Is the use of the representative action procedure for large scale data-related claims doomed to fail? This is a view we've heard a lot recently. But is it right?
If it is, it is good news for potential defendants. A defendant facing a representative action is, in principle, liable not only to those claimants who have taken the trouble to bring claims, but to all members of the representative class, irrespective of whether or not they have shown any interest in the claim. In short, this is true class liability of the kind that is common in the US.
It is easy to see why such a conclusion might be reached:
- The attempt to bring a representative claim failed in Lloyd v Google  UKSC 50. The Supreme Court held that the use of the representative action procedure was not appropriate in situations where an individualised assessment of damages was required, as was the case in Lloyd given the variability of personal data across the individual class members. See our briefing here for more details.
- The Supreme Court judgment in Lloyd did suggest that a future claim could be brought on a bifurcated basis dealing with common issues of fact and law separately from issues requiring individual assessment (including quantum). However, that seemed unlikely to be attractive for claimant lawyers and litigation funders because success in the first stage would not generate a financial return. It is telling that we have not seen this route taken up since the Supreme Court judgment.
- A representative claim also failed in Prismall v Google and Deepmind  EWHC 1169. Given the decision in Lloyd, the claimants accepted that it was necessary to examine their claim arising out of the sharing of their data by the Royal Free Hospital with the Defendants on a "lowest common denominator" basis. However, applying that test, the information that was shared with the Defendants was anodyne in nature and so would not have resulted in damages for everyone in the class. See our briefing here for more details.
However, we think it would be unwise for defendants to conclude that there is no prospect of claimants using the representative action procedure for large scale data based claims:
- As a starting point, the Supreme Court was actually broadly encouraging about the potential use of representative actions in Lloyd. Lord Leggat described it as a "flexible tool of convenience in the administration of justice".
- The claimants' problem in Prismall (or at least one of the problems) was that when the Court looked at the lowest common denominator, it would not have resulted in damages for all members of the class. But it is not difficult to imagine a scenario where a data breach is sufficiently serious that the lowest common denominator does result in damages for all members. It is, however, worth remembering that the Supreme Court in Lloyd and the court in Prismall proceeded on the basis that the "lowest common denominator" approach was appropriate and did not determine the point. There is clearly a battle to be fought on that point.
- It has been suggested that one way of addressing the issue in Primsall would be for potential claimants to use a robust, properly designed survey to identify the lowest common denominator and define the class accordingly. This would require fairly significant up-front investment from claimant law firms and funders. High risk for sure but, potentially, high reward.
- Claimant law firms might well take comfort from the decision in Commission Recovery v Marks and Clerk  EWHC 398 (Comm). See our briefing here. This was not a data based claim but secret commission arrangements regarding IP rights renewals. The Court found that, while some elements of each claim may differ between individual class members, this should not in principle preclude representative proceedings where the "essential pattern" of the claims remains the same and there is no conflict of interest between members of the class. The decision has been appealed, and this is due to be heard by the Court of Appeal in November. If the first instance decision is upheld, it may renew the appetite of claimant law firms and funders for representative actions.
- Stepping back, some might question why it is the case that English law doesn’t provide a procedural vehicle for these kind of claims, especially given the low bar that applies for certification of opt-out competition law claims and the failure of Parliament to extend that regime into other areas. There is force in the view that this is for Parliament rather than the courts. However, Knowles J concluded in Commission Recovery that "If the choice is this or nothing, then better this".
As Knowles J said in Commission Recovery, "In a complex world, the demand for legal systems to offer means of collective redress will increase not reduce". We would advise potential defendants to tread carefully: reports of the death of the representative action for data based claims may well be exaggerated.
Authors: Jon Gale and Sophie Law