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A new way to bring class actions? The Supreme Court decides in Lloyd v Google

A new way to bring class actions? The Supreme Court decides in Lloyd v Google

Directors decision making: considerations for virtual meetings

Bringing a class action – where a single person brings a claim and obtains redress on behalf of a class of people who have been affected in a similar way by alleged wrongdoing – is difficult in England and Wales.

Apart from competition law claims, the only way used to be the rather unsatisfactory group action route. In Lloyd v Google LLC [2021] UKSC 50, the Supreme Court had to consider whether to allow a third way – the representative procedure. The attempt in this case failed, but could it be used in other class actions?  

Background

Mr Lloyd claimed that in late 2011 and early 2012, Google secretly tracked the internet activity of millions of Apple iPhone users and used the data collected for commercial purposes without the users’ knowledge or consent. Mr Lloyd said that this meant Google breached its duties as a data controller under section 4(4) of the Data Protection Act 1998 (the DPA 1998). This would give affected individuals a right to compensation under Section 13 of the DPA 1998. Mr Lloyd brought a section 13 claim against Google on his own behalf and on behalf of all those affected in England and Wales.

Mr Lloyd needed the court’s permission to serve the proceedings on Google out of the jurisdiction. Google successfully challenged this permission in the High Court on the basis that the claim had no real prospect of success, but this judgment was overturned by the Court of Appeal, so the issue went to the Supreme Court.

Group actions

Mr Lloyd could have brought the claim as a group action under 19.11 of the Civil Procedure Rules (CPR), where a group of people who want to bring claims which give rise to common or related issues of fact or law can apply to the court for a Group Litigation Order. Claims are managed together, the common issues are tried in one or more test claims and the judgment is binding on the remaining claims.

The big problem with group actions however is that they can only be brought as opt-in claims,  meaning affected individuals have to take a positive step to join the proceedings. The number of people who opt in is much smaller than the number of affected individuals. This is the case even where the breach is clear cut and the affected individuals can be clearly identified and contactable, as can be seen by the claim brought against Morrisons by employees whose personal data was put on to the internet by a rogue employee – out of around 100,000 affected employees, fewer than 10,000 joined the group action. This is a problem because of the need for litigation funders to provide funding for class actions in England and Wales. In class actions, although a huge number of people may have been affected by a wrongdoing, the amount of compensation each individual can claim is normally small and so it is not economic for an individual to bring their own claim. However there needs to be a large enough number of claimants in a class action so that amount recovered is big enough to give litigation funders a sufficient share to provide an acceptable return on their funding.   

Third way? Representative procedure – CPR 19.6

In a novel approach, Mr Lloyd tried to avoid the opt-in problem of group actions by using the representative procedure instead, set out in CPR 19.6. This procedure allows a claim to be brought by (or against) one or more persons as representatives of others who have the “same interest” in the claim. The advantage is that it is effectively an opt-out procedure, as there is no need for a member of the representative class of claimants to take any positive step to be bound by the result (unless the judge orders otherwise).

The "same interest" problem

There is a problem with the representative procedure, however. Claimants also need to have the “same interest” in the remedy. Section 13 of the DPA 1998 specified that the remedy was damages which meant that the loss suffered by each claimant had to be individually assessed. The claimants therefore did not have the same interest in terms of their damages claims.

Mr Lloyd sought to get around this problem by arguing that the court could order payment of a uniform sum to each claimant. He said that it could do so if it interpreted the word “damage” in section 13 to include “loss of control” over personal data too. He argued that the court should do so on the basis that section 13 claims were analogous to the misuse of private information claims, where uniform sums can be awarded on a loss of control basis without proof of material damage or distress. The Supreme Court, however, said that the wording of s13 meant that it was plain that the term "damage" was limited to material damage. (The wording in fact also excluded distress, but the Court of Appeal in Vidal-Hall v Google Inc (Information Comr intervening) [2015] EWCA Civ 311 had previously held that this was incompatible with EU law and so damages and distress can be claimed for s13 claims. This argument could not be used for loss of control however.) It also said that the analogy with misuse of private information claims was not appropriate as there was no reasonable expectation of privacy here.    

Mr Lloyd tried an alternative argument based on “user damages”, which assessed by estimating what a reasonable person would have paid for the right of user, but this failed for similar reasons.  

The extent of unlawful processing problem

Even if individual assessment of loss was not required, there was still a need to establish the extent of the unlawful processing, which would be different for each claimant, so making the claim unsuitable for the representative procedure. Mr Lloyd sought to avoid this problem by seeking damages for the “lowest common denominator”. However, this argument this did not help him. Even if it was possible to bring a representative claim for only part of the compensation claimable by a claimant, the lowest common denominator would be someone who visited just one affected website and this would not be sufficiently serious to give rise to a section 13 claim.

Therefore the Supreme Court held that Mr Lloyd’s claim had no real prospects of success and so Mr Lloyd did not have the court’s permission to serve proceedings on Google.

Any role for representative claims for class actions?

Although Mr Lloyd’s claim failed, the Supreme Court confirmed that the representative procedure can be used for class actions, if the “same interest” requirement is satisfied.

This means it can be used if the claimants do have the same interest in the remedy sought, so for example where loss of control or user damages can be claimed with no individual assessment required. However most claims are damages claims which do require individual assessment. The representative procedure can be used for damages claims if the loss suffered by the claimant class as a whole can be calculated without reference to the losses suffered by individual class members, but again the circumstances when this will apply are limited.

The Supreme Court said that representative proceedings can be used as a bifurcated process, so just to establish liability. Claimants could then be sought to opt-in to the second stage of assessing damages. This may be useful in some cases, however the problem remains that no damages are recovered at the liability stage, so there would still be the problem of getting enough claimants to opt in for the damages part of the claim to make it economically attractive to litigation funders.  

The Supreme Court was also willing to loosen the meaning of “same interest”, which again may be helpful for some future class actions. It said that claimants can have divergent interests, so an issue can arise that is only relevant to the claims of some and not others – the key thing was that there should not be a conflict of interest between them, so that nobody was prejudiced as a result.

Representative proceedings should therefore be considered as an alternative option for non-competition law class actions.

Conclusion

The government in 2019 rejected a Civil Justice Counsel recommendation to introduce a general class action regime in favour of a sector-based approach, but so far they have only introduced it for competition law claims. When we contrast the above with the collective procedure allowed in competition law claims brought before the Competition Appeals Tribunal (CAT), where opt-out proceedings are allowed, and where legislation was brought in to overturn the common law requirement for individual assessment of damages, it is clear that there are still real obstacles in bringing class actions for non-competition law claims.

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