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Announcements Case Developments Commercial

Rest Super Members Prepare for Class Action Over Alleged Breach of Trustee Duties

Shine Lawyers has filed a class action on behalf of members of the Rest Superannuation fund who may have had income protection insurance premiums wrongfully deducted from their superannuation accounts.    “This class action alleges that between December 2008 and June 2019, Rest Superannuation (Rest) signed up new members to income protection insurance by default, without the member actively choosing to sign up to the policy,” said Shine Lawyers’ Practice Leader, Hadi Boustani.    “We also claim that when members did not make any contribution to their Rest account for 13 continuous months or more, the default income protection insurance policy did not provide the member with any coverage and when members held multiple income protection insurance policies at the same time, the Rest income protection policy provided little to no coverage.”    “This was money down the drain for fund members who paid a premium for no benefit. As a result, we’re seeking compensation for insurance premiums which we allege were unfairly deducted, as well as investment returns and administration costs,”    “Up to 500,000 Rest members may be affected,” said Boustani.   Shine Lawyers client, Jarrod Lane, has registered for the class action to demand accountability from his super fund.   He was not earning an income for over 3 years between 2018-2021 and believes he was charged for income protection insurance that he could never claim on.    “I felt it was important to join this class action because what Rest has done is wrong and they should compensate those who were affected.”  The action is being funded by Woodsford, a leading global ESG, access to justice and litigation finance business.   Clare Owen, Director and Head of Origination, Woodsford Australia, commented: “Everyday Australians trust their superannuation funds to look after their hard-earned dollars which they have invested for their retirement. Having sufficient superannuation to fund retirement is so important. Woodsford is pleased to be supporting this action to assist those everyday Australians in recouping losses to their superannuation which has been unfairly eroded.”    To be a part of this class action, you must have:   
  • Been a Rest Super fund member for any time between 5 December 2008 and 30 June 2019; and   
  • By default, signed up to a Rest Superannuation account which included an income protection insurance policy; and   
  • Had income protection insurance premiums deducted from your Rest Super account; and  
  • Either:  
    • Made no contribution to your Rest Superannuation account for 13 continuous months or more but continued to receive deductions from your account to cover income protection insurance premiums to Rest during that period; and/or  
    • Paid for multiple default income protection policies alongside your Rest income protection insurance policy.   
Anyone who meets the above criteria and was a Rest super fund member between 5 December 2008 and 30 June 2019 may be entitled to compensation.      To find out more, register here.    The class action was listed for a case management hearing on Friday 16 February, 2024 in the Federal Court. Justice Button made orders including for Rest to file its defence by the 28 March 2024. 
Commercial Regulatory Issues

Arizona House Judiciary Committee Approves Litigation Investment Safeguards and Transparency Act

The campaign across the United States to introduce state-level legislation regulating third-party litigation funding continues to gain momentum, as the Arizona state legislature has moved forward with its own bill designed to increase oversight of funding arrangements. An article in Chamber Business News covers the progression of HB 2638, the Litigation Investment Safeguards and Transparency Act, which was advanced by Arizona’s House Judiciary Committee earlier this week. The draft bill was approved by the committee in a 5-4 vote and will now be sent to the House Rules Committee, before proceeding to a full vote in the House. The language in the current version of HB 2638 bears a striking similarity to the bill making its way through Florida’s legislature, with an emphasis placed on increasing transparency requirements and laying out restrictions on funders’ control over the litigation and settlement processes. As is the case in the Florida bill, HB 2638 prohibits litigation financiers from paying commissions or referral fees, and prohibits them from assigning any part of a litigation financing agreement. The bill, which is sponsored by Rep. Travis Grantham, has received support from the American Property Casualty Insurance Association, the U.S. Chamber of Commerce Institute for Legal Reform, and a coalition of Arizona’s business associations. Those organisations publicly opposing the bill include the Arizona Trial Lawyers Association and the International Legal Finance Association (ILFA).
Announcements Commercial People Moves

Global law firm behind $70 billion BHP mining disaster claim launch Sydney office

The lawyers behind a multibillion-dollar class action against BHP over the fatal 2015 Samarco dam disaster in Brazil, are opening an office in Sydney.

Global law firm Pogust Goodhead has corporates who fail to uphold their social and environmental responsibilities in its sights as it establishes an Australian presence with the opening of an office in Sydney’s legal district at 126 Phillip Street.

Pogust Goodhead is bringing a case against BHP, the world’s biggest miner, on behalf of over 700,000 claimants in Brazil following the collapse of the Fundão Dam in 2015. The collapse killed 19 people and released 50 million metres of toxic waste, destroying entire villages and livelihoods. The case is the largest class action of its kind and is set to go to trial in London in October 2024.

The new office in Sydney is expected to serve as a base to launch new claims against Australian corporations who fail to uphold their obligations.

Global Managing Partner Tom Goodhead said:

“We are delighted to be launching in Sydney. We are establishing a base in BHP’s backyard to ensure we explore every avenue in our fight for justice for the victims of one the world’s worst environmental disasters.”

“The mining sector in Australia plays a vital role in ensuring the availability of increasingly important rare and critical minerals, which makes it a major driver of economic growth and wellbeing. However, with this enormous wealth and influence comes a responsibility to the communities in which they operate - a responsibility premised on basic decency and fairness.”

“We are investigating a number of new cases against Australian multinational corporations, such as BHP, in which their commitment to this responsibility has been seriously thrown into question. With the launch of our Sydney office, we are putting Australian corporations on notice that we are ready to hold them to account.”

Described as ‘the first legal unicorn’, Pogust Goodhead, has seen huge growth in just over five years and now represents over three million clients worldwide. It is also accumulating a sizeable war chest, enabling it to confront some of the world’s largest corporate entities on behalf of its clients which include some of the most disadvantaged people on the planet.

In October last year the firm announced a landmark US$550m investment partnership with US-based emerging markets investment manager Gramercy. The firm employs over 700 staff and has offices in London, Rio, Edinburgh, Amsterdam, Miami, Philadelphia and now Sydney.

The Sydney office will be headed up by Partner | Head of Australia, Amie Crichton and Partner, Joshua Carton. With over 15 years’ experience, including across top-tier Australian and global firms, Amie is a highly sought after disputes specialist and commercial litigator. She has a proven track record in defending and prosecuting claims across the consumer, financial services, technology, resources and infrastructure sectors, with a primary focus on complex multi-party disputes and high-profile class actions. Amie is joined in the partnership by long standing colleague and complex commercial disputes and class action specialist, Joshua Carton

Partner | Head of Australia Amie Crichton said:

“Pogust Goodhead’s arrival in Australia is more than just another player in the legal field. What sets the firm apart is its global reputation and extensive network. In bringing their resources, knowledge and invaluable strategic partnerships to Australian shores, the firm is empowering individuals to seek justice on an unprecedented scale. This launch also signifies the firm’s recognition of Australia’s importance as a hub for representative proceedings and underscores its confidence in the country’s sophisticated class action framework. Pogust Goodhead is poised to leave an incredible mark, cementing their status as trailblazers in the pursuit of justice.”

Case Developments Commercial

Industry Reaction to Ruling In Burford Capital, Sysco Antitrust Cases

As LFJ reported earlier this week, the ongoing saga of Burford Capital and Sysco Corp experienced a new twist as a Minnesota judge denied the joint motions for substitution of plaintiff in the antitrust lawsuits against pork and beef producers. Whilst Burford has already stated its intention to challenge the court’s ruling, litigation finance leaders and analysts have begun to offer their perspectives on what the potential impact of this court order may be. An article in Bloomberg Law gathers insights from legal scholars, senior executives from litigation funders and other organizations, as they react to Judge Docherty’s February 9 ruling. Maria Glover, civil procedure and civil justice professor at Georgetown Law School, framed the development as an unhelpful addition to the broader climate of scrutiny on litigation funding which has seen “a cascade of things going wrong.” In a similar vein of thought, Tom Baker, law professor at the University of Pennsylvania, said that the judge’s decision “will be something that the anti litigation funders will use to try to promote what the industry will regard as restrictive regulation.” However, leaders within the litigation finance industry have offered a far more measured reaction to the ruling, with Dai Wai Chin Feman, managing director at Parabellum Capital, describing it as “just more of the sideshow” and “a huge distraction from the underlying case.” Reinforcing this position, Rebecca Berrebi, litigation finance broker and consultant, emphasised that the Burford-Sysco situation was atypical for the industry, and “the result of a series of unfortunate events.”
Commercial Deals

Erso Capital: 2024 the ‘Crucial Year’ for Collective Actions in England & Wales

The important role that litigation funding plays in supporting group claims has been evident in the sub-postmasters scandal, with funders able to assert the value they can provide to the public in facilitating access to justice. Moreover, funders are looking at the coming year ahead with optimism, with their sights set on major cases that could build momentum for collective actions in England and Wales. A new blog post from Erso Capital looks at the current state of collective actions in England and Wales, assessing whether 2024 might be a transformative year for group claims in this jurisdiction. Starting with the premise that England and Wales are currently trailing behind other jurisdictions’ class action frameworks, the article examines some of the key cases and developments that may ‘forge a workable regime.’ The two major cases highlighted in the post are the Mariana dam and Dieselgate claims, with the former set for trial in April 2024, and the latter due for a series of hearings in the lead up to a trial next year. The fact that both of these claims are representing a huge number of claimants, leads Erso Capital to suggest that ‘both will test to the extreme the case management powers of the court.’ Observing how effectively these claims are managed and whether they are able to proceed in an orderly fashion, will provide the industry with a guide as to how viable these large-scale collective actions are in England and Wales. Erso Capital also highlight the potential for more representative claims to be brought ‘under CPR19 on behalf of a group of claimants with the same interest’, noting that the Court of Appeal’s decision in January 2024 to allow a representative action to proceed ‘may lay the ground for future representative claims.’ Similarly, the article suggests that there may be opportunities for the CAT to expand its remit, citing the ongoing trial in Le Patourel v BT Group Plc as an important marker that could open the way for ‘the CAT regime to be widened to allow non-competition claims.’
Commercial Regulatory Issues

Malaysian Government Minister Meets with EU Officials to Discuss Litigation Funding Regulations

The dispute between the Malaysian government and the Sulu heirs has been one of the most high profile international arbitration cases in recent times, raising issues around state sovereignty and the role of third-party funders in international arbitration. Whilst Malaysia has already managed to achieve some success towards overturning the unfavourable arbitration rulings, the government is now increasing its vocal support for reforms around the international regulation of litigation funding. An article in MalayMail highlights new comments from Datuk Seri Azalina Othman Said, the Malaysian government minister for law and institutional reform, who stated that she had participated in several bilateral meetings with European Union (EU) officials to discuss its own efforts towards regulating third-party litigation funding. These meetings reportedly included representatives from the European Commission, European Parliament and European External Action Service.  Azalina stated that “there is a pressing need for concerted global action to combat the misuse of third-party litigation funding solely for profit-seeking purposes, which subverts the pursuit of justice.” With the arbitrations and disputes in the Sulu case taking place across several EU jurisdictions, she highlighted that the issues which have affected Malaysia are also of concern to “EU member states that are not spared from such detrimental effects.” Azalina also expressed her desire for these discussions to continue with a wider and more international scope, including forums with policymakers from the United States and ASEAN. She stated that it was the Malaysian government’s position that there should be “a robust debate on regulating third-party litigation funding vis-a-vis the need for greater transparency, accountability and ethical professionalism among the funders.”
Case Developments Commercial

Piper Alderman Files Class Action Targeting IC Markets Over CFD Sales to Retail Investors 

As LFJ reported in October of last year, Piper Alderman have been exploring bringing a class action against International Capital Markets (IC Markets) over its marketing and sale of contracts for difference (CFD) products to retail investors. After a short delay, it now appears that this lawsuit has been formally filed in the Australian courts. An article by CDR reveals that Piper Alderman has filed its class action against IC Markets in the Federal Court of Australia, with the lawsuit submitted on 6 February. The class action focuses on allegations that IC Markets failed to adequately assess retail investors’ knowledge of CFD products and the associated risks with trading before selling them. Woodsford is providing the litigation funding for the class action, with the litigation looking to represent any investors who bought CFD products from IC Markets between 6 February 2018 and 6 February 2024. Commenting on the class action, Kate Sambrook, partner at Piper Alderman highlighted that many retail investors “have suffered significant financial losses and distress as a result of being offered highly-leveraged CFDs when they had little or no experience in trading complex financial products.” Woodsford’s chief investment officer, Charlie Morris stated that the funder is “committed to backing this action against IC Markets on behalf of those people who have suffered loss trading these excessively risky and complex products.” As LFJ has previously reported, this is not the only class action that Piper Alderman and Woodsford are involved in targeting trading platforms over the sale of CFD products, as both firms are engaged in separate class actions against IG Markets. In addition, according to CDR’s reporting, IC Markets is also the target of another class action representing retail investors who were sold CFD products, with that lawsuit being led by Echo Law.
Case Developments Commercial

Minnesota Judge Denies Burford and Sysco’s Joint Motions for Substitution of Plaintiff

The dispute between Burford Capital and Sysco Corp was one of the biggest litigation finance stories of 2023, providing critics of the industry with fresh talking points around the level of controls that funders can exert over litigation. Despite the core issues of the dispute being resolved last year, it appears that the story will continue throughout 2024, as a Minnesota judge has denied Burford’s request to be named as the plaintiff in the ongoing antitrust lawsuits. Reporting by Reuters covers the decision handed down by U.S. Magistrate Judge John Docherty, which not only denied Burford’s bid to take over the lawsuits, but also raised pointed questions about the reasons behind Burford’s request. Judge Docherty’s order denied the ‘joint motions for substitution of plaintiff’, which had been filed by Sysco Corp and Burford affiliate Carina Ventures LLC, in the ‘Pork Antitrust Litigation’ and ‘Cattle and Beef Antitrust Litigation’ cases. Judge Docherty found that there was no precedent for substituting a plaintiff for ‘a newly formed shell company created mid-suit for the sole purpose of litigating assigned claims on behalf of a litigation funder.’ He went on to emphasise, that in the court’s view, Burford Capital ‘has no stake in the litigation other than maximizing its return on an investment it made in the outcome of the litigation.’  Docherty’s ruling stressed that such a substitution would be in opposition to public policy, as it could discourage parties from reaching settlements. In what appeared to be a rather bold critique of the litigation funder’s involvement in these cases, Judge Docherty stated that ‘the litigation burden caused by Burford’s efforts to maximize return on investment has been enormous.’ He also described the joint motion’s ‘extraordinary nature’ as a contributing factor to the denial, noting that ‘the fact that no other litigation funder has apparently ever before asked to be substituted for its client under Rule 25(c)—leads the Court to be particularly chary of granting the substitution.’ Burford Capital responded to the decision by stating that it would contest the order.
Commercial Special Features

Key Takeaways from LFJs Digital Event: Litigation Finance: What to Expect in 2024

On February 8th, 2024, Litigation Finance Journal hosted a special digital event titled 'Litigation Finance: What to Expect in 2024.'  The event featured Gian Kull, Senior Portfolio Manager at Omni Bridgeway, David Gallagher, Co-Founder of LitFund, Justin Brass, Co-CEO and Managing Director of JBSL, and Michael German, Co-Founder and CIO at Lex Ferenda. The event was moderated by Peter Petyt, founder of 4 Rivers. The discussion covered a range of topics pertinent to the litigation funding space. Below are some key takeaways from the event: Which areas are you particularly interested in investing in over this coming year?  MG: There is a supposition that this industry will continue to grow in 2024. All of the indicators suggest that the industry will continue to grow--nearly all of the funders are funding bankruptcy-related cases, and three quarters are funding patent cases. Those are areas of interest to us, and I think that will continue to make sense, given the types of commercial cases they are - complex cases that require significant amounts of attorney time and defendant time,  and yield significant costs to the litigaiton. JB: We're going to see a continued expansion into the mass arbitration space. That is something that has been coming up with more frequency. Mass torts has been staying quite busy. And where we see a lot of potential is with the evolution of the secondary market. There are a lot of funders coming up with maturing cases, and it makes sense for those funders to redeploy that capital into other opportunities - not necessarily exit that case - but just sell a minority stake or a portion of it. We that in traditional fixed income classes, so we think that is going to continue in the funding market as well. Are you seeing any kind of appetite to invest in jurisdictions you haven't previously invest in? Have some jurisdictions matured to the point where you now will give them a serious look?  GK: That's a hard question to ask Omni Bridgeway as a whole, because we try to be in a lot of places. But from my own experience in Europe, we've gotten quite comfortable in the Netherlands, we have a very large investment in Portugal. Spain is next on the list. Italy is after that. The jurisdiction I've been most disappointed in - aside from the UK with the regulatory issues there - is Germany. For such a large economy, from a commercial collective redress perspective that is a dead end. As we move through Europe, I'll be watching the regulatory regimes and how those are tested over the coming years. Are you seeing many requests for monetization of judgements or awards, or is that not an area that you are particularly interested in?  DG: We're especially interested in that, largely because my partners have spent a lot of their careers making those types of investments. And just speaking from my own experience, that has always been an important part of the market, and continues to be an important part of the market. I think the availability of judgement preservation insurance makes funding more available and appropriate both on the funder's side and the client's side. In my view, it's very interesting to see the number of people in the market moving into the insurance space. In my view quite a surprising number - it's certainly indicative of a trend. LFJ just announced today that Ignite has launched a capital protection insurance resource. So there are a lot of interesting things happening here. Is it still early days for this space, because there are a lot of people moving into it with interest?  MG: I share the sentiment of having a general level of surprise with how many folks from the litigation finance industry insurance has drawn. From the Lex Ferenda perspective, insurance has proven to be a very expensive option, that ultimately my clients and I don't feel is worth the cost. But the vast majority of our investments - from an insurer's perspective - are probably the least good fit, so that's probably why it's reflecting in the price. JB: I think the insurance aspect of litigation finance is here to stay. There will be growing pains along the way. I think even as recently as last week, there were disclosures in the Affordable Care Act fee dispute where the law firm got an insurance policy related to its fee award. What was interesting there, was the law firm was seeking disclosure about the policy, and in essence how it worked. So not only is it new and here to stay, we're seeing it become public. The risk to early-stage cases is the pricing can be expensive, but what will happen over time, is like anything else, the insurers will be tracking the progress on those cases, and as funders come back as repeat customers, they'll be looking at you and factoring that relationship into their pricing, just like how a bank factors that into a credit score. I think the best path forward is figuring out how to work together and create a level of transparency and trust, because it's not going away. For the full recording of the event, click here.