Upfield train station and 115 homes in the nearby suburb of Dallas were evacuated at the height of the blaze when air quality levels dropped to 'very poor'.
Four people, including a 4-year-old girl, were hospitalised and many more were treated for smoke-related complaints.
Brendan Pendergast, from Maddens Lawyers, said there possibly "several hundred people" were affected by the fire, with about 70 so far joining the class action.
He declined to put a value on the action.
"We are aware of scores of people who had to have medical attention and those problems are ongoing, with a significant impact on people's respiratory systems," Pendergast told AAP.
"It's very early to say if there will be any long-term damage to people's health."
As well as health issues, residential properties were filled with soot, dust and ash, which has "infiltrated" ducted heating systems, curtains, carpets and gardens, Pendergast said.
He said there is "most certainly" a strong case considering the plant also caught fire in February, June and on the Wednesday afternoon before the blaze began.
"We are also told that on those previous occasions, there have been some people who also had to evacuate their houses," Pendergast said.
"Whilst that didn't receive much publicity at the time, it is a significant factor that goes to our belief that their fire suppression systems were inadequate."
The site was due to be inspected for fire management practices when the latest blaze started.
The cause is still under investigation but there is no clear reason so far.
SKM has been contacted for comment.
- AAP
