Lloyd v Google LLC [2021] UKSC 50
This case represents one of a number of funder-backed cases that have reached the Supreme Court, which is in itself a development of concern to funders. A litigation funder never wishes to see a case it funds having to be litigated all the way to the highest Court, but it is often the price to be paid for funding claims that are novel and potentially hugely significant and profitable. As it was, this case spelled the end of the road for the claimant and the funder, Therium, in respect of this type of data breach case. It also provided the Court with the opportunity to take some swipes at funding in general, although to be fair the Court avoided such an opportunity. The particular type of claim at issue was for compensation under the Data Protection Act (DPA) for “loss of control” of personal data without the need to prove that the claimant suffered any financial loss or mental distress as a result of the breach. The characterisation of the claim in this way allowed the claimant to bring the claim on a representative basis on behalf of everyone similarly affected, some 4m people. The Court was clear in its view that in order to recover compensation under the DPA for any given individual, it would be necessary to show both that Google made some unlawful use of personal data relating to that individual and that the individual suffered some damage as a result. The claimant’s attempt to recover compensation under the DPA without proving either matter in any individual case was therefore doomed to fail.
The Court could see no legitimate objection to a representative claim brought to establish whether Google was in breach of the DPA and, if so, seeking a declaration that any member of the represented class who had suffered damage by reason of the breach was entitled to be paid compensation. However, the case had not been pursued on that basis, because success in the first, representative stage of such a process would not itself generate any financial return for the litigation funders or the persons represented. Funding the proceedings would therefore only be economic if pursuing separate damages claims on behalf of those individuals who opted into the second stage of the process would be economic. It was because of this that the claim was pursued as it was, and why it failed. The trial judge made a number of observations concerning the undesirability of the claim, seeing it as “officious litigation, embarked upon on behalf of individuals who have not authorised it” and in which the main beneficiaries of any award of damages would be the funders and the lawyers. In the event, the Court of Appeal took the opposite approach, which goes some way to showing how difficult it is to evaluate the exercise of discretion. The Supreme Court did not need to comment on this view because either outcome would not have influenced the result, since the claim did not get past first base. If one view was to be preferred by the Supreme Court, one had the sense that it would have been the view of the trial judge, but it was not discussed.
The challenge to this case is therefore that sometimes, in order to make a case fundable, it cannot be pursued in the way that gives it the greatest chance of success. It is ironic that the presence of a funder can in fact be counter-productive, but this is an example of a case that bore the hallmarks of a case that was put together for the benefit of the funder, rather than the claimant. This was an unfair characterisation because it was of course put together for the best interests of the claimants who would never have had the chance to pursue their case without funding, but this type of case - where one is seeking to fashion remedies that do not actually fit the facts - is particularly vulnerable to challenge by the defendant. This case had not even passed “Go” in the sense that the argument in the Supreme Court was merely in relation to service of the claim outside the jurisdiction, so it was a very expensive exercise to get an answer in relation to a case that had not really got started. The fact that there had been earlier settlements by Google in respect of similar claims may have meant that the case appeared to have good prospects, but it is equally important to establish that the Court has the ability to hear the case in the way that is proposed.
An issue that did not need to be decided but nonetheless is of critical importance to a funder was whether a funder needs the consent of each person represented before receiving a distribution. This raises the concern that a funder would need to essentially operate an “opt-in” model by the back door - because otherwise it would not be possible to gain consent to allow for a distribution. Such an outcome would almost inevitably mean that a funder would not wish to engage in the representative action from the outset.