Update: Competition Appeals Tribunal – Liza Lovdahl Gormsen v Meta Platform Inc. and Others, Johnson Zhuang

Introduction

We shared our thoughts on the UK Competition Appeals Tribunal (“CAT”) hearing in this matter here. The CAT has now released its judgment in relation to the proposed class action, brought by Dr Liza Gormsen, on behalf of approximately 45 million Facebook users. In its 46-page judgment, the CAT:

highlighted various defects and issues with the proposed causes of action;
raised particular concerns about the methodology proposed to measure the purported damage suffered by the claimant class; and
stayed the proceedings for a further six months to allow Dr Gormsen (as the proposed class representative) to further refine and amend the methodology proposed to prove any damage suffered by the claimant class.

Judgment

The CAT highlighted its concerns with the expert methodology proposed by Dr Gormsen’s expert witness and went on to say that it was not convinced that the claim in its current iteration would be able to produce a case capable of being tested at trial.

Referring to the three key causes of actions against Facebook:

On the “unfair data requirement”, the CAT described the cause of action as “vague”. It accepted Meta’s submissions that the cause of action as articulated in the claim form, was “coy” about the nature of loss arising from the cause of action. Furthermore, the CAT noted that the remedy sought for the cause of action was for the recovery of the gain accrued from the alleged “unlawful conduct” of Meta, rather than the actual loss suffered by class. The CAT went on to say later in its judgment, “competition law does not operate a form of compensation based upon the recoupment or clawing back of unlawful gains: it compensates for loss”.
On the “unfair price”, the CAT did not accept the preliminary arguments made that Facebook was demanding an “unfair price” for the use of the platform. Rather, it likened the exchange to a form of barter, saying “there is no monetary consideration, but there is consideration”. The CAT did not address this cause of action in detail, but said that if the cause of action were to continue, there could only be three possible outcomes for this cause of action: i) there was no abusive price, ii) the price was abusive and Meta was charging too much, or iii) the price was too low, and the proposed class of claimants were “free loading”, and Meta should have been charging for the service.
On the “unfair trading conditions”, the CAT had trouble accepting the cause of action, as articulated in the claim form. It firstly raised a question on whether it has jurisdiction to consider the cause of action under the Chapter II prohibition. Jurisdiction point aside, it instead opined that in order to make the “unfair trading conditions” allegations arguable in the CAT, they must have arisen from the Facebook terms and conditions being misleading. However, even if the cause of action was amended to make it triable, it was likely that further difficulties would arise, including i) what the appropriate and correct measure of damages would be for the new “misrepresentation” cause of action, and ii) the fact that there was not already a negligent or fraudulent misrepresentation cause of action. The omission of latter weakening any potential argument that there is a triable misrepresentation cause of action.

The CAT stayed the proceedings for six months to allow Dr Gormsen to reassess and amend the causes of action in light of its initial analysis. If a new, “workable blueprint leading to an effective trial” of the issues cannot be produced, the CAT will lift the stay and reject the application.

Next steps from here

This latest judgment gives Meta a bit of breathing space in the CAT. The decision reaffirms that there are proving to be inherent difficulties in bringing these types of opt-out, representative action for claims related to personal data processed by large, multi-national tech-giants.

While there remains time on the clock for Dr Gormsen to re-evaluate the causes of action, and make them triable, the proposed claimant class still faces well-established issues: how should the value of data be properly quantified, and how should consumers be compensated for “giving up” their personal data that Facebook monetises for advertising. It is clear that there continue to be fundamental difficulties in applying these traditional legal principles in a developing area of concern in the modern world.

Dr Gormsen, as class representative, will need to file additional evidence, or apply for an extension before 20 August 2023.