FEDERAL COURT OF AUSTRALIA

Darwalla Milling Co Pty Ltd v F Hoffmann-La Roche Ltd [2006] FCA 915

DARWALLA MILLING COMPANY PTY LTD (ACN 009 698 631) & ORS v F HOFFMANN-LA ROCHE LTD & ORS

VID 359 OF 1999

JESSUP J

18 JULY 2006

MELBOURNE

THE COURT ORDERS THAT:

1.                  The evidence contained in the confidential exhibits to the affidavit of Kim Elizabeth Parker affirmed on 11 July 2006, being the exhibits set out in the schedule to this order, not be published to any person without the order of the Court.

Schedule:

·        Confidential Exhibit “KEP-2”

·        Confidential Exhibit “KEP-3”

·        Confidential Exhibit “KEP-4”

·        Confidential Exhibit “KEP-7”

·        Confidential Exhibit “KEP-8”

·        Confidential Exhibit “KEP-9

·        Confidential Exhibit “KEP-10

·        Confidential Exhibit “KEP-14”

·        Confidential Exhibit “KEP-24”

·        Confidential Exhibit “KEP-25”

2.                  The confidential exhibits referred to in order 1 be sealed on the court file and not disclosed to any person without the order of the Court.

3.                  Pursuant to ss 33X and 33Y of the Federal Court of  Australia 1976, the form and content of the notice of application for approval of proposed settlement to group members set out in the schedule to this order be approved:

Schedule:

notice of proposed settlement

vitamins class action

In 1999 a class action was commenced in the Federal Court of Australia regarding an alleged cartel to fix the prices of animal-grade vitamins sold by the Roche, BASF and Rhone-Poulenc/Aventis groups of companies (“the Respondents”). 

The class action alleges that at various times between 1992 and 1999, the Respondents fixed prices for vitamins A, E, B1, B2, B5, C, Betacarotene, Canthaxanthin for animal nutrition or animal health (“theClass Vitamins”) and premix products containing Class Vitamins. 

The companies bringing the class action (“the Applicants”) seek damages and other orders, for themselves and for all persons who fall within the definition of “Group Members” in the class action.  The Group Members are defined to cover all persons who were:

a)         Manufacturers, distributors and suppliers of pre-mixes containing Class Vitamins; or

b)        Manufacturers, distributors and suppliers of stock feeds containing Class Vitamins; or

c)         Producers of livestock including poultry, pigs sheep and cattle, and dairy farmers, egg producers and aquaculturalists, who purchased stock feeds containing Class Vitamins; or

d)        Manufacturers, distributors and suppliers of veterinary and performance enhancing preparations and supplements containing Class Vitamins; or

e)         Manufacturers and distributors of pet food containing Class Vitamins;

and who ordinarily resided in or carried on business in Australia, and spent at least $2,000 for Class Vitamins or premixes or other products containing Class Vitamins, in the period 5 March 1992 to 31 December 1999.

If you are, or think you might be, a Group Member then you should read this notice carefully, as it may affect your rights.

PROPOSED SETTLEMENT OF THE CLASS ACTION

The Applicants have reached an agreement with the Respondents to settle the class action. 

The proposed settlement requires approval by the Federal Court before it takes effect.  If approval is granted then an amount of $30.5M paid by the Respondents will after payment therefrom of the sum of $419 758 to the Applicants and some nominated Group Members by way of reimbursement for their time, effort and out of pocket expenses associated with the class action, be distributed between the Applicants and those Group Members who lodge a claim in accordance with a Settlement Distribution Scheme (“Settlement Scheme”).  In broad terms, the Settlement Scheme establishes formulae for valuing the claims of Group Members for losses resulting from higher vitamin prices paid by them for Class Vitamins or products containing Class Vitamins (“overcharge”).  The settlement scheme also establishes formulae for valuing the claims of Group Members who are premix manufacturers (excluding the Respondents and their related companies) and who claim lost profits on lost premix sales resulting from the cartel (“lost market share”).  Group Members will be required to lodge claims supported by business records as set out in a proof of claim form which can be viewed at the web site below.  The Settlement Sum will be distributed in proportion to each Group Member’s claim.

The proposed settlement also requires the Respondents to pay $10.5m for the Applicants’ legal costs.  The Applicants’ solicitors, Maurice Blackburn Cashman Pty Ltd (“MBC”) will not charge Group Members any costs in relation to the class action or for participating in the Settlement Scheme.  If any Group Member wishes to engage separate solicitors then it will need to make a separate costs arrangement with those solicitors.  If a Group Member is dissatisfied with the amount assessed for its claim under the Settlement Scheme then it may request a review by an independent barrister, who will charge the Group Member a fee. 

The full terms of the proposed settlement and of the proposed Settlement Scheme may be by obtained by contacting MBC on 1800 810 812, or on their web site at http://www.vitaminssettlement.com.au.

COURT APPROVAL

The Applicants will seek the Court’s approval of the proposed settlement including the proposed Settlement Scheme at a hearing in Melbourne at 10.15 am on 31 August 2006. 

If the Court grants approval then the settlement will be binding on every Group Member, and will be the only way for Group Members to recover compensation for the effects of the alleged cartel.

WHAT YOU MUST DO

If you are a Group Member and you are in favour of the settlement then there is nothing you need to do at this time.  A further notice will be published in this newspaper if the settlement is approved, and it will tell you what you need to do then.  In the meantime you are welcome to contact MBC to register as a Group Member, if you have not already done so.  Please do not dispose of any documents you have regarding your purchases or sales of Class Vitamins or products containing Class Vitamins since 1992.  Those documents might assist you in lodging a claim.

If you are a Group Member and you wish to object to the settlement or the Settlement Scheme then you must send a written notice to the Federal Court.  It must have the heading shown below.  It must be received by the Court before 24 August 2006.  You will then be sent further information and might be required to attend the hearing on 31 August 2006.  If so, you may wish to hire a lawyer to represent you.

If you have any questions, please visit the MBC web site at http://www.vitaminssettlement.com.au or telephone MBC on 1800 810 812, or seek your own legal advice.

4.                  On or before 28 July 2006 the solicitors for the applicants cause the Notice of Proposed Settlement to be:

(a)          sent by e-mail or by prepaid post to the last known address of each person who has registered as a group member with the solicitors;

(b)          published in each of the following newspapers:-

(i)                  Stock & land (VIC);

(ii)                The Land (NSW);

(iii)               Stock Journal (SA);

(iv)              Farm Weekly (WA);

(v)                North Queensland Register;

(vi)              Queensland Country Life;

(vii)             Adelaide Advertiser;

(viii)           Brisbane Courier Mail;

(ix)              Canberra Times;

(x)                Hobart Mercury;

(xi)              Melbourne Herald Sun;

(xii)             Northern Territory News;

(xiii)           West Australian;

(xiv)           Sydney Daily Telegraph;

(xv)            The Australian; and

(xvi)           The Weekly Times

5.                  The applicants’ solicitors and the respondents’ solicitors have leave to inspect the court file (other than the confidential exhibits referred to in order 1) and to copy any notices of objection filed by Group Members objecting to the settlement.

6.                  The further hearing of this Notice of Motion be adjourned to 31 August 2006.

7.                  Costs be reserved.

Note:    Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

REASONS FOR JUDGMENT

1                     This is a representative proceeding under Pt IVA Federal Court of Australia Act 1976 (Cth) (‘the Federal Court Act’), in which the applicants allege that the respondents operated a cartel in contravention of s 45 of the Trade Practices Act 1974 (Cth) (‘the Trade Practices Act’) in the market for vitamins for animal nutrition or health, and premix products containing vitamins, being vitamins A, E, B1, B2, B5, Beta-carotene and Canthaxanthin, which the applicants have described as ‘Class Vitamins’.  A broad background explanation of the proceedings, and of the allegations of the applicants, may be obtained from the reasons for judgment of Merkel J given on an interlocutory application on 13 March 2002 – sub nom Bray v F Hoffman-La Roche Ltd (2002) 118 FCR 1 – and on appeal therefrom – Bray v F Hoffman-La Roche Ltd (2003) 130 FCR 317.

2                     The Group Members are described as:

(a)                Manufacturers, distributors and suppliers of pre-mixes containing vitamins A, E, B1, B2, B5, Betacarotene or Canthaxanthin for animal nutrition or health purposes (together and severally the ‘Class Vitamins’);

(b)               Manufactures, distributors and suppliers of stock feeds containing class vitamins;

(c)                Producers of livestock including poultry, pigs, sheep and cattle, and dairy farmers, egg producers and aquaculturalists, who purchased stock feeds containing class vitamins;

(d)               Manufacturers, distributors and suppliers of veterinary and performance enhancing preparations and supplements containing class vitamins;

(e)                Manufacturers and distributors of pet food containing class vitamins;

who:

i)               Were at all relevant times ordinarily resident in or carrying on business in Australia;

ii)             Paid at least two thousand Australian dollars (AUD$2,000.00) in the period 5 March 1992 to 31 December 1999 for class vitamins or pre-mix or other animal health or nutrition products containing class vitamins; and

iii)            Are not Justices or Registrars of the High Court of Australia or the Federal Court of Australia.

3                     The applicants’ claim under the Trade Practices Act is for damages, declarations, injunctions and other relief.  Damages are claimed both for losses caused by any increase in the price of the Class Vitamins over the price that would have been paid but for the cartel, and for loss of profits on any sales lost as a result of the cartel.

4                     In their defences, the respondents have made significant admissions with respect to the applicants’ cartel allegations.  These admissions vary as between the individual respondents, and the respondents also deny causation, rely, to an extent, upon statutory limitation periods, and allege that the applicants and the group members passed on any higher prices to their customers.

5                     By December 2005, discovery in the proceeding had not taken place.  In that month, as a result of a mediation arranged by the parties themselves, the applicants accepted an offer by the respondents to settle the proceedings for the sum of $30.5 million, plus $10.5 million by way of costs, subject to the approval of the Court, and in accordance with heads of agreement signed on behalf of the parties on 16 December 2005. 

6                     The settlement requires the approval of the Court not only as a matter of agreement between the parties: by s 33V(1) of the Federal Court Act, a representative proceeding under Pt VIA may not be settled without the approval of the Court.  By Notice of Motion dated 11 July 2006, the applicants sought that approval.  However, before any approval under s 33V(1) may be given, notice of the application therefor must be given to group members pursuant to s 33X(4) of the Federal Court Act.  By s 33Y(2) of the Federal Court Act, the form and content of such a notice must be approved by the Court.

7                     In their Notice of Motion dated 11 July 2006, the applicants sought the following orders:

‘1.        The confidential exhibits to the affidavit of Kim Elizabeth Parker affirmed 11 July 2006 (“Parker Affidavit”) be sealed and filed with the Court as confidential exhibits and marked “Not to be opened without leave of the Court or a Judge.”

2.         Pursuant to sections 33X and 33Y of the Federal Court of Australia Act 1976 (Cth) (“the FCA Act”), the Notice of Application for Approval of Proposed Settlement to Group Members (“Notice of Proposed Settlement”) in the terms set out in Exhibit KEP27 to the Parker Affidavit, be approved.

3.         On or before [             ] 2006 the solicitors for the Applicants cause the Notice of Proposed Settlement to be:

(a)   Sent by email or by prepaid post to the last known address of each person who has registered as a Group Member with the solicitors; and

(b)   Published in each of the following newspapers:

(i)      Stock & Land (VIC),

(ii)     The Land (NSW),

(iii)    Stock Journal (SA),

(iv)    Farm Weekly (WA),

(v)     North Queensland Register,

(vi)    Queensland Country Life;

(vii)   Adelaide Advertiser;

(viii)  Brisbane Courier Mail;

(ix)    Canberra Times;

(x)     Hobart Mercury;

(xi)    Melbourne Herald Sun;

(xii)   Northern Territory News;

(xiii)  West Australian;

(xiv)  Sydney Daily Telegraph; and

(xv)   The Australian

4.         The Applicants’ solicitors have leave to inspect the Court file and copy any notices of objection filed by Group Members objecting to the settlement.

5.         The further hearing of this motion on notice be adjourned to [          ] 2006.

6.         Pursuant to section 33V of the FCA Act, the settlement of the proceeding upon the terms set out in the Heads of Agreement executed 16 December 2005 and in the Settlement Scheme, being Exhibits “KEP5” and “KEP6” respectively to the Parker Affidavit, be approved.

7.         All costs orders made in this proceeding prior to these Orders be set aside.

8.         No order as to costs.

9.         The solicitors for the Applicants have liberty to apply.

10.       Such further or other orders as the Court deems appropriate.’

When the Notice of Motion came on for hearing on 17 July 2006, the applicants indicated that they proposed to deal with it in two parts; first, on that day, they proposed to ask the Court to make orders in accordance with pars 1-5 of the Notice of Motion; and secondly, on the adjourned date fixed in accordance with par 5 of the orders sought, they proposed to move the Court in terms of the remaining paragraphs of the Notice of Motion.

8                     Of the matters proposed to be dealt with on 17 July 2006, par 1 of the Notice of Motion is concerned with claims for confidentiality in relation to various exhibits of the affidavit affirmed in support of the Notice of Motion by Kim Elizabeth Parker, a principal in the firm of solicitors conducting the case on behalf of the applicants.  Paragraphs 2-5 of the Notice of Motion are concerned with the content and publication of the notice required by s 33X(4) of the Federal Court Act.

9                     Of the groups of documents sought to be kept confidential on the court file, the first three are tables setting out the sales figures of the respondents.  I was told that the underlying data on which these tables were based contained sensitive commercial information, the property of the respective respondents.  As between each respondent and the applicants, this consideration would not have protected the documents from disclosure in these proceedings, although the Court might have been persuaded to make orders under s 50 of the Federal Court Act with respect to the data.  But, the actual tables constituting the first three exhibits for which confidentiality is claimed were, I was assured by the respective respondents, brought into existence to enable the respondents to hold without prejudice discussions with a view to the settlement of this proceeding, first as between the respondents themselves, and then as between the respondents as a group and the applicants.  On the basis of these assurances, I am persuaded that the exhibits to Ms Parker’s affidavit designated “KEP-2”, “KEP-3” and “KEP-4” are privileged, that it is appropriate that their publication be prohibited pursuant to s 50 of the Federal Court Act and that they be sealed on the court file, with restricted access, pursuant to s 33ZF of that Act. 

10                  The next two documents for which confidentiality is claimed are opinions of the applicants’ legal advisers prepared for the purpose of advising the applicants with respect to the settlement of this proceeding.  They are clearly privileged and, accordingly, I would make similar orders under s 50 and s 33ZF of the Federal Court Act in relation to those documents, being exhibits to Ms Parker’s affidavit designated as “KEP-7” and “KEP-8”.

11                  The next two documents for which confidentiality is claimed are reports by export economists retained by the applicants’ solicitors, and provided to the applicants for the purpose of furnishing them with a technical basis for assessing the adequacy of the settlement proposal in the light of the loss and damage most probably suffered by them and other group members.  Because they were brought into existence for the purpose advising the applicants in relation to this proceeding, I consider that these documents too, designated “KEP-9” and KEP-10” in Ms Parker’s affidavit, are subject to privilege, and should be covered by the confidentiality orders which I make. 

12                  The next document for which confidentiality is claimed is an affidavit by Charles Wright of a Canadian law firm that represented class members in a corresponding proceeding in Canada.  The affidavit sets out his view as to the reasonableness of the proposed settlement in Australia.  This affidavit was obtained by the applicants’ solicitors for the purposes of assessing the adequacy of the settlement proposal, and is prima-facie privileged.  It is designated as exhibit “KEP-14” in Ms Parker’s affidavit, and I would make the same orders in relation to it as I have above. 

13                  The final two groups of documents for which confidentiality is claimed, designated as exhibits “KEP-24” and “KEP-25” in Ms Parker’s affidavit, are working tables and calculations by the applicants’ solicitors themselves, prepared for the purpose of achieving a settlement of this proceeding.  They are clearly privileged and should be protected from disclosure in same terms as those applicable to the other documents to which I have referred. 

14                  As to the terms of the notice required by s 33X(4) of the Federal Court Act, I required the applicants to accept certain minor, but important, changes thereto before I would give my approval for the notice to be published.  The applicants readily accepted those changes, and the respondents raised no objection thereto.  The notice as, in effect, settled by the Court appears in order made by the Court, and I need say nothing further about it in these reasons.

15                  The applicants agreed to add the Weekly Times to the list of publications in which the proposed notice would be inserted.

16                  Although not the subject of any order which I made, I was told on 17 July 2006 that the applicants intended to make the proposed settlement the subject of a media release.  Further, at my suggestion, the applicants agreed to notify such trade and industry associations as they considered would probably be relevant to group members.  Each of these additional measures, although not subject of the Court’s order, would, in my estimation, be helpful in securing the purpose of the applicants, and of the Court, of maximising the prospect that all group members would have the proposed settlement drawn to their attention.

17                  These are my reasons for the orders herein made on 18 July 2006.

Associate:

Dated:              18 July 2006