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Woodsford Funds £Multibillion Claim Filed Against Sony Group

The UK specialist competition court has today certified the legal claim brought by consumer rights expert Alex Neill, on behalf of 8.9 million Playstation customers The lawsuit was filed in August 2022 alleging Sony has abused its dominant position in the market by charging excessive prices to its customers for games and in-app purchases. It is the first claim of its kind to be fully certified by the courts following the landmark funding ruling by the Supreme Court in PACCAR that held that litigation funding agreements which provide a return to the funder based on a percentage of the damages awarded to the class are damages based agreements which are not permitted in opt-out collective actions Today, 21 November 2023, in a judgment handed down by the Competition Appeal Tribunal: (CAT), Alex Neill has been granted approval to go to trial with a £5bn claim against Sony Playstation. This marks a significant first victory for the claimants as Sony lost their battle to block the claim on both the merits of the case and the funding arrangements. The claim, first filed in the CAT in August 2022, is an opt- out group legal action and it argues that the games console giant breached competition law by unlawfully overcharging PlayStation customers. The claim sees Sony accused of abusing its market dominant position to impose unfair terms and conditions on PlayStation game developers and publishers, which results in excessive and unfair prices for consumers every time they buy digital games or ingame content from the PlayStation Store. It is alleged that this has resulted in 8.9m UK consumers being overcharged for their digital gaming purchases by potentially as much as £5 billion over the last six years. Alex Neill, the Class Representative for the claim, said:  “This is the first step in ensuring consumers get back what they’re owed as a result of Sony breaking the law. Playstation gamers’ loyalty has been taken advantage of by Sony who have been charging them excessive prices for years. “It is significant that the competition court has recognised Sony must explain its actions by ordering them to trial. With this action we are seeking to put a stop to this unlawful conduct and ensure customers are compensated.” This judgment means the claim has been certified by the CAT and can now proceed to a full trial. This is the first consumer claim of its kind to achieve certification for its funding arrangements in light of the recent Supreme Court ruling in the PACCAR case. The ruling has made waves in the litigation funding industry as it means that Litigation Funding Agreements with a percentage-based fee cannot be used to fund opt-out collective proceedings that come before the CAT. Natasha Pearman, the partner leading the litigation and head of competition litigation at Milberg London LLP, said: “We are delighted to have achieved certification for our claim against Sony. Companies who break the law must be held to account and we are determined to ensure this happens and consumers get access to justice. We hope that the certification of our claim provides some clarity as to acceptable litigation funding agreements in the post-PACCAR environment for optout claims. Litigation funding is integral to the collective action regime. When a company as large as Sony breaks the rules consumers often have no idea it is even happening, let alone have the resources to take them on – litigation funding helps to level the playing field. That is why group legal claims like ours are so important, they provide a route to accessing justice that simply doesn’t exist otherwise.” Charlie Morris, Chief Investment Officer for Woodsford, commented: “Woodsford is proud to be funding Alex Neill and delighted that this is the first collective action where the funding arrangements have been approved following the seminal Supreme Court decision in PACCAR. Sony sought to advance numerous unmeritorious and opportunistic arguments, all of which unsurprisingly failed.  Defendants to these actions would be better advised to resolve meritorious actions in a speedy and cost-efficient way rather than spending millions on spurious and ultimately unsuccessful satellite disputes aimed solely at stymying access to justice.” Anyone who has purchased digital games or in-game content in the UK on their console, via the PlayStation Store between 19 August 2016 to 19 August 2022, is automatically included and potentially entitled to compensation. These customers do not need to take any further action at this stage. Those impacted are encouraged to sign-up at www.playstationyouoweus.co.uk to be kept up to date on the case. About Milberg London LLP Milberg London is at the forefront of group actions law and practice. It is instructed in some of the most significant multiparty cases ever to be heard before the courts in this jurisdiction. Milberg London and its partners are ranked in London’s top legal directories; Chambers and Partners and The Legal500.  Home | Milberg London About Woodsford  Since 2010 Woodsford has been helping to hold big business to account for their egregious behaviour. Whether it is helping consumers achieve collective redress when businesses abuse their market dominance, ensuring that inventors and universities are properly compensated when Big Tech infringes intellectual property rights, or helping shareholders in collaborative, escalated engagement up to and including litigation with listed companies, Woodsford is committed to ensuring that companies are held to the highest environmental, social and corporate governance (ESG) standards and helping deliver access to justice. Woodsford - ESG, access to justice and litigation finance.
Commercial Deals

Uinta Investment Partners to Merge with Alternative Income Solutions

In an announcement on 17 November, Uinta Investment Partners revealed that it would be merging with Alternative Income Solutions (AIS), with the merger set to take place on 1 January 2024. The new company will operate under the Uinta Investment Partners, LLC brand, and will ‘provide enhanced resources, focus, and growth at a time when opportunities for deploying capital are both quite attractive and more plentiful.’ Uinta is a multi-family office based out of California, founded in 2017 by Gavin James and Don Plotsky, offering financial products and solutions to institutional, wholesale and retail clients. Uinta’s flagship fund, Uinta Income Fund, LP, was launched in Q2 of 2017 and focuses on consumer litigation finance investments.  AIS was founded in 2019 by Andrew Saunders and Don Plotsky, and launched its Alternative Income Solutions – Foundation Fund, LP, to provide ‘a diversified portfolio of specialty finance opportunities’. This fund will continue to be managed by Saunders and Plotsky after the merger, but will be renamed as the Alternative Income Solutions Fund, LP. Saunders is also the co-founder and president of Castle Hill Capital Partners, a strategic marketing and capital raising firm, which will continue to support the new Uinta Investment Partners company with compliance and marketing services.  Inquiries about the merger can be directed to: info@uintapartners.com
Commercial Deals

Inweasta Expands with Launch of Dubai Branch

In December of last year, LFJ reported on the launch of Inweasta, a boutique investment company with a focus on litigation finance and cross-border litigation management. Following last month’s news that Inweasta’s founder, Andrey Elinson, had departed A1 to dedicate his time to the firm, we are already seeing signs of its strategy for global expansion.  Reporting by Gulf News covers the announcement that Inweasta has opened its first office in the Middle East. The new branch has been set up in the Dubai International Financial Centre (DIFC), and will allow Inweasta to provide distressed asset management (DAM) services to companies operating in Dubai. This latest expansion adds to Inweasta’s global footprint, having already established presences in Paris, Hong Kong, Vienna, and Istanbul. Explaining the decision to open an office in the DIFC, Elinson highlighted its “strategic location and business-friendly policies”, describing it as “an ideal platform for Inweasta to expand its operations and cater to a diverse clientele.” Elinson went on to say that the Dubai branch is already live and operational, with the regional division aiming to “ensure convenience for clients seeking a wide spectrum of services, including consulting, legal, and investment solutions." According to Inweasta’s website, the Middle East office will be led by Timur Unarokov, who also serves as the company’s CEO.
Commercial

Augusta Ventures Reported Rising Losses and Administrative Expenses for 2022

Despite the much-hyped growth in demand for litigation funding across the globe, the last year has seen an industry increasingly defined by fierce competition among funders for market share. As LFJ covered in September, Augusta Ventures has experienced staff layoffs and exits in recent months, and according to new reporting, the funder is faced with increasing losses and a rise in expenses.   An article in The Law Society Gazette provides an overview of recent account filings by Augusta Ventures, which show that the litigation funder is facing tougher financial circumstances than in previous years. The article details that Augusta’s losses for the 2022 calendar year totalled £1.4 million. This figure represents a dramatic increase compared to its 2021 filings, when Augusta only reported £262,000 in losses. The Gazette’s reporting also revealed that while Augusta’s turnover had risen by 4.5% to £9.2 million in 2022, this good news was dampened by the fact that it had faced a 17% rise in administrative expenses, which reached £10.6 million. Furthermore, Augusta faced a £2 million increase in the amount owed to creditors, with the total amount owed reaching £6.8 million. As a result, the funder’s net liabilities had almost doubled compared from 2021, hitting £2.2 million in 2022. According to the Gazette, Augusta Ventures did not respond to any requests for comment.
Commercial

The Benefits of Financial Transparency Between Funders and Clients

Whilst the debate rages on about the level of disclosure that funders and their clients should provide to the courts, it is important to note that financial transparency and disclosure between a funder and client is one of the best ways to ensure a successful partnership in any funding arrangement. In an insights post from Sentry Funding, Jack Burgess highlights the importance of greater financial transparency between funders and clients, as well as the ways in which funders can enhance both their own and their client’s position through this approach.  Firstly, he points out that it is one of the best ways to increase trust in litigation funding, as clients can often be under large amounts of stress during legal proceedings, and by providing open financial disclosure, funders are able to ‘ease their concerns and establish trust in the partnership.’ He also points out that this goes a long way to maintaining ethical funding practices, so that ‘clients can have confidence that they are partnering with a reputable and trustworthy organisation.’ Beyond this trust building, Burgess argues that this approach also empowers the client, because when a funder makes sure that the client is aware of all the information around ‘the terms, fees, and repayment structures’, these clients can then ‘make informed decisions about their legal financing.’ Similarly, financial transparency can be a helpful part of a funder’s risk mitigation strategy, as an informed client is one that is able ‘to make risk-aware decisions and plan accordingly.’ Burgess explains that Sentry Funding maintains its commitment to financial transparency through these four principles: open financial disclosure, client empowerment, ethical funding practices, and financial accountability.
Commercial Deals

AVZ Minerals Signs Binding Term Sheet with Locke Capital for up to $20m in Funding

As LFJ reported last week, it is clear that litigation funders see the potential for partnerships with companies in the mining sector, who are often embroiled in disputes with nation states over projects, and must pursue costly legal proceedings to safeguard their investments. An announcement from AVZ Minerals reveals that the Australian mineral exploration company has signed a binding term sheet with Locke Capital for a litigation funding facility of up to $20 million. The funds will support AVZ’s corporate and legal costs as it pursues six arbitration proceedings connected to the Manono Lithium and Tin Project in the Democratic Republic of the Congo (DRC). The funding from Locke Capital is expected to cover all costs related to the arbitration matters as well as ‘provide significant working capital to ensure AVZ can continue defending its legal rights to its interests in the Manono Project and ultimately see its development.’ AVZ explained that it has now entered into ‘a phase of exclusive due diligence with Locke until, at latest, 31 March 2024, with the aim of executing a formal agreement for the Funding Facility as soon as practicably possibly.’ Nigel Ferguson, CEO of AVZ, said that the company was ‘extremely pleased to have signed this Term Sheet with Locke, a global litigation funder with deep experience in funding complex litigation proceedings.’ He also said that the fact Locke had moved forward with the proposed funding, after completing its own rigorous due diligence on the proceedings, ‘validates AVZ’s strong position across all its legal disputes with a clear pathway to conclusion in AVZ’s favour.’ AVZ is currently pursuing the following legal proceedings related to the Manono Project:
  • Three ICC arbitration proceedings involving La Congolaise d’Exploitation Minière and/or Jin Cheng Mining Company.
  • Two ICC arbitration proceedings involving Dathomir Mining Resources SARLU.
  • One ICSID arbitration proceeding against the DRC.
Commercial Deals

Preview of the 3rd Annual LITFINCON Event

On March 6, 2024, Houston,Texas will host the third annual LITFINCON conference, convening some of litigation finance's top industry leaders, in an event sponsored by Siltstone Capital.  Above The Law recently published Gaston Kroub's preview of LITFINCON’s planned agenda at the Post Oak Hotel in Houston. Kroub says he has attended the past two LITFINCON conferences and finds the conference's networking experience to be a premier highlight.  LITFINCON is slated to hold several panel discussions on topics ranging from patent and intellectual property litigation investment law to regulatory compliance and ethical considerations for the international litigation finance community. Additionally, LITFINCON will host a roundtable composed of academic scholars who specialize in third party funding research.  Kroub says LITFINCON will also include several events for litigation investment professionals who specialize in mass tort and international arbitration law.
Commercial Regulatory Issues

Class Action Report Highlights Public Opinion on Litigation Funding

As the UK funding industry continues to adapt to this post-PACCAR world, it is becoming increasingly important for industry leaders to take the temperature of the public on the role of funders in class actions. The fourth annual Class Action Report published by Portland Communications shows that whilst there is some stagnation in the UK public’s understanding of class actions in general, there is a growing public understanding and acceptance of litigation funding. The report’s dedicated section on funding explains that ‘those expressing a ‘low’ level of awareness of litigation funders has dropped from 57% in 2022 to 49% in 2023.’ Part of this growth in awareness among the general public can be attributed to greater media coverage of the sector, with Portland finding that the volume of references to litigation funding by UK national news outlets grew by 65% from 2022 to 2023. One of the most intriguing areas explored by Portland was: ‘what return on a funder’s investment do the general public think is unfair?’ There was a wide variety of responses to this question, with ‘nothing is unfair so long as they still got their damages’ accounting for 28% of respondents, with another 28% saying that even ‘double investment is unfair’. Between these two polar opposite responses, the next highest answers were either ‘quadruple is unfair’ at 23% and ‘six times is unfair’ at 12%. Adrian Chopin, co-founder and managing director of Bench Walk Advisors, provides featured commentary within the report. He begins by noting that as “nearly half of respondents thought that a funder shouldn’t make more than double its money on an investment”, in order to comply with this standard whilst still breaking even, “a funder would have to win 50% of its cases on average.” Whilst Chopin acknowledges that on its own this “doesn’t sound so bad”, the economics of litigation funding make it a more challenging proposal. He points out that “the fact that funders’ investors must make a profit on their money, and the fact that the funder also has its own operating costs to cover out of those profits”, means that the win rate would need to be far higher. If this became reality, Chopin says that “the end result would certainly be far fewer funded claims.” The full Class Action Report from Portland can be downloaded here.
Commercial Regulatory Issues

Amendment to UK Bill is Only a ‘Partial Fix’ to PACCAR Issues

As LFJ reported last week, in the wake of the Supreme Court’s PACCAR decision, many advocates for the litigation funding industry have suggested that only the government can rectify the situation through new legislation that would more clearly define the place of litigation funding agreements (LFA). However, it appears that an initial attempt to manufacture a legislative shortcut through an amendment to the proposed bill will not be successful. An article by The Law Society Gazette canvasses the opinions of legal experts regarding the amendment to the Digital Markets, Competition and Consumers Bill, which is due to enter the ‘report stage’ next week. The amendment, listed as NC8, is described as a response to the PACCAR decision and ‘provides that a damages-based agreement is only unenforceable in opt-out collective proceedings before the Competition Appeal Tribunal if the agreement is with a provider of advocacy or litigation services.’ According to the industry leaders and experts that are quoted in the Gazette article, the current version of the amendment is not a complete solution to the issue of LFAs being classed as DBAs. Richard Pike, partner at Fieldfisher, explained that the amendment would only solve the problem for funding agreements in opt-out collective proceedings but not ‘any other type of proceedings.' Jonathan Barnes, director of the Association of Litigation Funders, also described the amendment as ‘a partial fix to the problem’. He expressed appreciation that the government had made an effort to address these issues that would limit access to justice, but emphasised that the amendment ‘does not address cases heard outside of the Competition Appeal Tribunal.’