The Victorian Supreme Court has set aside subpoenas issued by the lead plaintiffs in a class action that sought documents identifying persons who may be group members in the class action. The decision means that identifying potential group members at an early stage of a class action, is not a legitimate forensic purpose for a subpoena and is more appropriately characterised as an information gathering or "book building" exercise.
The class action regimes and book building
The Australian class action regimes are "opt out" regimes, meaning that all persons who meet the group member definition are automatically part of the class. Typically, litigation funders and plaintiff law firms do not know how many people meet the group member definition. Often, the litigation funder and plaintiff law firm embark on a process known as "book building" to identify as many group members as possible. Establishing contact with potential group members is important to bring the class action to the attention of those entitled to any judgment or settlement of class action proceedings, but may also be one of the ways in which a litigation funder or plaintiff firm can ensure a return on its investment in the class action and learn more about the claims of the group members.
Subpoenas in the Victorian Supreme Court
A subpoena can be issued to a non-party requiring them to produce documents "for evidence" at the hearing of an interlocutory application or at trial. The term "for evidence" in this context limits the scope of material that can be sought by a subpoena to documents with some potential relevance to the real issues in dispute between the parties. The issuing party also needs to have a legitimate forensic purpose for seeking access to the documents.
Ordinarily, the requirement for legitimate forensic purpose will not be satisfied where the issuing party has sought to go on a ‘fishing expedition’, to subpoena documents merely to determine whether they may be relevant and assist that party's case.
Wawryk v Mercedes-Benz Australia/Pacific Pty Ltd (Subpoena Ruling) [2024] VSC 120
After filing their statement of claim but before the defendant had filed its defence and given discovery, the plaintiffs issued eight subpoenas to State and Territory motor registration authorities in a class action against Mercedes-Benz regarding diesel vehicle emissions. The subpoenas sought documents containing information about potential group members, including their identities and information about the vehicles they had leased or owned. The registration authorities produced documents in response to the subpoenas.
The Defendant objected to the plaintiffs being granted access to the documents produced, arguing that there was no legitimate forensic purpose for the subpoenas.
The plaintiffs gave two reasons for issuing the subpoenas:
- Composition of the class and identity of group members – to obtain information as to the identity of the group members and their vehicles, so that the plaintiffs may understand the size, nature and characteristics of the class, facilitate communication with group members, investigation of their individual claims, and undertake emissions testing of some group members' vehicles; and
- Factual investigations – to allow investigations to be undertaken about each group member’s vehicle.
The plaintiffs said that their intention was to establish a complete record of contact details of each of the registered owners of the "Affected Vehicles", use those details to identify and communicate with group members, and investigate their individual claims, and gauge the size, nature and economic value of the claim to form a view about how the case should be conducted forensically.
However, Associate Justice Steffensen determined that there were no issues in dispute regarding the identities of the group members or composition of the class and so there was no legitimate forensic purpose which supported the subpoenas being validly issued. The Court was also concerned that the breadth of the subpoenas meant that the responsive documents would include information about the identity of individuals who were not group members.
Associate Justice Steffensen did accept, however, that the information may assist for the purposes of sending group members opt-out notices at a later stage of the proceeding. Accordingly, Associate Justice Steffensen refused the plaintiffs access to the subpoenaed materials but retained that material on the Court file in the event a future application for access to the subpoenaed information was successful.
Associate Justice Steffensen also indicated that there may also be other means available to the plaintiffs to seek the subpoenaed information for the purpose they identified at an appropriate stage of the proceeding, such as in relation to how the Court decides opt out notices should be distributed to potential group members or non-party discovery for exceptional cases.
Whether a subpoena directed at understanding more information about the group members in a class action can be properly issued will turn on the circumstances of the case, the purpose of the subpoenas and the stage of the proceeding and the specific Court rules in the relevant jurisdiction.
What Wawryk means for class actions in Victoria
This decision indicates that, at the early stages of a class action, subpoenas in Victorian Supreme Court proceedings are unlikely to be an appropriate mechanism for a lead plaintiff to identify group members (unless there is a dispute about the criteria for group membership). This is also consistent with maintaining the privacy of potential group members who provide their information to third parties. This means that subpoenas cannot be used to short cut the traditional book building process used to identify group members.
Plaintiff firms and litigation funders are unlikely to get assistance from Court processes in confirming the viability of a class action that they are running until ancillary processes designed to alert group members of the proceeding and protect their interests lead to the uncovering of more information about the class.
As a result, plaintiff firms and litigation funders are faced with a choice: embrace the burden of book building or commence and run the initial phases of the class action with a level of uncertainty as to group members.