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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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Discovery Application Filed by Russian Billionaire Over Litigation Funding

By Harry Moran and 4 others |

The sanctioning of Russian business owners since 2022 has led to a plethora of litigation, as one ongoing case in Florida sees two Russian nationals in a dispute over the funding of litigation between them.

Reporting by Bloomberg Law covers ongoing proceedings in a Florida court, where sanctioned Russian billionaire Andrey Guriev is seeking discovery on the funding of claims brought against him by Alexander Gorbachev. The discovery application relates to a series of cases brought against Guriev by Gorbachev over his claimed partial ownership of Guriev’s company, with Gorbachev’s legal costs, insurance and additional expenses having been paid by Sphinx Funding LLC, a subsidiary of 777 Partners. 

Gorbachev failed in his claim brought against Guriev in the UK, but has since claimed that he does not have the £12 million that he has been ordered to pay to Guriev in court costs. Mr Guriev’s counsel from Boies Schiller Flexner, explained the reasoning behind the discovery application in a memorandum of law, stating:

“Mr. Guriev hopes to discover information relevant to the identities and ultimate sources of the funds provided by the third-party funders who financed Mr. Gorbachev’s failed, frivolous, and potentially fraudulent claims, as well as the true motives and objectives in bringing those claims.”

In response to a prior application by Guriev to have the two funders added as parties to the case, Joshua Wander, managing partner and co-founder of 777 Partners, stated that even though the company had covered some of Gorbachev’s legal costs, it had no stake in the result of the litigation. Furthermore, Wander had claimed that his companies had no paid any of Gorbachev’s legal costs after May 2023, following a “breakdown in the relationship between Alexander and the funders”.

£16m Settlement Reached in Dispute Between Funder and Investor’s Estate

By Harry Moran and 4 others |

The funding of arbitration claims brought against nation states represent challenging opportunities for legal funders, with the potential of a large return balanced against the complicated nature and prolonged timelines of these disputes. A new settlement in the High Court demonstrates that these issues can even extend to disputes between the claimant and funder, even when a valuable settlement is secured.

Reporting by the USA Herald covers the move by the High Court of Justice of England and Wales to finalise the settlement in a dispute between litigation funder Buttonwood Legal Capital, and the estate of late Finnish mining investor Mohamed Abdel Raouf Bahgat. The £16.74 million settlement which was approved by the court on Tuesday ended the legal action that Buttonwood began in 2022 to recover a share of the award won in Bahgat’s arbitration case against Egypt.

As Mr Bahgat died on 8 October 2022, the settlement was reached with his estate. The arbitration claim dated back to 2000 when Bahgat was arrested by the new government and had his assets frozen and his mining operations project seized. The arbitration ended in 2019 at a tribunal in The Hague where Bahgat was awarded $43.8 million, which following two years of interest and an enforcement dispute, finished as a $99.5 million payout in November 2021. Buttonwood brought a claim to the High Court in the following year to retrieve its share of the amount, further complicated by a prior renegotiation of terms between Buttonwood and Bahgat in 2017.

Neither Buttonwood Legal nor the Estate of Mr Bahgat have publicly commented on the settlement.

LSB Director Argues Funding Should Move to a “Mandatory Model” of Regulation

By Harry Moran and 4 others |

With next Monday set as the deadline for the Civil Justice Council’s (CJC) Interim Report and Consultation on litigation funding, we are beginning to hear more vocal arguments about the approach the government should take towards regulating the litigation funding industry.

An article in Legal Futures provides an overview of remarks given by Richard Orpin, Director, Regulation & Policy at Legal Services Board, at a consultation event for the CJC review in Oxford. In his speech, Orpin advocated for “moving away from the voluntary model of regulation to a mandatory model” for litigation funding, suggesting that it should be brought “into the remit of the FCA (Financial Conduct Authority).

Orpin argued that the rise in the use of litigation funding had “coincided with an increase in poor practice by some law firms in receipt of that funding,” and that “this pattern of behaviour undermines trust confidence in the ‘no win, no fee’ sector.” Orpin put forward the view that regulators needed to take a “more proactive” stance, highlighting his organisation’s concerns over “poor standards of client care, short-term financial gain being put above the interests of client and duty to the court.”

Other speakers at the event varied in their perspectives, with Richard Blann, head of litigation and conduct investigations at Lloyds Banking Group, similarly arguing that the current model of self-regulation was “ineffective and inadequate” and that the Association of Litigation Funders (ALF) “has no teeth”. 

Adrian Chopin, managing director and founder of Bench Walk Advisers, offered a dissenting view and questioned some of the preconceptions about funding, saying that the suggestion there are “waterfalls where the funders take everything and the client gets nothing” demonstrated a “gross level of ignorance”.