By Michael Legg -
Snapshot
- Opt out class actions were adopted in Australia to extend access to justice to as many persons as possible. Consequently opt out class actions do not require the consent or identification of group members at the time the proceedings are commenced. However, to conclude a class action in which the group members receive compensation or other personal benefit it is necessary to identify the group members.
- Identification of group members takes place through ‘class closure’ whereby orders are made for group members to return a form to participate in any settlement. This step has been controversial as it undermines the access to justice that the class action seeks to advance and group members who do not return the form may have their claim extinguished but be unable to benefit from a settlement.
- The opt-out class action employed in Australia contains a conflict between the lofty aspiration of extending access to justice to as many injured people as possible with the practical reality of bringing the class action to a conclusion.
- Minimising that conflict requires effective notice to group members so that they are aware of the class action and the ramifications on their rights of the class closure orders.
An ‘opt out’ class action is commenced by a representative party without the express consent of the group members on whose behalf the proceedings are brought. All entities that fall within the group definition are automatically part of the class action, but the members are subsequently afforded an opportunity to exclude themselves from the proceedings. If a group member does not opt out they are bound by the outcome of the proceedings (Federal Court of Australia Act 1976 (Cth) ss 33E, 33J, 33X, 33ZB; Supreme Court Act 1986 (Vic) ss 33E, 33J, 33X, 33ZB; Civil Procedure Act 2005 (NSW) ss 159, 162, 175, 179).
In contrast, an ‘opt in’ class action is commenced by a representative party but a person only becomes a group member if they affirmatively consent to their inclusion.
In Australia, the opt out model was adopted through legislation. Opt in class actions are not allowed. However, the courts have allowed a hybrid ‘closed class’ where the class action is commenced by a representative party on behalf of group members who are identified and have consented to their inclusion, but the group members must be given the option of opting out at some point. Class closure only applies to the traditional opt out class action (see Matthews v SPI Electricity (Ruling No. 13) [2013] VSC 17 at [18]-[24]).
