Class Action Litigation Update – November 2021

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COVID-19 Class Action Fallout in Australia

The COVID-19 pandemic has caused a veritable outbreak of class action litigation across the globe, spawning lawsuits in areas as diverse as product liability, employment, securities and constitutional law. In Australia, this wave of COVID-19 litigation has taken on a unique twist, with Quinn Emanuel filing mass tort proceedings against the State Government of Victoria, claiming hundreds of millions in damages in a nation-first contingency fee class action.  

Background

In late March 2020, in the early days of the pandemic, Australian Prime Minister Scott Morrison announced that Australia would be closing its borders to the world and that all returned travelers would be required to undertake a mandatory 14-day isolation at designated quarantine facilities. In response to the Federal Government’s edict, the State Government of Victoria announced that it would be rolling out a “Hotel Quarantine” program, pursuant to which all returned travelers arriving in the State would be detained in one of several designated hotels for the duration of the mandatory 14-day isolation period.

At a time when the serious health and economic consequences of widespread community transmission of the virus were becoming manifest around the world, the decision to implement Hotel Quarantine was taken in pursuit of a single, critical objective: prevent COVID-19 escaping into the Victorian community, and thereby protect Victorians and their businesses from the devastating impacts were the virus to take hold. 

In April 2020, however, frontline health workers involved in the care of patients with COVID-19 in Hotel Quarantine began to raise serious concerns about how the program was being implemented and run. Raising particular alarm was a decision made by the Government to deploy private security guards to oversee quarantine detainees, even though the guards had no prior experience in infection prevention and control, received little-to-no training from the Government in relation to appropriate measures and protocols, and where other States and Territories were using police officers and military personnel to carry out that function. 

Sure enough, by late May 2020 several security guards across multiple hotel sites had become symptomatic, later testing positive for COVID-19. By the time the resulting community transmission was discovered, and the State Government had begun scrambling to control the outbreak, but it was already too late. With the security guards as its vector, the virus had irreversibly seeded itself in the Victorian community; and it had been spreading—silently and undetected—for weeks, triggering the State’s COVID-19 “second wave.”  

From the explosion in case numbers that followed, lockdown measures were a foregone conclusion. In June 2020, “Stage 3” restrictions were introduced, prohibiting people from leaving their homes other than for essential reasons, and restricting the operation of hospitality, dining, entertainment and other retail businesses. But even these harsh measures came too little, too late. By August 2020, the Premier of Victoria had declared a state of disaster across the whole of the State and imposed a “Stage 4” lockdown, tightening restrictions on people leaving their homes, imposing stringent curfews, and dramatically curtailing—and in many cases, preventing—the ability of Victorian businesses to provide their goods and services to the public. Victoria had become a veritable ghost town, and with it, the livelihoods of millions of retail proprietors and their employees were plunged into darkness.

The COVID-19 Class Action

By proceedings filed in the Supreme Court of Victoria in August 2020, Quinn Emanuel sued the State Government Victoria (and certain servants and agents of the State) on behalf of lead plaintiff Anthony Ferrara and his restaurant business “5 Boroughs NY,” one of the many thousands of Victorian retail businesses forced to shut their doors to customers as a result of the “second wave” lockdown measures. On behalf of this class of retail business proprietors, Quinn Emanuel seeks to recover millions of dollars in business losses that it alleges were caused by the defendants’ negligence in implementing Hotel Quarantine program.

In what is shaping up to be one of the most complex and novel mass tort cases in Australian class actions history, Quinn Emanuel argues that the defendants assumed a duty of care to prevent foreseeable economic loss to class members when they took the decision to implement Hotel Quarantine with the sole aim of preventing a COVID-19 “second wave” from wreaking havoc on the Victorian community. The lawsuit argues that class members were uniquely vulnerable to the defendants’ control in implementing the program in circumstances where they knew (or ought to have known) that strict COVID-19 restrictions—including widespread business lockdowns and stay-at-home orders—would become necessary in the event that it failed and the virus escaped, dramatically curtailing the ability of class members to carry on their businesses. 

For that reason, the lawsuit asserts that the defendants owed class members a duty to take reasonable care in the design and implementation of the Hotel Quarantine program. In particular, lawsuit alleges that the defendants’ duty required them take all reasonable steps to ensure that personnel were adequately trained in infection prevention and control; that they were provided with effective PPE; and that they were capable of overseeing Hotel Quarantine in a manner that would adequately protect against the risk of the virus escaping into the community. In this respect, the class action takes central aim at the Government’s decision to deploy untrained private security guards to staff the critical program—a failure that has since been excoriated by an independent judicial inquiry tasked with unearthing the preventable failures that led to Victoria’s devastating “second wave.”

The case will undoubtedly involve complex questions of fact and law across each of the elements of duty, breach, causation and loss, requiring, among other things, expert evidence in epidemiology, virology and public health. The case is also unique as the first ever Australian class action to be run on a contingency fee basis. Unlike in the US, until recent reforms, contingency fee arrangements were long been prohibited under Australian law. The COVID-19 class action therefore stands certain to create new precedents and to pave the way for the sweeping changes to how class actions are funded and run in Australia. 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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