Product liability in the Australian Consumer Law era

Toby Biddle

Partner

Norton Rose Fulbright Australia

2nd September 2016

The current product

liability regime versus

the old

• Australian Consumer Law vs Trade Practices Act

• Powers of the ACCC

• Vioxx litigation fallout

Impact of

globalisation &

technology on

product liability

Global regulation

Local regulation

Litigation co-operation

Consumer behaviour

Developments in

product liability

actions in Australia

Class actions

Litigation funding

Competition between plaintiff law firms

Impact of legal advertising changes

Shift from drugs to devices

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Overview

1. Pharmaceuticals under the current regime

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Product liability provisions

• Trade Practices Act 1974 (Cth)

• Competition and Consumer

Act 2010 (Cth)

– Amalgamation of all consumer

protection laws into Schedule 2, the

Australian Consumer Law (ACL).

– ACL replaced all state & territory Fair

Trading laws

– Effective 1 January 2011

• Other causes of action

available in product liability

claims in:

-Contract

-Sale of Goods Acts

-Negligence

Such products are known to confer substantial benefits which flow to the wider community at large. The small statistical chance of injury associated with them does not of itself mean that they are “defective”.- Explanatory Memorandum to Part VA,

Attorney-General Michael Duffy (1992)

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Consumer guarantees

s 52

“A corporation shall not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”

s 53 false and misleading misrepresentations

s 18“A person must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.”

Replicated in s 29, includes false testimonials

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TPA ACL

Consumer guarantees

Part V Division 2: Conditions and warranties in consumer transactions

– Goods match description (s 70)

– Implied undertakings as to quality or fitness (s 71)

– Goods match sample (s 72)

– Guarantee as to fitness for a particular purpose (s 74)

Part V Division 2A: Actions against the manufacturers and importers of goods

– Actions in respect of goods of unmerchantable quality (s 74D)

– Actions in respect of unsuitable goods (s 74B)

– Actions in respect of false descriptions (s 74C)

Part 3–2 Division 1 “Consumer guarantees”

Guarantees as to:

– acceptable quality (ss 7(1); 54) replaced “reasonable consumer" test

– fitness for any disclosed purpose (s 55)

– supply of goods by description (s 56)

– supply of goods by sample or demonstration (s 57)

– express warranties (s 59)

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TPA ACL

Liability for defective goods

• Part VA – Liability of manufacturers and importers for defective goods replaced

• “defect”

• Part 3–5 “Liability of manufacturers for goods with Safety Defects”

• “safety defect”

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TPA ACL

• Equivalent provisions:

– Deemed manufacturers

– Defence of establish that defect did not exist at the time of supply

– Defence if goods have safety defect only because of compliance with a mandatory standard

– State of the art defence

– Commonwealth liability arising due to compliance with a Commonwealth mandatory standard

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Powers of the Australian Competition and Consumer

Commission (ACCC)

• New powers introduced into the TPA in April 2010

• Enforcement powers:

- Substantiation notices

- Public warning powers

- Infringement notices up to $66,000

• Remedies in consumer protection & unconscionable conduct:

- Civil pecuniary penalties up to $1.1 million

- Disqualification orders

- Non-party redress orders

2. Effect of increased regulation & mass

communication on the globalisation of

product liability actions

Technology & international flows of data

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Regulation

Impact of global regulation

Advantages for Plaintiffs

Ready access to adverse event data

Someone else has done the

groundwork

Plaintiff firms can pick & choose the

best products to target

Foreign litigation increased settlement

expectations

Advantages for Defendants

Ensure lay witnesses need only meet

with one set of lawyers

Share litigation strategies & discoveryFollow litigation in other jurisdictions,

develop a global network

Share expert witnesses

Consumers & social media

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• Robust media monitoring

• Know when you’re facing a global issue

• Develop strategies to respond ASAP

3. Why it’s never been a better time to launch

a class action in Australia

Class actions & litigation funding in Australia

• Class action regimes in the Federal Court, NSW & Victoria.

• Part IVA of the Federal Court of Australia Act 1976 (Cth), contains the class action provisions, came into effect on 5 March 1992.

• Regime for the commencement and conduct of class actions:

– 7 or more persons

– same circumstances

– substantial common issue

• Litigation funding - Campbells Cash &

Carry Pty Ltd v Fostif Pty Ltd [2006]

HCA

• ‘New entrant’ risk

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0

5

10

15

20

25

30

March 2006 - March 2016

Filings in the Federal Court of Australia

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Competition amongst plaintiff law firms

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Legal Profession Uniform Law (2015)

• National framework for practising law, only adopted in NSW & Victoria

• Removal of prohibitions on:

–Advertising personal injury & worker’s compensation services

–Uplift/ contingency fees

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Impact of adverse event registries

Increase in medical device litigation

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know what’s coming

use technology to your advantage

monitor ‘signalling events’

establish a litigation network

Know your defences

Developments

in Australia

Globalisation

& TechnologyACL vs TPA

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Summary

Strategy

Disclaimer

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