• Andrew Matheson

7-Eleven to pay $98M to settle franchisee class action

Article originally published by and written by Cat Fredenburgh

Convenience store giant 7-Eleven has agreed to pay $98 million to settle two class

actions accusing it of misleading franchisees, the largest class action settlement

reached so far this year.

As part of the settlement in the Levitt Robinson-led class actions, which still requires

court approval, funder Galactic would earn a 25 per cent commission of $24.5

million under a proposed common fund order.

Levitt Robinson’s administration costs as well as legal costs and disbursements for

running the class actions, plus $40,000 for each of the six applicants, will also be

deducted from the settlement sum.

The settlement was reached in June, just days after the High Court refused 7-

Eleven’s special leave application which challenged the power of judges to make

common fund orders upon settlement.

Stewart Levitt, senior partner of Levitt Robinson, told Lawyerly at the time that both

parties had negotiated in good faith and had reached a “mutually satisfactory”

agreement. The High Court’s denial of the special leave application played a role in

the mediation outcome, according to Levitt, who said the timing was “propitious”.

The class actions, which were filed in February 2018, allege 7-Eleven engaged in

breach of contract, misleading and deceptive conduct, and unconscionable conduct

that has kept franchisees from turning a profit. Very few of the franchises in the 7-

Eleven system were financially viable without employees being underpaid or the

owners of the franchises or their family members working “unreasonable or

unsociable” hours at below-award rates, the class actions allege. Claims of

unconscionable conduct were also added earlier this year.

A separate settlement between the applicants and Australia and New Zealand

Banking Group, which was also named as a respondent, was approved by Justice

Mark Moshinsky in August last year.

ANZ was accused of breaching its responsible lending obligations and the Code of

Banking Practice, and engaging in unconscionable conduct by providing loans to

purchasers of 7-Eleven franchises. Under the settlement, the class action applicants

agreed to drop their claims against ANZ in exchange for the bank suspending the

limitations period in the event they decide to pick up the claims later. The bank is

not released from liability.

The plaintiffs are represented by Philip Tucker, instructed by Levitt Robinson. 7-

Eleven is represented by Philip Solomon QC and Myles Tehan, instructed by Norton

Rose Fulbright.

The class actions are Davaria Pty Limited v 7-Eleven Stores Pty Ltd & Ors, which

defines its group members as franchisees, and Pareshkumar Davaria & Anor v 7-

Eleven Stores Pty Limited & Anor, which encompasses a broader class member

definition that includes nominated directors and guarantors.