A week after a routine software update gone wrong left millions of Optus customers in the dark, questions around financial compensation and legal action are haunting the telco giant.
Amongst the apologies and commitments to do better, Optus has compensated affected customers by offering 200GB of extra data — provided they sign up for it by the end of the year.
But the repercussions facing Australia’s second-largest telecommunications provider are ongoing. Not only will Optus boss Kelly Bayer Rosmarin face a Senate inquiry on Friday, but the company is also facing investigations from several government bodies and authorities, and some of its biggest corporate clients are weighing up their contracts with the company.
In the days since the blackout, could Optus face a potential class action from its customers over the network failure to be financially compensated, and what could it look like?
Are there grounds for a class action?
There is certainly potential for one, argues Joel Phibbs, partner at Melbourne-based law firm Phi Finney McDonald.
“When an incident like this occurs, people are watching it closely,” he says.
“Having said that, it’s more on Optus to do the right thing by its customers first, because a class action should really only fill a gap.
“A lot of pieces would have to fall into place for it to be viable.”
That includes Optus providing a thorough understanding and explanation of what happened to cause the outage.
“The explanation [for the outage] to date doesn’t really give much of an indication of who’s at fault, and whether it could be avoided,” he says.
“Admittedly I’m not a tech person, but it sounds very ‘not our fault’ but ‘this isn’t going to happen again’.
“So understanding the cause, whether there was any negligence in the way Optus managed things or the systems they had in place, they’re all questions you’d have to really round out before seriously thinking about a claim.”
Mr Phibbs says that thorough understanding will come in time, through the various investigations being done by ACMA, the federal government, and other industry watchdogs.
Instead, he says he sometimes considers class actions as a form of “private regulation”.
“Sometimes they play a really important role when regulators can’t or won’t step in,” he says.
“But when regulators are looking at the issues, you’re wise to let the regulators see where they get first, and then if there’s a gap in how the company has addressed or resolved the issue, you might then consider private litigation.”
But that doesn’t guarantee a claim will go ahead
Even if a law firm believes there are suitable grounds for a claim to proceed, there are other hurdles that must be cleared first.
Mr Phibbs says a major challenge facing a potential class action would be proving the impact the outage had on customers – which would vary greatly, depending on what they use the Optus network for.
“Here, you have a range of different customers, from individuals to different-sized businesses, and they have different consequences,” he says.
“You also have to work out what was done or not done that ought to have been done to prevent this negligence — if it’s negligence — that resulted in these losses.
“Then you’re also going to have the general reluctance to deal with pure economic claims like these on a class action basis, because damages can be indeterminate.”
In other words, the potential class action is challenging to pin down because the financial impact of the outage looks different for each one of Optus’s millions of customers and thousands of business clients.
“How do you settle or resolve a case where it’s very hard to put a clear endpoint on the losses?” he says.
“There’s quite a few fairly challenging legal issues.”
Mr Phibbs says his firm is not currently investigating the potential of a class action against Optus, and it will take time for many law firms to weigh up whether to pursue one.
“They’re not easy in these circumstances to get a class action up, and most firms, if they’re going to look at this in a measured way, will take a bit of time to assess as information comes out through the investigations,” he adds.
“You might get some firms that come out very quickly and say they are investigating, but that might be an indication of their attempt to market themselves … but they would be wise to take their time and assess their options.”
A class action is not a quick fix
As with any legal process, getting a class action off the ground is not a straightforward process, nor is it a quick one.
Mr Phibbs, whose firm is overseeing a class action lodged against Westpac on behalf of the bank’s shareholders, says getting a claim together and through the courts is a time-consuming process.
“We’ve got the Westpac shareholder class action that relates to their AML [Anti-Money Laundering] issues from 2019, and we’re back before the court in December, so they [class actions] do take time,” he explains.
Optus is no stranger to class actions, and is defending two, related to separate alleged data breaches in 2019 and 2022 — further proving claims take time to progress through the legal system.
The 2019 class action, led by Maurice Blackburn, alleges Optus mistakenly released the names, addresses and phone numbers of 50,000 customers and subsequently listed on online directories, including White Pages.
The representative complaint is currently awaiting a determination by the OAIC, a spokesperson for Maurice Blackburn said.
The most recent class action, lodged by Slater and Gordon in April on behalf of more than 100,000 Optus customers affected by the September 2022 data breach, alleges the telco breached consumer laws and failed in its duty of care.
The class action could end up being the biggest — and most valuable — class action in Australian legal history, Mirella Atherton and Elizer Sanches-Lasaballet wrote in The Conversation last year.
A spokesperson for Optus said the telco could not comment on either matter as they were before the courts. The company has previously said it would defend both claims.
ABC News: Toby Hunt
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How big could an outage claim be?
Should a class action over the outage be filed against Optus in the future, Mr Phibbs believes the compensation bill could potentially total hundreds of millions of dollars.
“If you say there’s 10 million people affected over this period, and you averaged down a couple of hundred dollars lost per person affected, you end up getting hundreds of millions of dollars quite easily,” he says.
“It’s not hard to imagine that the total losses to businesses and so on is in that realm.
“Whether or not you could get a class action up that covered all of that in question, and whether you could recover that is also another question.
“It’s too early to say, but it’s not hard to imagine that they’re the sorts of numbers you’re talking about.”
Mr Phibbs says the challenge is balancing a suitable level of compensation with what Optus can afford.
“What they’ve been trying to manage is how do they compensate people as a going concern,” he says.
“How do they compensate people without going broke?”
There are other ways to be compensated
The Telecommunications Industry Ombudsman has been encouraging anyone who suffered a loss due to the outage to make a claim directly with Optus.
The ombudsman recommends those affected should approach Optus directly about compensation, and says there are other options available if they are unhappy with the telco’s response.
“I do think people should go through the steps to give Optus the opportunity to have a better go at resolving things correctly, then potentially looking at actions that won’t cost you anything before piling on to a class action, [because] someone has to pay the [legal] fees,” Mr Phibbs says.
“If I were affected by this outage significantly myself, I’d be looking as an individual consumer to go to the Telecommunications Industry Ombudsman, which tends to get pretty good outcomes for people at no cost before going down the road of a class action.”
Ultimately, Mr Phibbs says a class action against Optus for the network outage is possible, but there are other avenues that should be explored first.
“Some people might say ‘great, let’s get a class action going, get the lawyers out’ but they’re not suited to every kind of scenario,” Mr Phibbs says.
“This is one where there are some hurdles, I don’t think it’s impossible, but it’s certainly not the most attractive option at the moment.”
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