New frontiers of class-action risk detailed

Experts predict three areas to fuel class actions in the coming years

New frontiers of class-action risk detailed

Expert from Allens expect three areas to be the new frontiers of class-action risk in the coming years.

In the firm’s Class Action Risk 2020 report, Allens said that data breach, climate change and other material business risks, and environmental issues are expected to be the new frontiers of class-action risk, based on current regulatory trends and the types of class actions brought in the US. These are both reliable markers for developments in Australian class-action activity, the firm said.

Data-breach claims could be based on allegations of negligence, breach of contract, or misleading or deceptive statements, despite a lack of direct cause of action for breach of privacy in Australia, Allens said.

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The firm said, however, that there may be significant obstacles in the identification and quantification of compensable loss. Last year, a class action on data breach was settled in NSW in a first for Australia.

Allens said that while most shareholder class actions are driven by earnings misses, it has observed a growing number of shareholder actions based on non-disclosure of information. The next frontier in this category may be material business risks arising from climate change and corporate governance processes.

Climate-change risk could hinge on organisations not lowering carbon emissions or the costs associated with transitioning to lower emissions. The firm also expects to see more claims focused on inadequate company governance processes, including failure of internal systems that batter share prices.

Allens also expects that actions focused on environmental issues will feature more in the class-action landscape of the future. These actions will be related to property damage or human health concerns arising from environmental contamination.

It said that the most high-profile among these class actions around the world is the group of claims Bayer is facing because of its RoundUp product. Claims in this category can also include water rights, the firm said.

In Australia, three communities recently settled with the federal government over per- and poly-flouroalkyl substances (PFAS) contamination.

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