INTERNET BASED CLASS ACTIONS

Class actions have the potential to:

• Make it economic for small claims to be litigated and thereby increase access to justice;
• Assist in the efficient allocation of legal resources.
• Promote compliance with the law by providers of goods and services;

But, litigants may face numerous problems, including uncertainty and risk, which benefit “repeat defendants” such as insurers and may deter potential plaintiffs who have had little exposure to the legal process; and under s.43(1A) of the Federal Court Act, costs cannot be ordered against a class member other than the representative. The risk of an adverse cost order, and other additional complexities faced by a class representative may deter individuals from acting as class representatives. Without a class representative, there is no class action.

Internet transactions are likely to give rise to many situations whereby a class action may arise due to the capacity to simultaneously pass the same information to a number of people. Whether Internet based claims will cause a rise in the number of class actions commenced is yet to be seen.

Federal Court Of Australia Act 1976 - Sect 33C

1. Subject to this Part, where:
   1. 7 or more persons have claims against the same person; and
   2. the claims of all those persons are in respect of, or arise out of, the same, similar or related circumstances; and
   3. the claims of all those persons give rise to a substantial common issue of law or fact;
      a proceeding may be commenced by one or more of those persons as representing some or all of them.
2. A representative proceeding may be commenced:
   1. whether or not the relief sought:
      1. is, or includes, equitable relief; or
      2. consists of, or includes, damages; or
      3. includes claims for damages that would require individual assessment; or
      4. is the same for each person represented; and
   2. whether or not the proceeding:
      1. is concerned with separate contracts or transactions between the respondent in the proceeding and individual group members; or
      2. involves separate acts or omissions of the respondent done or omitted to be done in relation to individual group members.

Supreme Court Act 1986 (Vic) - Sect 34

Section 35 applies-

1. where three or more persons have the right to the same or substantially the same relief against the same person and if separate proceedings were brought by each of them against that person in respect of that right, some common question of law or fact would arise in all the proceedings; and
2. whether or not all rights to relief are in respect of or arise out of the same transaction or series of transactions.

Supreme Court Act 1986 (Vic)- Sect 35

1. Despite any Act, law, rule or practice to the contrary, in the circumstances referred to in section 34, a proceeding may be commenced by any one or more of those persons as representing some or all of them.
2. All persons being represented in the proceeding-
   1. must, before the commencement of the proceeding, have consented in writing to being represented; and
   2. must be named in the process by which the proceeding is commenced.
3. The written consents referred to in sub-section (2)(a) must be filed in the Court at the same time as the process by which the proceeding is commenced is filed in the Court.
4. After the commencement of a proceeding a person may become represented in the proceeding with the leave of the Court and the consent in writing of that person.
5. The Court may in any particular case give directions concerning the conduct of the proceeding.
6. A representative proceeding may be brought even if-
   1. the relief to which each person is entitled is or includes damages; or
   2. any damages to which any person is entitled will need to be assessed individually; or
   3. any person being represented could join or be added as plaintiff in the proceeding under any Act, law, rule or practice.

Typical causes of action for Internet based claims may arise from :

1. Breach of contract
   • Clear title to the hardware or software
   • The ability to change or modify the software or hardware
   • Failure of performance or functional requirements
   • Failure of essential support obligations.
   • Failure to get the software or hardware up and running
   • Failure to provide encryption keys or devices as required
   • Excessive down time
2. The Copyright Act 1968 (Cth), the Patents Act 1990 (Cth) and the Trade Marks Act 1995
   • Copyright infringement
   • Patent infringement
   • Trade Mark infringement
3. The Trade Practices Act (1974) (Cth) and Goods Act (Vic) 1958
   • Misleading and deceptive conduct
   • False representations
4. Tort
   • Computerised name searches failing to find appropriate corporate entities or other information
   • Inaccurate selling/margin prices
   • Misleading financial information
   • Automatic reports being defamatory
   • Being informed that money had been paid or won when it was not so due
   • Inaccurate reservations
   • Negligent mis-statement
5. Corporations Law
   • Breaches of Directors' duties

Information technology related class actions are uncommon in Australia.

Year 2000 faults will be a likely source of class actions due to mass distribution of software (via the Internet or otherwise) and many examples of litigation have already been commenced in the US.

The Internet was designed to pass information to a large number of parties at the same time. As such, it is probable that a number of class actions will arise from Internet based transactions as the requirements of a class action more likely to be met when the same information is passed simultaneously by the same medium in comparison to traditional forms of media and distribution.

STEVE WHITE
WHITE SW COMPUTER LAW
DECEMBER 1999

www.computerlaw.com.au

© White SW Computer Law 1999

This article is a guide only and should not be used as a substitute for proper legal advice, readers should make their own enquiries and seek appropriate legal advice.