The Lloyd v. Google claim has given rise to some thought-provoking questions:

• Has Google breached its duties as a data controller? If so, have class members of the ensuing collective action suffered quantifiable damages?
• How exactly should “same interest” be determined in a case regarding the misuse of data?
• Do individual members of a class have to demonstrate material harm in order to receive recompense?

In the following article, we will explore the answers to these and other questions that have arisen from Case UKSC 2019/0213, otherwise known as Lloyd v. Google. What Exactly Happened? Richard Lloyd, sought to file a claim against tech giant Google, asking for compensation pursuant to section 13 of the Data Protection Act of 1998. The accusation involves the use of cookies in a ‘Safari workaround’ that ultimately collected, then disseminated, user data into metrics that were then used to employ targeted advertising to users. This alleged misuse ostensibly impacted over four million iPhone users in England and Wales, whose data was unlawfully accessed by Google. Google’s use of the data was found to be a breach of DPA1998. Lloyd sued not only on his own behalf, but on behalf of others whose data was treated similarly. Google fought the suit, saying that class members could not demonstrate material harm from the misuse of data. In a case like this one, ‘material harm’ could include monetary losses or mental anguish stemming from the illegal harvesting or dissemination of data. Lloyd’s claim was backed by Therium, a prominent litigation funder specializing in tech-related cases. Lloyd’s legal team argued that the ‘same interest’ mandate had been satisfied, and that awarding all class members the same sum in damages is reasonable—without a need to delve into the personal circumstances of every individual claimant. The Decision  Initially, the High Court ruled in favor of Google. When the court of appeal reversed the ruling, Google appealed again to the Supreme Court. In the majority decision, Lord Leggatt determined the following:

• The determination of “damage” must include verifiable, material damages such as financial or mental anguish. Mere illegality of an action is not enough to necessitate financial recompence.
• Damages must be demonstrated.

Why are the Facts Here so Important? Obviously, there is reason to be concerned when a tech company in control of an extremely large amount of user data is accused of illegally managing that data. In this instance, Google allegedly sold or used user data for commercial/money-making purposes. This was done without the knowledge or consent of its users. One could argue that any user who utilized Google on an Apple iPhone has reason to be dismayed (indeed, a similar case settled before going to trial). The case also illustrates the importance of opt-in versus opt-out models, as well as what can happen when the majority of class members choose to abstain from involvement in the case proceedings. Under Lord Leggatt’s ruling, an opt-out model is not feasible in any instance requiring that class members be able to show tangible losses. Ultimately, tech giants like Google are required to abide by their own user agreements. However, users must prove suffering beyond the violation of their right to privacy. Ironically, one area of doubt in such a case arises over how shares of a payout (to litigation funders, for example) can properly be calculated without consent of all class members. Just as many class members in an opt-out proceeding may not know the details of the case, they also may be totally unaware of the claim, or of how any proceeds are to be divided. What Do These Developments Mean for Litigation Funders and Potential Claimants? The idea that a claimant must demonstrate damages in order to receive compensation is neither new nor controversial. But it does put a damper on collective actions with high class member counts. Especially when looking at cases against huge companies like Visa/Mastercard, Apple, or Google. Many would argue that it’s simply not feasible to collect information about losses from millions of potential claimants. So, while this line of thinking is reasonable under English law, it may well discourage litigation funders from taking on cases requiring that all class members demonstrate individual losses. This, in turn, will make the pursuit of justice more difficult for potential members of a wronged class. For litigation funders, the difference between one potential claimant in a case and the millions who could have been class members in Lloyd v Google is significant. While we know that funders ultimately back cases to increase access to justice and give claimants a day in court—we also know that this relies on investors, whose motivation to invest is profit-driven. In short, litigation finance only works in the long term, when it’s financially advantageous to investors. The question of privacy rights is a tricky one. Having one’s privacy violated is, as the phrase suggests, a violation. But as it typically has no financial component beyond the negative feelings associated, it is unlikely to serve as a demonstrable loss in a case involving user data (unless, of course, a further demonstrable loss can be proven). At the same time, it is clear that Google misused user data, intentionally and without consent—with an eye toward financial gain. Surely it makes sense that Google should share some of that income with the users whose data was breached? Not according to the UK Supreme Court, apparently. A Missed Opportunity  Had Lloyd vs. Google succeeded in the way Lloyd intended, it could have changed the way class actions in data cases were handled by the courts. Essentially, opt-out class actions could have flourished as individual class members wouldn’t be required to demonstrate financial damages. This has particular relevance to data cases, because when data companies use information in ways that are not in keeping with their own TOS, users may not be damaged financially. But this lack of demonstrable damages doesn’t necessarily mean a) data companies don’t have a moral obligation to offer users recompense, or b) that users aren’t deserving of a payout when they are wronged. Had Lloyd’s legal team instead used a bifurcated approach to the proceedings, a smaller opt-in class could perhaps have enabled a stronger case through the gathering of evidence—specifically evidence of damages. Similarly, a Group Litigation Order (GLO), which, despite what some see as high administrative costs, would have better determined eligibility for class members. This, in turn, would have allowed for a better test of the case’s merits. In Conclusion Lloyd vs. Google demonstrates the importance of several aspects of class action litigation, including how opt-in versus opt-out impacts the collection, as well as ability to bring evidence of damages. This promises to be a factor in future tech cases—not just in the UK, but globally. Will the failure to secure damages for those whose data was misused embolden Big Tech? Will it serve as a warning? Could it discourage litigation funders from backing such cases? We’ll have to wait and see. For now, it’s clear that Lloyd vs. Google has left its mark on the UK legal and litigation funding worlds—and on Big Tech as a whole.

The extent and scope of litigation funding liability is being questioned, after a High Court ruled the funder was liable for costs predating the litigation funding agreement (LFA).  In analysis for Lexology, Jodie Gittins and Chris Ross of RPC noted that this is a signal to funders to not assume their liability in unsuccessful claims will be measured against their portion of funding contributed, nor will it be limited by the start date of their funding agreement.  In the case of The ECU Group plc v HSBC Bank Plc & ors, the claimant had entered into an LFA with Therium in September 2019, to fund the action and partially cover costs that The ECU Group had accrued since November 2018. After the Commercial Court had dismissed all claims and ruled that ECU must pay the defendant’s costs, HSBC asked the court to order Therium to be jointly liable for all costs dating back to the start of proceedings. Mrs Justice Moulder ruled that Therium was indeed liable for these costs as they had (in part) covered these costs for ECU. As the courts have a breadth of options when deciding costs orders, funders should be mindful that in cases where they have the potential to reap a large reward if successful, they may face an equally significant loss when the outcome is reversed.

The Soros Economic Development Fund has issued a £5MM investment into Aristata Capital. This brings Aristata's total fundraise to well over £40MM. The firm has been established to protect social change projects and the environment. The announcement is being touted by those who praise idealistic investments into litigation finance. Aristata will provide a central location for claimants to seek funding, but also assistance in publicizing their cases.  The Soros Economic Development Fund says that the investment will hopefully provide greater access to the rule of law.

Researchers around the world are providing examples of litigation finance becoming an increasingly important asset class. This, as investors are on the hunt for high return opportunities with compounding portfolio effects.  LegalDive.com has issued a report that investigates the nature of litigation finance in terms of being considered a serious legal asset class. With scrutiny never in short supply, Legal Dive suggests that litigation financiers are on the cusp of real innovative approaches to products and services to help support the rule of international law.  Click here to read more.

Erasmus Law Review hosts white papers from 10 of Europe's top legal finance scholars. The library highlights major developments and barriers to litigation financiers.  Litigation Finance Journal’s compilation of the Erasmus legal investment library’s LF-based white papers includes a diverse library of subject matter, including regulatory issues in Australia, European litigation funding, and the role of BTE and ATE insurance.  The Erasmus library provides some dense material, yet these deep-dives can provide industry stakeholders with the opportunity to explore niche segments of the market not typically covered in more mainstream publications.

Omni Bridgeway, Deminor and Nivalion AG have teamed up to organize the launch of the European Litigation Funders Association (ELFA). Tasked with helping expand legal finance innovation across Europe, ELFA will represent industry best practices before international governments and legal associations.  According to ELFA, Wieger Wielinga (Managing Director, EMEA Omni Bridgeway) will be the inaugural Chairman of the association. Additionally, Marcel Wegmuller (Co-Founder and Co-CEO of Nivalion AG) and Charles Demoulin (Chief Investment Officer of Deminor) will serve as directors.  ELFA says the organization will be open to legal finance franchises of all sizes. Prospective members will need to accept ELFA's code of conduct.  Read more about ELFA's planned organizational activities here: ELFAssociqtion.eu.

The following piece was contributed by Lillian Rizio and Max Hensen of Australian law firm, Piper Alderman.  The Full Federal Courts’ decision in Parkin v Boral Limited (Class Closure) [2022] FCAFC 47 (Parkin) confirms the courts’ power to issue pre-mediation (and settlement) soft class closure notices to group members. The decision hints at the (positive) appetite of the Federal Court in making future orders for class closure that facilitate a just outcome,[1] simplifies the assessment of quantum prior to settlement, and reduces an element of risk in funded litigation. Opt-Out Nature of Class Actions   The Australian position on class closure orders is set out in Part IVA of the Federal Court of Australia Act 1976 (Cth) (Act). It serves as a guide for commencing Class Actions in the Federal Court of Australia, and is the reason why they are run on an ‘opt out,’ and ‘open’ basis. By virtue of the Act, class actions are commenced by a representative applicant on behalf of ‘group members.’ Group members are not required to register their interest, provide their consent, or even have knowledge of the proceedings on foot. Whilst the Act provides that a group member might ‘opt-out’ of the proceedings,[2] it does not compel one to submit information prior to settlement or judgment in order to participate. Ultimately, an ‘opt-out’ proceeding means that the size and composition of a class is difficult to quantify in pre-settlement discussions. Uncertainty as to the potential quantum of a claim complicates settlement negotiations. Background The parties in Parkin sought clarification from the Federal Court on its statutory power to issue notices to class members following two 2020 judgments handed down in the Court of Appeal of New South Wales. Both judgements considered the court’s powers pursuant to the Civil Procedure Act 2005 (NSW), in sections that mirrored the powers conferred by the Act on the Federal Court. In Haselhurst v Toyota Motor Corporation Australia Ltd t/as Toyota Australia,[3] the court found that its statutory powers did no extend to authorise it to make orders relating to class closure before settlement. It rationalised that, a class closure order extinguishes the cause of action of a group member. Therefore, that ordering the issuance of one was beyond the scope of its statutory ‘gap-filling’ power in facilitating a just outcome. In Wigmans v AMP Ltd[4] the court found that making an order to issue a notice for soft closure was contrary to the ‘fundamental precept’ of the class action regime.[5] Here, it rationalised that a group member was entitled to not act prior to settlement, or judgement. Questions In seeking clarity on the courts’ statutory powers, the parties in Parkin filed applications which put two questions to the Court. Namely, whether:

1. section 33ZF of the Act permitted the Court to make orders to notify group members that, if they failed to register their interest, or opt out by a given date, they would remain a group member, but not be entitled to benefit from settlement (subject to Court approval) (Question One); and
2. section 33X(5) permitted the court to order that group members be notified that in the event of a settlement, the Applicant would seek an order which (if made) would prevent a group member that had failed to register their interest, or opt out by a given date, from being entitled to benefit from settlement (Question Two).

Findings and Discussion Ultimately, the court found that, whilst no power under s 33ZF of the act was ‘enlivened,’[6] the specific power available under s 33X(5) permitted the court to issue the orders sought by the Applicant in Question Two. As to the precedential decisions from the Court of Appeal in New South Wales, the court in Parkin found that:

1. the decision in Wigmans[7] was ‘plainly wrong.’ Here, the court affirmed that s 33X(5) conferred a power that was ‘broad and unqualified’[8] with respect to making an order that a notice be issued to group members at ‘any stage’ and of ‘any matter’[9]; and
2. contrary to Wigmans[10] assertion on ‘fundamental precept,’ the court held that whilst group members may take a passive role in proceedings, they can also be required to act prior to settlement, and that the court may exercise its statutory powers to motivate them to do so.

In its discussion relevant to Question One, the court found that the power conferred by s 33ZF was discretionary and ‘gap filling.’[11] On the facts, the court did not consider that a ‘gap’ applied, given the relevance of s 33X(5) in providing a resolution to the issue at hand. Interestingly, however, the court hinted at its sentiment towards potential future application of s 33ZF in the following comment: ‘one could not foreclose the possibility, depending upon the circumstances of the case, that such an order could advance the effective resolution of proceedings.’[12] Conclusion – What does it Mean The decision of the Full Federal Court, means that parties can expect to be awarded notices that identify the intention of ascertaining future class closure orders in proceedings. This has resulted in the ratification of a strategy in which parties can agree to obligate group members to affirm their interest, or opt-out prior to mediation (for settlement purposes). As for the future of class-closure, the court comments on the potential of the issuance of class closure orders enlivened by s 33ZF in instances where they effect the effective resolution of proceedings. Going forward, competing interpretations of the statutory powers conferred upon the courts leaves room for the High Court to interpret the matter, or perhaps, call for statutory reform.  Given the positive findings as to the ability for pre-mediation notices to be issued, the Federal Court will likely be the preferred jurisdiction for class actions commenced on an open class basis. About the Authors Lillian Rizio, Partner Lillian is a commercial litigator with over 14 years’ experience in high stakes, high value litigation. Lillian specialises in class action, funded and commercial litigation, with expertise across a broad range of sectors including financial services, energy & resources, insurance and corporate disputes. Max Hensen, Lawyer Max is a litigation and dispute resolution lawyer at Piper Alderman with a primary focus on corporate and commercial disputes. Max is involved in a number of large, complex matters in jurisdictions across Australia. For queries or comments in relation to this article please contact Lillian Rizio, Partner | T: +61 7 3220 7715 | E:  lrizio@piperalderman.com.au -- [1] Parkin v Boral Limited (Class Closure) [2022] FCAFC 47 at [144]. [2] Part IVA Section 33J Federal Court of Australia Act 1976 (Cth). [3] (2020) 101 NSWLR 890. [4] (2020) 102 NSWLR 199. [5] Wigmans v Amp Ptd (2020) 102 NSWLR 199 at [89]. [6] Parkin v Boral Limited (Class Closure) [2022] FCAFC 47 at [1]. [7] Wigmans v AMP Ltd (2020) 102 NSWLR 199. [8] Parkin v Boral Limited (Class Closure) [2022] FCAFC 47 at [111]. [9] Ibid. [10] Wigmans v AMP Ltd (2020) 102 NSWLR 199. [11] Parkin v Boral Limited (Class Closure) [2022] FCAFC 47 at [13]. [12] Parkin v Boral Limited (Class Closure) [2022] FCAFC 47 at [144].