Things To Think About

First: are our current laws adequate to deal with the Internet of Things and its consumer products that collect, report and store information about you?  The question is prompted by recent stories of vibrators reporting users’ habits without consent, allegations that CIA and MI5 are tapping Samsung Smart TVs,  confirmation that teddy bears stored recorded messages on an insecure database (so insecure that the messages were held for ransom), and Alexa getting a search warrant in a murder trial; casting our minds back, it was not so long ago that we watched the FBI-Apple encryption dispute unfold.  It may not surprise you that a recent study at the University of Melbourne found that “many technology developers seem unaware of their legal obligations when it comes to safely seeking, using and storing people’s data”.

Second: what’s a reasonable length for a contract?  CHOICE has called on the Australian government to do something about unreasonably long contract terms for products bought online, noting that the Kindle purchase contract terms and conditions would take longer to read than Hamlet and Macbeth put together.

Third: we expect differences in regulators’ approaches to enforcement to be based on sound policy considerations.  But these choices are also affected by the personal skills and past experiences of the individuals working within each regulator.  No doubt these human considerations play a part in explaining the results of a recent cross-jurisdictional review of insider trading enforcement conducted at the University of Melbourne.

Finally: we’ve talked before about the role of class actions in enforcement of regulatory laws and consumer (and other) rights.  Is the class action so important that a government fund should be established?  Professor Morabito thinks so.  It’s interesting to note that there’s scope in some regimes – the Australian Consumer Law, for example – for a regulator to take action on behalf of a class; but to my knowledge this has never been done in Australia.  If you know of any examples, please let me know.

Notable Litigation Actions

AUSTRAC has secured the “highest ever civil penalty in corporate Australian history” with its litigation against Tabcorp for non-compliance with the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.   I’ll add a link to the judgment once it’s published.

A big fortnight for the ACCC.  Its civil cartel litigation against Olex Australia P/L and others was dismissed by the Federal Court.  The ACCC is “carefully considering this judgment“, which is important, because cartels are in the regulator’s crosshairs this year and this outcome may have significant implications for its other investigations:  ACCC v Olex Australia Pty Ltd [2017] FCA 222.  In consumer law litigation, results are in for Jetstar and Virgin: $545,000 and $200,000 penalties respectively, for misleading drip-pricing conduct: ACCC v Jetstar Airways Pty Limited (No 2) [2017] FCA 205.  The ACCC initiated civil pecuniary penalty litigation against Audi AG, Audi Australia, and their parent, VW AG in relation to emissions testing cheat devices, and has cross appealed in Valve, arguing Edelman J’s rulings that certain statements were not misleading, in part because consumers knew their rights, were wrong in law.

“The most heinous aspect of the case is the deliberate and pre-meditated exploitation of these vulnerable people.”  The Federal Court was not impressed with the FAF companies and their sham diamond-trading schemes: total penalties of $730,000 were ordered this fortnight, for consumer credit law violations: ASIC v Fast Access Finance Pty Ltd (No 2) [2017] FCA 243,

Over in the US, there’s an interesting damages case brought by Cabell County against a string of major drug wholesalers.  Drug wholesalers have a duty under US Federal and State law “to monitor, detect, investigate, refuse and report suspicious orders of prescription opiates originating from Cabell County”; the plaintiff alleges the defendants deliberately failed to comply with the duty, and this failure has caused the current opiate addiction crisis in its community.

And a second US case deserves a mention: the successful prosecution of a high-profile Manhattan art dealing company for offences under New York’s relatively new ivory trading laws.

Law & Policy Updates

A “revelatory” realisation that Australian corporate fines are “out of line” with the rest of the world prompts ACCC and ASIC to consider seeking much higher penalties.  Despite courts frequently citing the CSR maxim that the object of a civil penalty is to “put a price on contravention that is sufficiently high to deter repetition by the contravenor and by others who might be tempted to contravene the [law]”, there’s little (convincing) guidance in the common law as to how such a penalty can be calculated.  (Speaking of large overseas corporate fines, the US DOJ has just agreed a $430.4M penalty with ZTE Corporation for illegally shipping products to Iran, among other things.)

ASIC and the ASBFEO have warned that banks are continuing to include unfair contract terms in their small business loan agreements, threatening to take legal action seeking declarations of unfairness.

ASIC has published its 6-monthly review of its enforcement action.

The Standing Committee on Economics conducted a further round of public hearings with the big four banks this fortnight; transcripts here.

The US DOJ has issued some very interesting guidance for corporations indicating the questions its prosecutors will ask when assessing the compliance processes of a company being investigated for fraud.

It’s finally arrived!  This has been a long time coming, but was worth the wait.  The UK has consolidated its benchbooks on jury directions, trial processes and sentencing into a single publication, the Crown Court Compendium.  Part 1 deals with jury and trial management and summing up; it offers a very interesting comparison to Australian procedure. For example: in contrast to Victorian procedure, in UK courts jurors are still called by name, not number.  And there is no direction that a parade before the dock is required – a recent Victorian development, that, as you know, is causing headaches.  Part 2 concerns sentencing; the comparisons are just as interesting there.  In the UK, ‘denunciation’ doesn’t feature among the sentencing purposes, for example.

Event Calendar

20-21 July 2017: Competition Matters 2017 (Wellington)

27-28 July 2017: ACCC & AER Regulatory Conference (Brisbane)