Courtney v Medtel Pty Limited

BETWEEN: KEVIN GLYNN COURTNEY in a representative capacity on behalf of the persons referred to in paragraph 1 of the Eighth Amended Statement of Claim

PACESETTER INC a Delaware corporation with its principal place of business 15900 Valley View Court, Sylmar, California

REASONS FOR JUDGMENT 1 The parties to these representative proceedings have agreed to settle the proceedings. The respondents have filed an amended notice of motion seeking the Court's approval of the proposed settlement, as required by s 33V(1) of the Federal Court of Australia Act 1976 (Cth) ('Federal Court Act'). 2 Section 33X(4) of the Federal Court Act provides that, unless the Court is satisfied that it is just to do so, an application for approval of a settlement under s 33V must not be determined unless notice has been given to group members. The notice must be given as soon as practicable after the happening of the event to which the notice relates: s 33X(6). 3 The form and content of any notice under s 33X must be as approved by the Court: s 33Y(2). The Court must, by order, specify who is to give the notice and the way in which it is to be given: s 33Y(3)(a), (b). The order may include directions requiring a party to provide information relating to the giving of the notice and provision for the costs of the notice: s 33Y(3)(c), (d). An order under s 33Y(3) may require that notice be given by means of press advertisement, radio or television broadcast: s 33Y(4). 4 Section 33Y(5) of the Federal Court Act provides as follows: 'The Court may not order that notice be given personally to each group member unless it is satisfied that it is reasonably practicable, and not unduly expensive, to do so.' 5 The applicant's own claim has been finally resolved in the proceedings: Courtney v Medtel Pty Ltd (2003) 126 FCR 219, aff'd Medtel Pty Ltd v Courtney (2003) 130 FCR 182 (special leave refused by the High Court on 2 December 2003: [2003] HCATrans 496). The proposed settlement concerns the claims of members of the represented group. 6 At the time the representative proceedings were commenced in June 2000, there were 1039 group members. There are now 482 group members (other than the applicant) who have not opted out of the proceedings or settled their claim (the 'Remaining Group Members'). 7 Of the 482 Remaining Group Members, 307 have had their Pacemakers explanted, while 175 retain their Pacemakers in situ. Approximately 47 of the 307 explant group and 80 of the 175 in situ group are deceased. 8 Maurice Blackman Cashman act for 154 of the 482 Remaining Group Members. It appears that the other 328 Remaining Group Members (or their estates) have not retained a lawyer. Many of the surviving Remaining Group Members are elderly and frail. 9 The Schedule to Annexure A to the Amended Notice of Motion sets out the proposed terms of settlement. The Schedule is appended to this judgment. 10 The notice the parties propose should be sent to the Remaining Group Members is in the form of Annexure A to the Amended Notice of Motion, subject to certain amendments incorporated in the Schedule. Annexure A was redrafted after the filing of the original motion to accommodate some concerns I had expressed about its form. I am now prepared to approve the form and content of the notice pursuant to s 33Y(2) of the Federal Court Act. 11 The parties propose that the notice be sent to each Remaining Group Member who has not retained the Applicant's solicitors by prepaidordinary mail to that person's last known address. They point out that considerable efforts have been made to ascertain the correct addresses of the Remaining Group Members and that the efforts are continuing. Nonetheless there are about 35 surviving Remaining Group Members for whom current addresses are not known. Some of these 35 have left Australia without providing forwarding addresses. There are another 35 deceased Remaining Group Members for whose estate no executor or administrator has been identified. 12 Because of the inability to locate all the Remaining Group Members, I suggested that it might be appropriate to order that the notice be advertised in the press, as contemplated by s 33Y(4) of the Federal Court Act. The parties have argued against this course. They point to the cost of advertising and to the low chance that any advertisement will come to the attention of Remaining Group Members where addresses are not known. They also rely on evidence which, on the basis of past experience, suggests that press advertising is likely to cause panic and confusion among elderly persons who have a cardiac device implanted, since they are usually unaware of the brand or model of the implanted pacemaker. 13 The issue of cost would not have been enough of itself to persuade me that a press advertisement was inappropriate. However, the dangers of an advertisement creating anxiety and distress among pacemaker recipients, combined with the relatively modest sums at stake (cf Femcare Ltd v Bright (2000) 100 FCR 331, at 349 [74], per curiam) and the low probability of any advertisement coming to the attention of the relevant persons, have persuaded me to dispense with a newspaper advertisement. 14 It is not, in my view, reasonably practicable to require notice to be given personally to each Remaining Group Member (cf s 33Y(5)). 15 The parties have also sought an order pursuant to s 33J(3) of the Federal Court Act extending until 11 October 2004 the date by which the Remaining Group Members may opt out of the proceedings. The purpose of this order is to allow those Remaining Group Members who are dissatisfied with the proposed settlement to opt out of the proceedings in order to pursue their own claims. I propose to make such an order. 16 The order and directions I propose to make are as follows: 1. The form and content of the notice which is Annexure 'A' to the Respondents' Amended Notice of Motion filed 15 September 2004 (as further amended on 15 September 2004) be approved for the purposes of s 33Y(2) of the Federal Court of Australia Act 1976 (Cth) ('Federal Court Act'). 2. Pursuant to s 33J(3) of the Federal Court Act, the date by which the Remaining Group Members may opt out of these proceedings be extended to 11 October 2004. 3. The Applicant file and serve any affidavits in respect of the Respondents' Amended Notice of Motion filed 15 September 2004, on or before 20 September 2004. 4. The Respondents' solicitors send each Remaining Group Member who has not retained the Applicant's solicitors the notice referred to in Order 1, by prepaid ordinary mail to their last known address, on or before 27 September 2004. 5. The Applicant's solicitors send each Remaining Group Member retained by them the notice referred to in Order 1, by prepaid ordinary mail to their last known address, on or before 27 September 2004. 6. In preparing and sending the notice referred to in Order 1, the parties adopt the following protocol: (a) where the parties' solicitors know the identity of the executor or administrator of the estate of a deceased patient, the envelope containing the notices be addressed to that executor or administrator; (b) where the parties' solicitors do not know the identity of the executor or administrator of the estate of a deceased patient, the envelope containing the notice shall be addressed to 'The Estate of [name of deceased patient]'; and (c) where a notice is returned to sender, the parties' solicitors shall work together to identify the correct address for the Remaining Group Member, and wherever possible, re-post the notice by prepaid ordinary mail. These endeavours should include, as appropriate, electronic White Pages searches, electoral roll searches and searches in the Probate Division of the Supreme Court of the State and Territory in which the deceased patient last resided where such searches are available to the public. 7. The Respondents' Amended Notice of Motion filed 15 September 2004 be set down for hearing at 10:15 am on 26 October 2004. I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Sackville.

Counsel for the Applicant: P Cashman with R Gilsenan

Solicitor for the Applicant: Maurice Blackburn Cashman

Counsel for the Respondents: SS Clark with C Harris

Schedule Definitions In this Schedule: 'fault' means a short circuit between the solder terminals where the pacemaker's battery is soldered to the flex circuit, caused by dendritic growth, which can cause the pacemaker to fail; and 'Hazard Alert Pacemaker' means a St Jude Medical Tempo Pacemaker, Model Nos. 1102, 1902, 2102 and 2902, that was subject to the Hazard Alert issued by Medtel Pty Limited on or about 5 June 2000.

1. Group Members living as at the date of settlement being approved by the Court whose Hazard Alert Pacemaker has been removed and replaced 1.1 Group members whose Hazard Alert Pacemaker was removed and replaced: (a) prior to the issue of the Hazard Alert (5 June 2000) and the device was found upon examination to suffer the fault; (b) after the issue of the Hazard Alert (5 June 2000) and prior to 31 December 2001; (c) on or after 31 December 2001 and the device was found upon examination to suffer the fault; or (d) on or after 31 December 2001 but not more than four (4) years after the date of implantation provided that the device was removed and replaced because of the Hazard Alert even if the device was examined and, upon examination, found not to suffer the fault; will be entitled to receive $8,000 (being $10,000 in compensation less $2,000 in contribution to the Applicant's legal costs). 1.2 Group members whose Hazard Alert Pacemaker was removed and replaced: (a) prior to the issue of the Hazard Alert (5 June 2000), unless the device was found upon examination to suffer the fault; or (b) on or after 31 December 2001 and on or after the day four (4) years after the date of implantation unless the device was found upon examination to suffer the fault; will not be entitled to receive compensation.
2. Estates of deceased patients whose Hazard Alert Pacemaker had been removed and replaced

2.1 The estates of patients who died on or after the date of commencement of the proceedings (22 June 2000) and whose Hazard Alert Pacemaker was removed and replaced: (a) prior to the issue of the Hazard Alert (5 June 2000) and the device was found upon examination to suffer the fault ; (b) after the issue of the Hazard Alert (5 June 2000) and prior to 31 December 2001; (c) on or after 31 December 2001 and the device was found upon examination to suffer the fault; or (d) on or after 31 December 2001 but not more than four (4) years after the date of implantation provided that the device was removed and replaced because of the Hazard Alert even if the device was examined and, upon examination, found not to suffer the fault; will be entitled to receive $5,250 (being $6,500 in compensation less $1,250 in contribution to the Applicant's legal costs). 2.2 The estates of patients who died:

(a) prior to the commencement of the proceedings (22 June 2000); (b) on or after the date of commencement of the proceedings (22 June 2000) and whose device was removed and replaced prior to the issue of the Hazard Alert (5 June 2000) unless the device was found upon examination to suffer the fault; or (c) on or after the date of commencement of the proceedings (22 June 2000) and whose device was removed and replaced on or after 31 December 2001 and on or after four (4) years after the date of implantation unless the device was found upon examination to suffer the fault;

3. Group Members living as at the date of settlement being approved by the Court whose Hazard Alert Pacemaker has not been removed and replaced

3.1 Group members whose device has not been removed and replaced at the date of the settlement being approved by the Court will be entitled to receive compensation in the amount of $750 and will not be required to contribute to payment of the Applicant's legal costs. 4. Estates of deceased patients whose Hazard Alert Pacemaker had not been removed and replaced 4.1 The estates of patients who died prior to the commencement of the proceedings (22 June 2000) will not be entitled to receive compensation. 4.2 The estates of patients who died on or after the date of commencement of the proceedings (22 June 2000) whose Hazard Alert Pacemaker had not been removed and replaced as at the date of their death will be entitled to receive compensation in the amount of $375 and will not be required to contribute to payment of the Applicant's legal costs.