 28F, 28F(3)
Cases cited:

Botsman v Bolitho [2018] VSCA 278; (2018) 57 VR 68

CPB Contractors Pty Ltd v Celsus Pty Ltd (No 2) [2018] FCA 2112; (2018) 268 FCR 590

Darwalla Milling Co Pty Ltd v F Hoffman-LA Roche Ltd (No 2) [2006] FCA 1388; (2007) 236 ALR 322

Davaria Pty Ltd v 7-Eleven Stores Pty Ltd [2020] FCAFC 183; (2020) 281 FCR 501

Davis v Quintis Ltd (Subject to Deed of Company Arrangement) [2022] FCA 806

Ethicon Sàrl v Gill [2021] FCAFC 29; (2021) 288 FCR 338

Fowkes v Boston Scientific Corporation [2023] FCA 230

Gill v Ethicon Sàrl (No 5) [2019] FCA 1905

Gill v Ethicon Sàrl (No 6) [2020] FCA 279

Gill v Ethicon Sàrl (No 11) [2023] FCA 229

John Pfeiffer Pty Ltd v Rogerson [2000] HCA 36; (2000) 203 CLR 503

Kadam v MiiResorts Group 1 Pty Ltd (No 4) [2017] FCA 1139; (2017) 252 FCR 298

Kelly v Willmott Forests Ltd (in liq) (No 5) [2017] FCA 689

Lifeplan Australia Friendly Society Limited v S&P Global Inc (Formerly McGraw- Hill Financial, Inc) (A Company Incorporated in New York) [2018] FCA 379

Liverpool City Council v McGraw-Hill Financial, Inc [2018] FCA 1289

Lopez v Star World Enterprises [1999] FCA 104; (1999)…

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Details
Case
[2023] FCA 228
Decision Date

CaseChat Overview and Summary

The case of Gill v Ethicon Sàrl (No 10) involved two open class representative proceedings brought against Ethicon Sàrl, the manufacturer and supplier of pelvic "mesh" implants. The group members were afflicted by physical, psychological, and psychosocial difficulties as a result of the implants. The court was required to decide on an application under section 33V of the Federal Court of Australia Act 1976 (Cth) to approve the settlement of the proceedings. The primary legal issues before the court were whether the settlement sum was fair and reasonable, and whether the applicants had applied the correct legislative framework in assessing the size of potential group members' claims.

The court examined the evidence provided by the applicants, including the supplementary report by Dr Whitehouse, which confirmed the statistical validity of the approach taken by Ms Jancauskas in her analysis. The court also considered the extrapolative method used by Ms Jancauskas, which was supported by evidence from Ms Saddler, who confirmed that it was an orthodox and practical approach in the settlement of a large personal injury class action. The court concluded that the calculations undertaken by Ms Jancauskas, in light of the estimations provided in Dr Whitehouse's reports, revealed that eligible group members would have damages entitlements at the lower end of the reasonableness range.

The court found that the settlement was at the low end of the range of fair and reasonable settlement outcomes and, therefore, should be regarded as qualifying for approval. The court emphasised that it was required to, within reason, take the applicants and their advisers as it finds them. The court also noted that the Settlement Deed provided appropriate releases and that there were no indemnities in favour of the respondents. The court approved the settlement of the proceedings on the terms set out in the settlement deed executed on 10 November 2022, subject to the separate and later determination of what orders should be made as are just with respect to the distribution of the money paid under the settlement.

The court's approval of the settlement was subject to the condition that the settlement approval was separate and later determined from the distribution of the settlement sum. This bifurcation allowed the court to focus on the fairness and reasonableness of the settlement sum itself, independent of the distribution process. The court acknowledged the hundreds of group member objections received but found that the settlement sum was fair and reasonable inter partes and inter se. The court also considered the role of the contradictors in guiding the court through the complex settlement process and the utility of the reference process in identifying paradigm cases in large-scale litigation.

Orders

Orders of the court

1. Pursuant to s 33V(1) of the Federal Court of Australia Act 1976 (Cth) (FCA Act), the settlement of the proceedings between the parties on the terms set out in the settlement deed executed 10 November 2022 be approved.

2. The settlement approval in order 1 is subject to the separate and later determination of what orders should be made as are just with respect to the distribution of the money paid under the settlement pursuant to s 33V(2) of the FCA Act.

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

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

The contradictors identified two issues with these figures: first, whether the evidence relied upon in order to arrive at the figures in fact supports the contention that the settlement sum is fair and reasonable; and secondly, and relatedly, whether the applicants applied the correct legislative framework to assess the size of potential group members’ claims.F.1.2 Adequacy of Numerical Evidence The contradictors’ criticisms of the numerical evidence are as follows. First, it is said that Ms Jancauskas’ evidence as to the characteristics of potential group members appears to be based on extrapolation from a reduced subset of 273 of the 499 registrants identified by Dr Whitehouse. Dr Whitehouse’s report does not address whether the reduced sample group of 273 registrants used by Ms Jancauskas in her final calculations is statistically representative of the total cohort of registrants, not least the larger body of potential group members. On this basis, on the first day of the hearing, the contradictors submitted it would be appropriate for the Court to require the applicants to provide further evidence from Dr Whitehouse addressing whether the 273 registrants actually used are statistically representative of the total cohort, and whether the manner in which Ms Jancauskas extrapolates figures based on those 273 registrants is reasonable. At my direction, and in advance of the final day of hearing on 16 February 2023, the applicants took the following steps to allay the contradictors’ concerns. First, they obtained a supplementary report by Dr Whitehouse in which Dr Whitehouse confirms that the approach taken by Ms Jancauskas in her analysis is statistically valid. Moreover, the applicants point to the fact that Dr Whitehouse produced slightly higher estimates for likely group member numbers and recommended that some consideration be given to the adoption of a range of likely estimates in lieu of landing on a single figure as an estimate. This was the course taken by Ms Jancauskas. Secondly, the applicants sought to justify Ms Jancauskas’ extrapolative method with evidence from Ms Saddler, who confirmed that in her experience, Ms Jancauskas’ extrapolation of a statistically representative sample of claims is an orthodox and practical approach in the context of the settlement of a large personal injury class action: Affidavit of Ms Saddler sworn 19 December 2022 (at [35]). Accordingly, the applicants contend that the calculations undertaken by Ms Jancauskas, in the light of the estimations provided in Dr Whitehouse’s reports, reveal that eligible group members will have damages entitlements at the lower end of the reasonableness range. So much is demonstrated by the following table produced by the applicants, which compares the applicants’ estimates against the “lower limit”, “point” and “upper limit” estimates of Dr Whitehouse (compare, in particular, the “totals” figures in the bottom row):Table 2 For ease of reference, it is well here to set out the available interest on the settlement sum. After a number of requests, the applicants drew the Court’s attention to the interest payable on the total amounts in Table 2, which adjusts the “totals” as follows:(1)Applicants’ estimate: $202,434,153.58;(2)Dr Whitehouse’s “lower limit”: $189,456,427.38;(3)Dr Whitehouse’s “point estimate”: $215,597,470.32; and(4)Dr Whitehouse’s “upper limit”: $240,209,044.43.

Decision

Reasons for decision

Thirdly, several objections appeared to proceed on the misapprehension that under the proposed settlement a group member would only receive compensation in the amount of $7,500, irrespective of the strength of their claim (see, for example, T13.1; T15.1–9; T27.25–44; T47.18–26; T48.24–35). That amount was evidently picked up by group members from the proposed “fast track” payment process offered by Shine’s settlement scheme. Under that scheme, group members may elect to obtain a “fast track” payment if they have suffered complications of a relatively minor nature. It is not suitable (and is not put forward as suitable under the proposed settlement) as a payment for women with complex claims. Given I am not approving the settlement scheme, these concerns have little bearing on my conclusion today.G CONCLUSION AND ORDERS As noted above, the settlement is at the low end of the range of fair and reasonable settlement outcomes. The authorities indicate that a proposal falling within this range should be regarded as qualifying for approval. The Court is required to, within reason, take the applicants and their advisers as it finds them: Darwalla Milling Co Pty Ltd v F Hoffman-LA Roche Ltd (No 2) [2006] FCA 1388; (2007) 236 ALR 322 (at 399 [50] per Jessup J). Section 33V(1) does not permit the Court to render what it perceives to be the best or fairest outcome. Indeed, there will rarely, if ever, be a case in which there is a unique outcome which may be regarded as the only acceptable option: Stanford v DePuy International (at [116] per Wigney J). But it is possible to determine a range of outcomes.

Ratio Decidendi

Legal Principle Established

The Settlement Deed provides appropriate releases. They are no wider than the claims common to group members and there are no indemnities in favour of the respondents.C.3 Scheme Administration As noted above, it was proposed that the scheme administrators be the solicitors at Shine with carriage of the proceedings, Ms Janice Saddler and Ms Jancauskas. However, following their departure from Shine, the applicants now seek leave to appoint two other highly experienced Shine solicitors, Mr Craig Allsopp and Ms Vicky Antzoulatos. Given the tender process I ordered (discussed above at [14]) there is little point in setting out the terms of the settlement scheme proposed by Shine. This will avoid confusion, in particular among group members, as to what falls to be determined at this stage. One exception which should be mentioned is the proposal in the current settlement scheme to exclude claims which would likely result in a non-economic loss claim which is less than 15% of a “most extreme case”, as understood under the Competition and Consumer Act 2010 (Cth) (Competition and Consumer Act). The statute provides that a “most extreme case” is a case “in which the plaintiff suffers non-economic loss of the gravest conceivable kind”: s 87P(2) of the Competition and Consumer Act. This aspect of the proposed settlement scheme is relevant to the question before the Court insofar as the calculations of funds potentially payable to group members proceed on the assumption that women who do not meet the 15% threshold will not be compensated.D NOTIFICATION AND REACTIONS TO THE PROPOSED SETTLEMENTD.1 Notification Pursuant to ss 33X, 33Y and 33ZF of the FCA Act, I approved the Notice of Proposed Settlement (Notice) on 16 November 2022 for distribution to all registrants by email or post, as well as its publication on a website dedicated to the settlement, and by requesting the administrators of a number of Facebook support groups to post a link to the Notice. The approved Settlement Overview was also to be published on >The final form of the Notice and Settlement Overview differ considerably from the drafts provided to the Court by Shine. I was required to make considerable amendments. The first was generally to simplify and shorten the documents to make them more accessible to their intended readers. Secondly, the Notice was, regrettably, opaque in an important respect and I added an explanation of the amount actually likely to be available to group members. Both drafts stated only that Ethicon “will pay the amount of $300,000,000.00 for the purpose of a Settlement Fund being established”, omitting other crucial details. Thirdly, I provided the direct contact details of the contradictors, removing the proposal that group members send objections to Shine to be passed on to the contradictors. Relatedly, I clarified somewhat the role of the contradictors and the opportunity for group members to attend the hearing either in person or remotely.D.2 The Reaction of the Class