7-Eleven can make private settlement offers to class members, court says
Class Actions July 2, 2018 10:50 pm By Cat Fredenburgh | Melbourne

A judge has found 7-Eleven is free to make confidential settlement offers to individual members in two class actions brought by franchisees, shooting down a bid by the applicants’ lawyers to get the court involved in the convenience store giant’s communications with class members.

“The ability of a respondent to communicate with individual group members is an important feature of the individual rights of a respondent and a group member to enter into negotiations without inhibition. Unless there is a basis upon the evidence for the Court to intervene to prevent or cure the effects of improper conduct on the part of a respondent, the Court should not do so in the pretext of some guardianship role to protect individual unrepresented group members,” Justice John Middleton said in shooting down the bid for a communications protocol.

The applicants argued 7-Eleven’s settlement offers and communications with class members didn’t provide adequate historical details of the cases; didn’t given enough time for the applicants, many of whom are non-native English speakers, to respond; violated the group members’ relative anonymity; and could mislead group members into thinking their businesses could face retaliation if they did not accept the offers.

In opposing a communications protocol, 7-Eleven countered said its communications with group members were not misleading or unfair and that the parties should be free to enter into confidential settlement negotiations without the court’s intervention.

Judge Middleton agreed.

“In my view, 7-Eleven and group members should be allowed to exercise their conventional freedom as business people to negotiate confidentially, and not involve the Court with respect to the imposition of a generalised communications protocol being a priori regime of the type proposed,” the judge said.

Separately, the judge ordered the applicants’ solicitors, Levitt Robinson, to issue a corrective notice to class members after previous bulletins sent to class members said they were required to sign a commercial litigation funding agreement in order to participate in and benefit from the class action; that each store might be entitled to approximately $200,000 in damages; and that warned things would get a lot worse if the class action did not proceed.

“Indeed, if we do not proceed with this Class Action, it is very likely that your working conditions will become a lot worse and like with Caltex, which on 27 February 2018 announced that it is closing down its entire franchising operation, you will finish up a lot worse,” the law firm warned in one bulletin.

Class members that relied on any of the misleading statements when signing the litigation funding agreement will have two weeks to withdraw from the agreement if they choose.

The court published its reasons for judgment on Monday, after Judge Middleton issued the two separate orders in May.

The class action against 7-Eleven was filed by Levitt Robinson on behalf of 500-odd franchisees that accuse the franchisor of breach of contract, misleading and deceptive conduct, and unconscionable conduct that has kept franchisees from making a profit.

The applicants are represented by Levitt Robinson. 7-Eleven is represented by Norton Rose Fulbright.

The cases are Davaria Pty Limited v 7-Eleven Stores Pty Ltd & Ors which defines its group members as franchisees. The second action is Pareshkumar Davaria & Anor v 7-Eleven Stores Pty Limited & Anor, which encompasses a broader class member definition that includes franchise principles and guarantors.

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Cat Fredenburgh

Cat Fredenburgh has been covering legal news for 12 years. She was previously Editor-in-Chief at US legal news publication Law360. She is the Co-Founder of Lawyerly.