Australian Wool Innovation Ltd v Newkirk

NEW SOUTH WALES DISTRICT REGISTRY NSD 1630 OF 2004

BETWEEN: AUSTRALIAN WOOL INNOVATION LTD AND THE APPLICANTS IDENTIFIED IN ANNEXURE 'A' TO THE FURTHER AMENDED STATEMENT OF CLAIM

REASONS FOR JUDGMENT 1 On 15 July 2005 the applicants applied pursuant to Order 8, sub-rule 2(2) of the Federal Court Rules ('the Rules')for leave to serve the Further Amended Application and the Further Amended Statement of Claim ('the FASC') on the second, third, fourth and ninth respondents in the state of Virginia in the United States of America. Leave is also sought pursuant to Order 8, sub-rule 2(2) of the Rules in relation to the fifth respondent. The Further Amended Application gives the fifth respondent's address as Avalon, New South Wales, but there is evidence that in July 2005 she was a participant in protests organised by PETA in San Francisco, and evidence that she is no longer to be found at the Avalon address. The first, sixth, seventh and eighth respondents have been served with the originating process within the Commonwealth. 2 An application under Order 8, sub-rule 2(2) of the Rules is necessarily made ex parte. Those respondents who have been served with the originating process within the Commonwealth did not seek to appear on the hearing of the application. Nonetheless, junior counsel for the first respondent, Mr Jones, suggested that it is inappropriate for an application to serve originating process outside the jurisdiction to be entertained whilst the issue of whether the FASC should be struck out on the application of the first, sixth and seventh respondents remains unresolved. Counsel for the applicants resisted deferral of the application under Order 8, sub-rule 2(2) of the Rules until after the resolution of the strike out application. In my view, the applicants are entitled to pursue their application under Order 8, sub-rule 2(2) of the Rules notwithstanding the pendency of the strike out application, as the making of an order under that rule does not preclude the other respondents, when served, from applying to have the FASC struck out or summarily dismissed: State of Western Australia v Vetter Trittler Pty Ltd (In Liq) (Receiver and Manager Appointed) (1991) 30 FCR 102 ('Vetter Trittler') at 110. In any event, orders made on the strike out application would be confined to claims made against the first, sixth and seventh respondents.

Outline of the proceedings 3 The applicants allege contravention of ss 52, 45D and 45DB of the Trade Practices Act 1974 (Cth) ('the TPA') (and their State or Territory equivalents) in relation to misleading and deceptive conduct, and secondary boycotts organised by the respondents in relation to the purchase of Australian Wool or of goods made of Australian Wool. The applicants seek relief pursuant to ss 80 and 82 of the TPA, (and their State or Territory equivalents); they also seek relief in respect of a conspiracy to injure by unlawful means and intimidation.

The terms of Order 8, sub-rule 2(2) 4 Order 8, sub-rule 2(2) of the Rules provides that the Court may give leave to serve originating process outside the Commonwealth in accordance with Division 2 or 3 of the Order or, subject to sub-rule 2(2B), on such terms and conditions as it considers appropriate if the Court is satisfied that: (a) the Court has jurisdiction in the proceeding; (b) rule 1 applies to the proceeding; and (c) the party seeking leave has a prima facie case for the relief sought by the party in the proceeding. The United States of America is a non-Convention country and accordingly Order 8, sub-rule 2(2B) of the Rules does not have application. 5 The reference to jurisdiction in Order 8, sub-rule 2(2) is a reference to jurisdiction over the subject matter of the proceeding and not to jurisdiction over the person sued: Bray v F Hoffman-La Roche Limited (2003) 130 FCR 317 ('Bray') at [31]. The Court has jurisdiction in relation to the claims with respect to the torts of intimidation and conspiracy to harm by unlawful means by virtue of s 32 of the Federal Court of Australia Act 1976 (Cth) ('the Act'). Rule 1 applies to the proceeding because one or more of pars (a), (ac), (ad), (b), (c), (g), (j) and (n) of rule 1 apply to the proceeding. 6 A prima facie case for the relief sought is made out if, on the material before the Court, inferences are open which if translated into findings of fact would support the relief claimed: Bray at [17]. Inferences may more readily be drawn in favour of an applicant at this stage of the proceedings than might otherwise be the case, as the applicant has not had the advantage of discovery, subpoena and other procedural aids to the making out of a prima facie case at trial: Vetter Trittler at 110. The nature of the enquiry as to whether there is a prima facie case was explained by Lee J in Century Insurance Ltd (in provisional liquidation) v New Zealand Guardian Trust (FCA, 16 May 1996 - unreported) as follows: 'The subrule does not require the Court to conduct an enquiry that trawls through the material and determines the strength of the case or ascertains whether there is a defence that may defeat the case. What the Court must determine is whether the case made out on the material presented shows that a controversy exists between the parties that warrants the use of the Court's processes to resolve it and whether causing a proposed respondent to be involved in litigation in the Court in Australia is justified.' 7 It is sufficient to make out a prima facie case in respect of one of the causes of action relied upon for the relief sought: Bray at [55] and [190]. 8 Material has been placed before me which is capable of establishing the matter referred to in the succeeding paragraphs. 9 PETA is a company incorporated in Virginia, USA. It describes itself as the world's largest animal rights organisation with more than 800,000 members, some of whom are Australian. In the financial year ended 31 July 2004, PETA had gross revenues of USD29,309,246 of which $27,848,439 came from donations, and $738,698 from merchandise sales. 10 PETA is dedicated to exposing and eliminating animal abuse wherever it occurs. Various means are used in order to achieve that end, including media campaigns and grass roots organising. PETA depends upon donations to fund its activities. 11 PETA regards the live export of sheep from Australia and the mulesing of merino sheep, which is practised by many Australian Wool growers, as objectionable practices which should be stamped out. PETA describes mulesing as a gruesome procedure involving cruel, unnecessary mutilation of lambs. 12 In about October 2004 PETA launched a world-wide campaign against the Australian merino wool industry which was intended to continue until mulesing and live exports of Australian sheep ceased. To that end, PETA announced an international boycott of Australian Wool, and its intention to take steps similar to those used in its successful efforts against other industries in which cruelty to animals is said to have run rampant, such as the Indian leather trade, which experienced a reported $68 million in lost sales as a result of PETA's campaign against it. 13 PETA maintains websites which convey information about what it regards as the unnecessary cruelty of mulesing and about the progress of its Australian Wool Campaign. Those websites also promote the sale of merchandise by PETA and by retailers nominated by it described as 'compassionate clothing' which is more 'animal-friendly' than products made from fur, or from leather. The websites promote the sale of alternative products to wool made of 'cruelty-free' fibre. PETA claims that its websites are visited by more than 30 million people, and that its campaigns have attracted significant media attention. 14 PETA's objective is to induce consumers not to purchase products made of Australian Wool, and to persuade manufacturers not to make garments from Australian Wool. The ultimate aim is to exert pressure on the wool growers to desist from the practices in question. As the campaign co-ordinator, Mr Rice, publicly stated: 'The way to Aussie farmers' hearts is through their wallets.' 15 Ms Newkirk is the president of PETA. She resides in the United States of America but was served with the originating process whilst on a visit to Australia. Mr Akin is a Senior Research Associate of the International Grass Roots Campaign Department of PETA. Mr Matthews is a Vice President and a campaign co-ordinator of PETA. Ms Ruckley is an employee of PETA, and appears to have acted as its Australian representative. Mr Rice is a Grass Roots Campaign Department Co-ordinator with PETA. All of these people have been involved in the conduct of the Australian Wool Campaign. The Australian Wool Campaign, as with other PETA campaigns, involves a high degree of co-ordinated activity managed by Ms Newkirk, Mr Matthews, Mr Rice and Mr Akin acting in concert. As president of PETA, Ms Newkirk has a high degree of involvement in the campaign.

Prima facie case - s 52 claims 16 The applicants claim that PETA, Ms Ruckley and Mr Rice have engaged in misleading and deceptive conduct in contravention of s 52 of the TPA and also claim that all the respondents in respect of whom leave is sought have been knowingly concerned in contraventions of s 52. The contraventions relate to the making of certain representations in trade or commerce. 17 The representations in question are listed in par 50 of the FASC. The applicants' case is that the conduct described as the 2nd Benetton Conduct (par 75), the 4th Benetton Conduct (par 89), the Australian Wool Boycott (par 115), the Rice Interview (par 123), the Ruckley Interview (par 128), the Newkirk Interview (par 133), the 1st Australian Newsletter Conduct (par 138), the 2nd Australian Newsletter Conduct (par 150) and the Australian Protest Conduct (par 156) involved the making of one or more or these representations. The relevant s 52 conduct of PETA falls into four broad categories described by the applicants as Website Conduct, Australian Newsletter Conduct, the Australian Retailer Conduct and the Australian Interview Conduct.

PETA s 52 Website Conduct 18 The first category of PETA's s 52 conduct is constituted by the 2nd Benetton Conduct (par 74) and the PETA Website Conduct (par 116). 19 The materials placed before me establish a prima facie case that PETA, by means of its websites, offers for sale and sells to places including in Australia, goods including clothing, such as long sleeve cotton fleeces with hoods and t-shirts, posters, cards and mugs with a photo image of a mulesed sheep together with the words 'Benetton is Baaad for Sheep', 'Boycott Benetton' and 'United Cruelty of Benetton.com' (2nd Benetton Conduct) and thereby conveys the Unethical Retailer Representation in respect of Benetton and the Unethical Consumer Representation in respect of consumers of Benetton goods. 20 Further, PETA publishes by its websites, material directed to the issue of mulesing (PETA Website Conduct) including references to Benetton (2nd Benetton Conduct) which conveys the representations in question. 21 The PETA website material is published in the context in which PETA by those same websites promotes the sale of PETA Benetton goods described above, promotes the sale of a whole range of PETA branded goods which are apt to be attractive to persons who are persuaded by PETA statements on various issues, promotes the sale of a range of animal cruelty-free goods or goods through specific retailers' websites reached by links from PETA websites in respect of all or some of which goods PETA receives a percentage of sales, promotes PETA 'victories' in respect of campaigns in which PETA engages and seeks donations to its causes in the light of the messages it conveys and its victories. 22 The PETA website material is capable of being downloaded in Australia and has in fact been downloaded in Australia and, having regard to the Australian focus of the Australian Wool Campaign, is designed to have impact in this country. The goods referred to on the PETA websites were capable of being purchased by a consumer in Australia by means of an internet transaction, and such goods have in fact been so purchased.

PETA s 52 Australian Newsletter Conduct 23 In general terms, this conduct consists of the publication in Australia of three newsletters published on 30 November 2004 (the 1st Australian Newsletter Conduct), on 11 December 2004 (the 2nd Australian Newsletter Conduct) and on 18 December 2004 (the 3rd Australian Newsletter Conduct) in which PETA made each of the representations in question.

The PETA s 52 Australian Retailer Conduct 24 There are two aspects to this conduct by PETA in relation to Australian retailers. First, in December 2004 PETA communicated with David Jones Ltd (the 4th Benetton Conduct) in which it made the Mulesing Cruelty Representation, the Unnecessary Mulesing Representation, the Viable Alternatives Representation and the Unethical Acquirer Representation. 25 Second, on 1 December 2004 PETA and others staged a protest outside business premises in Pitt Street Mall, Sydney (the Australian Protest Conduct) in the course of which protestors made the representations referred to above as well as the Unethical Consumer Representation.

PETA s 52 Australian Interview Conduct 26 This conduct consists of interviews with PETA employees or representatives and the Australian media in which the Mulesing Cruelty Representation, the Pointless Mutilation Representation and the Viable Alternatives Representation, were made. Those interviews took place with Mr Rice in October 2004, with Ms Ruckley in October 2004 and with Ms Newkirk on the 60 Minutes program in November 2004. 27 The materials placed before me establish at the prima facie case level that each of the relevant representations is misleading. 28 I have declined Ms Newkirk's application to strike out the FASC on the ground that it does not give rise to a triable issue as to whether the conduct in question on the part of PETA and its officers was 'in' trade or commerce: see Australian Wool Innovation Ltd v Newkirk (No 2) [2005] FCA 1307 ('AWI No 2'). I will not repeat what I said there. 29 There is little direct evidence as to the loss or damage actually suffered in consequence of the respondents' conduct by any particular applicant except that as a result of loss of business from Hass Naturtextilien, Elders has suffered a loss of broking, handling and logistic fees of approximately $12,000 each year, and the 105th applicant has suffered a loss of approximately $6,000 per year. There is also evidence that AWI has expended substantial sums in an endeavour to counter the effect of the respondents' conduct, and the adverse publicity associated with that conduct. 30 The applicants claim injunctive relief to prevent a repetition of the s 52 conduct. Loss and damage is not a requirement under s 80 of the TPA. An inference is readily available that the respondents' conduct is intended to damage and likely to damage the applicants because that is the avowed object of the Australian Wool Campaign. Corresponding campaigns which were implemented in relation to other industries are claimed by PETA to have inflicted significant losses upon the producers who were the targets of those campaigns. The object of this campaign is to induce consumers to form a lower opinion of Australian Wool and Australian Wool products leading to a reduction in the global demand for Australian Wool. 31 Having regard to the positions of the individual respondents in PETA, and having regard to their involvement in the Australian Wool Campaign generally, an inference is available that they were knowingly concerned in or a party to the PETA s 52 conduct such as to render them accessorily liable under s 75B of the TPA. 32 There is a prima facie case, in the sense earlier described, for the relief which the applicants seek in relation to s 52 conduct and the knowing participation of individual respondents in relation to that conduct.

Section 45D claims 33 The case against PETA under s 45D is based upon conduct which occurred in Australia and conduct which occurred overseas. The basis on which the applicants seek to charge PETA in relation to concerted activity overseas is that s 5(1) of the TPA extends part (IV) of the TPA to the engaging in of conduct outside Australia by bodies corporate carrying on business within Australia. 34 An inference is available that PETA carries on business in Australia as a result of the following: (a) the PETA website offers to sell merchandise to countries including Australia and Australia is one of the countries on the drop down menu;

(b) PETA has sold merchandise to consumers in Australia;

(d) Ms Ruckley gives media interviews in Australia on behalf of PETA;

(e) PETA's business includes the conduct of campaigns such as the Australian Wool Campaign, and elements of that campaign have occurred in Australia;

(f) PETA is the registered proprietor of a trade mark in Australia for use in educational lines and information services.

35 I declined to accede to Ms Newkirk's application to strike out the s 45D claim against her (see AWI No 2), and I will not repeat what I there said. An inference is available from statements publicly made by PETA and its officers that it has engaged in conduct which at least hinders and is at least intended to prevent consumers acquiring Australian Wool products from retailers, and Australian Wool acquirers acquiring wool from the applicants, and that such conduct was engaged in for the purpose and would have or be likely to have the effect of causing substantial loss or damage to the business of the retailers and of the applicants.

36 A prima facie case, in the sense earlier discussed, has thus been made out and the case is a proper one in which to authorise service outside the jurisdiction. I therefore make orders 1, 2, 3, 4, 5, 6, and 7 as sought in the applicants' Notice of Motion. I certify that the preceding thirty-six (36) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Hely.

Counsel for the Applicants: A J L Bannon SC, J Stephenson