News Update Class Actions

The Amsterdam Court of Appeal recently declared the class action brought by The Privacy Collective foundation ("TPC") on behalf of ten million Dutch internet users against tech companies Oracle and Salesforce admissible. The EUR 10 billion claim for non-material damage for privacy violations will now be assessed on the merits.

The proceedings at first instance

TPC accused Oracle and Salesforce of collecting and processing personal data of internet users for commercial purposes as part of their Data Management Platform service. TPC claimed damages totalling EUR 10 billion (EUR 5 billion each) from Oracle and Salesforce, or at least EUR 500 per internet user, in tort and under Article 82 GDPR. Article 3:305a of the Dutch Civil Code ("DCC") (WAMCA) applies to this class action.

The Amsterdam District Court declared TPC's claims inadmissible in December 2021 because TPC was not sufficiently representative. TPC had not sufficiently substantiated how many internet users actually supported the class action and the size of the claim. While TPC had obtained 75,000 'likes' from internet users to express their support via a 'support button' on its website, the information provided with the button was insufficient and it was not clear what was supported. Also, TPC had not registered the details of those who expressed their support, so it could not confirm whether they belonged to its constituency. Moreover, the lack of this data prevented TPC from involving the beneficiaries in the decision-making process on the class action. It therefore also failed to meet the requirements of transparency and governance. The Court found expressions of support from other privacy organisations irrelevant in this context.

The appeal proceedings

Unlike the Amsterdam District Court, the Amsterdam Court of Appeal found TPC's claims admissible. First, the Court of Appeal considered that the question whether the claims were admissible should be assessed according to the time of the oral hearing in appeal (ex nunc) and not according to the time of filing the claim in first instance (ex tunc). The Court of Appeal also assessed whether the various admissibility requirements of Article 3:305a DCC had been met. Below, we discuss the findings regarding the governance, similarity of interests and representativeness.

Governance and relation to funder

At the time the appeal was lodged, TPC had neither a full board of directors nor a full supervisory board. The director who decided to file the appeal was allowed to do so under the articles of association but had been appointed on the external funder's (Innsworth Capital) recommendation. However, at the time of the hearing, TPC had a new full board, which was pursuing the appeal, and a full supervisory board. The governance requirements had therefore been met (ex nunc). The Court of Appeal also decided that it is permissible for the funder's shareholder to also hold shares in Oracle, even under the Representative Actions Directive. Furthermore, the Court of Appeal did not consider the submission of the funding agreement necessary, as at this stage of the proceedings it was sufficiently plausible that the interests of the funder and TPC are completely parallel.

Similar interests

TPC had argued that every internet user whose personal data was processed by Oracle and Salesforce suffers non-material damage, which in all cases can be estimated at EUR 500. The Court of Appeal considered that both Dutch damages law and Article 82 GDPR require that actual damage is suffered for damages to be awarded. Punitive damages cannot be awarded on either ground. The Court of Appeal acknowledged that there may be very large individual differences between the beneficiaries. At present, to what extent they have suffered damage cannot be determined. Moreover, the Court of Appeal considered it very possible that some beneficiaries may not have suffered non-material damage at all.

Nevertheless, the Court of Appeal ruled that the damages claims could be assessed in a class action. The claims are based on the same breach of standards. The damages can be categorised, a possibility expressed under the WAMCA. In the alternative, TPC also claimed compensation for damage to be determined in follow-up proceedings. The Court of Appeal therefore held that the damages claims met the similarity requirement. The Court of Appeal added that it is efficient to decide on potential damages in a class action, and this aligns with the WAMCA's rationale. 

These findings go beyond the Amsterdam District Court's ruling in the case against Allergan and Abbvie on the alleged harmful effects of Biocell breast implants. The Court had considered that according to the Dutch Supreme Court, the right to compensation for non-material damage is of a highly personal nature and cannot be "more or less fixed". However, this did not preclude the admissibility of the claims for non-material damage, as the Court could not rule out beforehand that the existence of non-material damage of at least a certain amount was plausible for the beneficiaries. The Court deferred the final answer to the question whether a collective assessment of those claims was possible to the substantive phase of the proceedings. In the TikTok case, the Amsterdam District Court ruled that the claims for compensation for non-material damage were inadmissible, because they could not be bundled. For bundling to take place, the adverse consequences had to be clear for all beneficiaries, the Court ruled, and this was not the case. 

Representativeness and participation

The Court of Appeal first considered that Article 3:305a DCC does not set a numerical criterion for representativeness in terms of a certain number of declarations of support for the class action. The Court of Appeal deemed sufficient that a non-negligible number of interested internet users supported the class action. Unlike the District Court, the Court of Appeal considered the support of civil society organisations relevant. The 'likes' via the TPC website also indicated that although not a large number, a considerable number of natural persons supported the action. The Court of Appeal also noted that the website has now been set up in such a way that it is clear to whom the action is directed and what it is about. 

The Court of Appeal did not find the anonymity of the internet users' support a problem, as the law does not require their details to be registered. It ruled that the measures taken by TPC regarding the ability to consult the beneficiaries were sufficient. TPC provides information through its website, newsletters and 'Ask Me Anything' sessions on Reddit. It also keeps in touch with them through a focus group of about ten people and the supporting civil society organisations, which also have their own constituencies. 

Given the law and previous rulings, the Court of Appeal assumed representativeness relatively easily. Oracle and Salesforce had argued that there were hardly any new likes during the appeal process. If true, it remains that most likes were given anonymously while the website did not make it sufficiently clear for which action the support was given. Also, the number of likes (75,000) compared to the stated constituency of ten million Dutch internet users is rather small (0.75%). In the class action against Allergan, for example, 10% of the beneficiaries had expressed their support for the action. Moreover, these women had provided their details, submitted evidence and signed a participant agreement. Similarly, in the TikTok case, beneficiaries left their details when signing up with the claim organisations. The percentages of beneficiaries who had joined the claim organisations ranged from 8.7% to 1%. After extensive reasoning, the Amsterdam District Court found this sufficient for the claim organisations to be representative. 

The Court of Appeal seems to give most weight to the fact that established civil society organisations support this class action. However, this requirement is not mentioned in Article 3:305a DCC and has so far been invoked as a means to substantiate representativeness in public interest actions, where a numerical substantiation is often difficult. 

Further course of proceedings

The question now is whether the Court of Appeal will decide the case on the merits or refer it back to the Amsterdam District Court. According to the prevailing legal doctrine, a case can be referred back only by exception. The situation in which a claim organisation successfully appeals the District Court's inadmissibility judgment under Article 3:305a DCC is not yet among those exceptions. However, the Court of Appeal recently referred another class action back to the Amsterdam District Court after the collective claims were declared admissible.

Sign up for the News Update Class Actions.