The Freehills' Product Liability practice specialises in liability issues with respect to products and financial services in the context of both general and mass tort litigation.

Our product and financial services liability expertise covers two fields of key competency:

Financial services product liability

• shareholder class actions
• securities liability
• regulatory, compliance issues and corporate governance matters

Product liability and class actions

• general common law exposures and mass tort litigation
• product marketing and misrepresentation law
• product recalls business interruption / catastrophe management
• product extortion
• medical device liability
• criminal exposures
• insurance, indemnity and risk management solutions.

Our Product Liability team includes not only dedicated product liability and mass tort litigation experts, but also:

• intellectual property experts, who are concerned with the laws that affect packaging, labelling, advertising and promotion of products
• financial services experts, who can advise on product liability aspects of the financial services industry
• specialists in class action procedure, including both the federal and state class action mechanisms
• risk management experts, trained in responding effectively and efficiently to product-related crises.

We also recognise the important role of insurance in product liability and recall matters. Our team includes insurance experts who can liaise with a client's insurers in a constructive yet sensitive manner.

Our team can also call upon public relations and human resources experts if required.

Examples of our work include:

• Panadol – Freehills had a significant role in advising Glaxo SmithKline in relation to a variety of insurance and risk management issues arising out of the recall of Panadol products and subsequent insurance coverage matters. The costs of the product recall and the ability to effectively negotiate with insurers are two aspects of the matter in relation to which Freehills was able to offer comprehensive legal solutions.
• Femcare – Freehills acted on behalf of Femcare, the manufacturer of a well known female sterilisation device and its insurer St Pauls Insurance, in a major representative proceeding in the Federal Court of Australia as well as in numerous individual claims. The case is responsible for much of what is the current Australian law with respect to class action proceedings. Freehills was successful in obtaining judgments in favour of our client in all cases, including the complicated representative proceedings.
• Misleading consumer labelling – We act for a variety of clients in determining the appropriateness of their products' labelling and packaging. Even products that perform exactly in accordance with their intended use can be rendered defective if their labelling is inappropriate or insufficient to warn consumers about the risks associated with using the product.
  In a misleading labelling case in Australia, a supplier was sued for failing to warn a consumer that hot water should not be poured onto drain cleaning powder. The powder itself was not defective – it operated precisely as it should have – but the failure to warn of the dangers of mixing it with hot water rendered the product unsafe, and therefore defective. Freehills frequently advises clients in similar situations on the safety of product labelling and packaging.
• Mayne – We acted for Mayne in relation to issues arising from the suspension of Pan Pharmaceuticals' manufacturing licence by the Therapeutic Goods Administration (TGA) and the recall of Pan manufactured products. This recall was reported to be Australia's largest medical recall. Our involvement included assisting with issues arising out of the administration of Pan, including consideration of a proposed Deed of Company Arrangement.
• Victorian State Government (Longford gas explosion) – Freehills successfully acted for the Victorian Government and its related state entities following the explosion and fire at Esso's Longford gas plant in September 1998, including representation at the Longford Royal Commission and related significant class action litigation. The class action, brought on behalf of various groups of users of gas in Victoria against Esso, is the largest in Australian legal history, involving claims between A$300 million and A$1.3 billion. Justice Gillard held that Esso did not owe a duty of care to avoid pure economic loss to 1.4 million Victorian gas users. The effect was that most of the claimants for the reported losses of up to A$1.4 billion failed. The class action result emphasises Freehills' comprehensive approach to vigorously defending unfounded or defective class action claims against major corporate clients.

Product liability is progressively becoming an area of considerable legal and commercial risk to entities involved in the sale, supply, distribution, importation, manufacture, advertising and/or promotion of consumer, commercial and financial products and services.

Class action litigation is increasingly common in Australian jurisdictions, particularly in the product and financial services liability context.

In the case of product recalls, effective decision-making requires more than an understanding of the law. Corporations must also demonstrate that they prioritise consumer safety in an effort to maintain (or even enhance) their reputation despite the crisis.

At Freehills, we recognise the potential risk to a client’s reputation and business and are conscious of and responsive to the difficult commercial sensitivities that face companies presented with product and financial services liability exposure.

Class actions

Class action litigation is increasingly common in Australian jurisdictions, particularly in the product and financial services liability context. Such actions can involve hundreds or even thousands of potential plaintiffs and numerous defendants across several jurisdictions.
Shareholder class action litigation is an emerging trend in the Australian legal landscape, and the threat to corporations from large groups of shareholders suing in respect of corporate governance issues or misrepresentations associated with financial products is particularly real. Class actions require a depth of resources and specialist knowledge in order to be properly managed and successfully defended and resolved.

Class actions also require an expert understanding of the relevant court rules and basis on which mass claims can be challenged, a solid forensic knowledge of the relevant product or financial service, and a comprehensive understanding of the industry within which the client operates.

Freehills acted on behalf of Femcare in class action litigation.

Product recall

Product recalls can be the result of a defect, contamination, tampering or extortion threat. Voluntary safety-related recalls are primarily the responsibility of the manufacturer and supplier, although they are conducted pursuant to regulatory guidelines.

Effective decision-making in a product crisis situation requires more than an understanding of the law. Corporations must also demonstrate that they prioritise consumer safety in an effort to maintain (or even enhance) their reputation despite the crisis.

It is also necessary to establish and maintain strong relationships with key regulators such as the Australian Competition and Consumer Commission, Australian Securities and Investments Commission, Australia New Zealand Food Authority and the Therapeutic Goods Administration.

Freehills acted on behalf of Mayne in relation to issues arising from the suspension of Pan Pharmaceuticals' manufacturing licence and the recall of Pan manufactured products.

Insurance exposures

It is a commercial reality that all too often a corporation's contractual and risk allocation strategy and/or insurance program does not give adequate coverage. For an effective insurance program, corporations should have:

• adequate coverage for major projects / product developments / financial service initiatives
• legal risk management for product information
• insurance program review
• indemnity advice to ensure any claims are paid quickly and in full
• defence representation, for any third party claim against the corporation.

Freehills advised Glaxo SmithKline in relation to a variety of insurance and risk management issues arising out of the recall of Panadol products.

Criminal exposure

Under general law (both statute and common law), a manufacturer or supplier can be exposed to criminal liability for the reckless or grossly negligent infliction of harm against consumers. The standard of negligence required is the criminal standard necessary to support a charge of, for example, manslaughter and is of a higher degree than the negligence that gives rise to a claim for compensation in commercial (civil) proceedings.

Nevertheless, the risks of criminal exposure for directors and officers cannot be ignored, particularly in light of the potential impact of the Commonwealth Criminal Code and its greater emphasis on the importance of corporate criminal responsibility (including the ability to pierce the corporate veil).

Freehills successfully acted for the Victorian Government and its related state entities following the explosion and fire at Esso's Longford gas plant in September 1998.

Product and marketing law compliance

Product and marketing compliance law is concerned with the laws that affect the packaging, labelling, advertising or promotion of products and financial services. Some of this information is required by law, some is a commercial or practical necessity and the rest is designed to ensure product differentiation and to create or protect market share.

Companies must consider the accuracy and appropriateness of their product or financial service and associated marketing information, whether needed for legal or marketing purposes. Freehills acts for a variety of clients in determining the appropriateness of their products' labelling and packaging.

Legal guides

Freehills has been recognised by the industry for our outstanding work in dispute resolution and commercial litigation:

• Asia-Pacific Legal 500, top tier ranking in Dispute Resolution 2004-2011
• Chambers Global, top tier ranking in Dispute Resolution, 2006–2008 and 2011
• Best Lawyers International, top-listed firm in Australia in Litigation, 2008–2011
• PLC Which Lawyer?, top tier ranking in Dispute Resolution, 2006–2008 and 2010

Testimonials

• ‘The outstanding litigation team is co-ordinated, pragmatic, strategic and timely.’ ‘They maintain a culture which is not about making money but rather about providing top-quality service to their clients.’ Chambers Asia Pacific 2011
• Freehills ‘combines the clever thinking of smaller firms with the depth and breadth of a very large one’ Asia Pacific Legal 500 2010/2011
• ‘They focus on the outcomes to be achieved rather than the process. They don't think one or two steps ahead – their advice is always what will happen three or four steps ahead.’ Chambers Global 2010
• The ‘exceptional’ Freehills is a ‘firm of choice’ for clients in major litigation, such as class action defence, providing ‘high levels of service, responsiveness and value’. Asia-Pacific Legal 500 2010 
• ‘excellent lawyers who always meet deadlines and are universally great to deal with.’ Chambers Global 2009 
• ‘The Dispute Resolution team at Freehills remains a strong choice for complex commercial disputes.’ Chambers Global 2009 
• ‘… one of the country’s “pre-eminent litigation teams” due to its vast resources and wide-ranging experience.’ Chambers Global 2008