A HANDFUL OF shareholders have disputed the proposed settlement agreement in the Telstra class action claim in a letter to the Federal Court. If they decide to pursue individual claims against the telco, they will face the full brunt of Telstra’s legal team, who are prepared to vigorously defend any further claims, according to Will Irving, group general counsel for Telstra.
“There are a very small number of shareholders who have notified by the court since the advertising of the settlement a few weeks ago — nearly a month ago now — that they wish to object. Those matters will be heard by the judge on [14 December]. It is literally a handful,” Irving said. “Those shareholders may well opt-out of the class and they are entitled to do so. If they wish to start a fresh action and litigate the issue clearly that’s open to them. The company’s position is unchanged, and that is that we have at all times complied with the continuous disclosure regimes and that we will vigorously defend any future claim that comes along.”
Under the terms of the proposed settlement, shareholders will receive from 1 cent per share to a cap of 5 cents per share. Slater & Gordon have hailed the settlement as a legal first (see Lawyers Weekly coverage in issue 365: “Slater to Settle for Legal First in Telstra Claim?”), signifying a major shift in attitudes and legal approaches to corporate responsibility.
Telstra maintains that the settlement was simply the most expedient and cost-effective way to end the matter. Referring to the individual cap of $50 per shareholder, Irving said. “That’s reflective of the fact that in our view this case is totally baseless; we had absolutely complied with the law. Slater & Gordon, and obviously the named plaintiffs, have agreed with that [statement] as part of the settlement conditions.”
Since the settlement has been advertised, other firms have attacked Slater & Gordon’s decision to pursue the case. Chairman of Maurice Blackburn, Bernard Murphy, is reported to have slammed the firm at a presentation to economics consulting firm NERA. He reportedly commented that his firm would only pursue cases where the “misconduct is egregious and the losses severe”.
Telstra’s Irving also queried the prudence of firms pursuing these types of claims, pointing to the comparative position in the United States. “Certainly the US these sorts of actions get started more frequently, but they also get struck out far more frequently,” he said,
“I think given the way the legal system works here at the moment, absent reform, I think it’s really incumbent on the firms involved to be really asking themselves the question: ‘is this a case where we’ve got reasonable prospects of success, are we are really acting in the group or the class’ best interests in pursuing this in a particular way?’,” Irving said.
Irving highlighted another area of concern: the late revelation that the leading plaintiff in the case worked for Slater & Gordon. “I’ve got to say that in this case the concerns were heightened given the relationship that exists between the named plaintiff and Slater & Gordon — he’d been a media consultant for them,” he said. “I’m sure that he was quite genuine in his concerns, but it certainly left an impression on the outside that perhaps there was more than one reason for Slater & Gordon running the case.”