High Court rules on cut-off dates and the costs of advertising in group litigation in Weaver v British Airways

On 2 February 2021, the High Court handed down judgment in a procedural hearing in litigation concerning British Airways’ 2018 data breach (Weaver v British Airways Plc [2021] EWHC 2017 (QB, available here). Following the data breach, a number of claimant law firms have promoted “no win/no fee” arrangements for data subjects to join claims against British Airways (“BA”) that are being pursued under a Group Litigation Order (“GLO”). The present judgment concerns two practical issues that arise in these “book builds”. First, the approach the Court will take to potentially extending the “cut-off” date in GLOs. Second, on the recoverability of advertising expenditure by claimant law firms.

Background

The claims allege that BA’s systems had failed to put in place appropriate security measures to prevent the cyber-attack, in breach of the General Data Protection Regulation 2016/769 and/or certain contractual obligations owed to the claimants and/or a breach of confidence, and that as a result of the cyber-attack the claimants had suffered various harms (including pecuniary loss and/or distress and/or loss of control of data).

In June 2019, BA issued an application for a GLO. The Court granted the GLO in October 2019, which provided that any claimant to the litigation had to have issued and served a claim form (or have been named on an issued and served claim form) by 17 January 2021 (the “Cut-off Date”). A Cut-off date is the deadline by which additional claimants can join the GLO by right. Cut-off dates serve several purposes, encouraging potential claimants to join a claim -- often well in advance of the limitation period -- and so can assist on case management. This can give the defendant(s) visibility on the size of the case they are facing. It is possible for claimants to join a GLO after the Cut-off date, albeit they need to apply to the Court. The parties to the BA claims subsequently agreed to extend the Cut-off Date to 3 April 2021.

The present judgment concerned two matters. First, an application by the claimants to further extend the Cut-off Date to summer 2022, being one year after the proposed trial on liability. Second, to rule on the recoverability of the claimants’ advertising costs to recruit potential claimants in the amount of £443,000, as well as future advertising costs estimated at £557,000 concerning publication of the claims in the media.

Judgment

Cut-off Date

In considering the relevant case law and the Civil Procedure Rules, the Court pointed out that there was no requirement to order a Cut-off date, and any decision to maintain or vary the Cut-off Date concerned issues of pragmatic case management.

The Court also found that the claimants needed to establish some “development or feature” to justify the extension of the Cut-Off Date, and in doing so the Court would have regard to the procedural history of the claim. However, the Court also accepted that, if the variation of a Cut-off date would help to achieve a fair outcome, then any prior agreement between the parties, in principle, should not stand in the way of that variation.

The Court went on to consider both parties’ submissions, agreeing with the claimants that on the evidence, an extension to the Cut-off Date was necessary as a matter of access to justice for those who might wish to join the group litigation.

However, the Court also recognised that, as a matter of principle, even if the claim was only at the liability stage, BA was still entitled to know the extent of its potential exposure in the claim (the size and extent of a claimant group) given the impact that this would have on the strategy of a party in BA’s position, in its decisions to deploy resources and in any settlement discussions.

In assessing a fair balance between the need to uphold the “certainty principle” with a need to ensure access to justice, the Court ruled an extension of two months to the existing Cut-off Date to allow the claimant solicitors’ to benefit from their recent advertising efforts. The Court observed that new claimants would not necessarily be barred beyond the Cut-off Date as they could make an application to join the GLO beyond this point.

Advertising costs

BA contended that the claimants’ advertising costs were not recoverable as a matter of law. The Court agreed with that submission, citing the Court of Appeal’s decision Motto v Trafigura [2012] 1 WLR 657 (CA), which found that: “the expenses of getting business, whether advertising to the public as potential clients….should not normally be treated as… payable by the ultimate clients or clients” and that they should instead be treated as part of a solicitor’s general overheads.

Whilst the Court accepted that those costs had arisen in the context of a GLO, the Court noted that they were costs of “getting the business in” and as such, ruled that they would not be recoverable from BA if the claimants succeeded in the litigation.

Comment

Group litigation and GLO claims raise a range of practical issues. On the one hand, claimant law firms welcome the incentive and “burning bridge” that a Cut-off date creates in encouraging potential claimants to commit to joining a claim, but when the Cut-off date approaches the claimant law firm often prefers an extension in order to continue bookbuilding. In this case, the Court took a pragmatic view. It permitted a two month extension so that the claimant law firm could benefit from its recent expenditure on advertising the claim, but it was significantly influenced by BA’s arguments that visibility on the size of the claim it is facing would be relevant in any discussions on settlement. Running large bookbuild projects is an expensive process and confirmation that advertising costs cannot be recovered will be unwelcome news to claimant law firms. The viability of these claims often depends on signing up large numbers of claimants in order to reach critical mass, and advertising is clearly a useful tool for this purpose.

Increasing numbers of claims are being filed using “U.S.-style” opt-out class action devices, which are available in the UK for competition claims and in England and Wales for data protection claims seeking loss of control damages (pending the Supreme Court appeal in Lloyd v Google). That said, opt-in mechanisms continue to be used following other mass-harm events such as product liability claims and data breaches where damages are sought for pecuniary losses or distress. Accordingly, the practicalities of bookbuilding will continue to have an important bearing on defendant exposure for the foreseeable future.