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What Lloyd v. Google Means for UK Class Actions and Litigation Funders

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.

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Who Could Regulate the Litigation Funding Industry after the CJC Review?

By Harry Moran |

As funders and law firms await the outcome of the Civil Justice Council’s (CJC) review of litigation funding later this summer, industry experts are opining not only on the potential direction any future regulation could take, but what body would be in charge of this new oversight function.

In an insights post from Shepherd and Wedderburn, Ben Pilbrow looks ahead to the CJC review of litigation funding and poses the question that if some form of regulation is inevitable, who will act as the regulator for these new rules? Drawing upon two previous reports that reviewed the funding of litigation, Pilbrow points out that historically there have been two main bodies identified as the likely venues for regulation of third-party funding: the courts or the Financial Conduct Authority (FCA).

Analysing the comparative pros and cons of these institutions as prospective regulators, Pilbrow highlights that each one has two core contrasting qualities. The courts have the requisite expertise and connection to litigation funding yet lacks ‘material inquisitive powers’. On the other hand, the FCA does not have the aforementioned ‘inherent connection to the disputes ecosystem’, but benefits from being an established regulator ‘with considerable enforcement powers’.

Exploring options outside of these two more obvious candidates, Pilbrow suggests that utilising one of the existing legal regulators may be viable due to the fact they are all ‘largely staffed by lawyers but have regulatory powers.’ However, Pilbrow notes that these legal regulators may have common flaw that would stop them taking on this new role. That flaw being the comparatively small size of these organisations, with the Solicitors Regulation Authority (SRA) still only boasting 750 employees despite being the largest of these legal regulators.

Concluding his analysis, Pilbrow suggests unless the government opts for an expanded system of self-regulation under an industry body such as the Association of Litigation Funders, the most likely outcome is for the FCA’s remit to be expanded to include the regulation of litigation funding.

The full article from Ben Pilbrow can be read on Shepherd and Wedderbun’s website.

Omni Bridgeway Announces Final Payment for Acquisition of its Europe Business

By Harry Moran |

In an announcement posted on the ASX, Omni Bridgeway announced that it had completed the final payment for the acquisition of the Omni Bridgeway Europe (OBE) business that took place in 2019. The litigation funder confirmed that 5,213,450 fully paid ordinary shares had been ‘issued in satisfaction of the fifth and final tranche of variable deferred consideration’ to complete the acquisition.

Highlighting the progress of the business over the past six years, Omni Bridgeway said that the European business ‘has been successfully integrated into the global operations of the group, creating the most diversified legal asset management platform globally, covering all relevant civil and common law jurisdictions and all relevant areas of law.’ 

The announcement also revealed that OBE has ‘achieved the defined five-year KPIs in full’, whilst the management team ‘has been fully retained.’

Burford Capital CEO Says Litigation Finance Market is ‘Booming’

By Harry Moran |

With the global economy and financial markets in a current state of uncertainty, the stability of litigation funding as an uncorrelated asset class for investors is attracting wider attention than ever.

In an interview with Bloomberg TV, Christopher Bogart, CEO of Burford Capital discussed the current state of the litigation finance market, explained why third-party funding is attractive to clients and investors alike, and addressed the common critiques that are levelled at the industry.

On the enduring appeal of litigation funding to corporate clients, Bogart said that for many CEOs and CFOs the truth is that their companies are “spending too much money today on legal fees”. He went on to say that money spent by companies on legal fees is “not doing anything that advances their core undertaking”, and as a result, “the ability to offload that to somebody like us [Burford] is very valuable.”

When asked about why the litigation finance market is thriving during the global economic uncertainty, Bogart highlighted that all of Burford’s “cash flows come entirely out of the outcome of litigation results and those are independent of what’s happening in the market, independent of what’s happening in the broader economy.” In terms of the future of litigation funding and the potential for the market to continue to grow, Bogart pointed out that between legal fees and litigation judgments there is a “multi-trillion dollar a year global market” and that whilst the industry is already “booming”,  there is still “a lot of room to run here” for litigation funders.

In response to a question on the criticisms of litigation funding and the suggestion that funders may look to prolong the duration of cases, Bogart pointed out that Burford is just like any other investment firm that is “looking for high quality assets that are going to produce a reasonable return in a short period of time.” Bogart emphatically rejected what he described as “false concerns” by opponents of third-party funding, and stated plainly: “we’re absolutely not in the business of being interested in prolonging duration or in bringing forward things that are not ultimately going to yield a good result for our shareholders”.

The full interview can be found on Burford Capital’s website.