Amsterdam Court of Appeal provides key decision regarding WAMCA admissibility requirements

The Amsterdam Court of Appeal (“Court of Appeal”) has provided guidance for future Dutch mass tort cases in its decision in the matter between The Privacy Collective (“TPC”) and Oracle and Salesforce. In this blog, we will focus on two key lessons regarding admissibility.

• First,  the Court of Appeal finds that the condition of sufficient representativeness can be fulfilled if a non-negligible number of persons within the group supports the case, and that no hard absolute or relative numbers are set on what constitutes ‘sufficient’ support. Importantly, the Court of Appeal also finds that ‘likes’ and the support of other civil society organizations can evidence representativeness.
• Second, the Court of Appeals confirms that claims can be bundled and are sufficiently ‘similar’ even if the level of damage suffered by group members differs, as the Dutch Resolution of Mass Damages in Collective Actions Act (“WAMCA”) allows the court to categorize. This entails that a WAMCA claim can be admissible, also if a part of the to be represented group may suffer zero damage.

Background

TPC has initiated a collective action against Oracle and Salesforce on the basis of the WAMCA. TPC amongst other things asserts that Oracle and Salesforce illegally process personal data of approximately 10 million internet users living in the Netherlands. This constitutes an unlawful act according to the claimant. Various legal claims are made, including a damages claim of EUR 500.- per internet user in the Netherlands. In the aggregate, this amounts to a multibillion euro claim.

The Amsterdam District Court (“District Court”) found TPCs claims inadmissible. According to the District Court, TPC is not sufficiently representative to represent the proposed group of injured parties. Although the WAMCA is an opt-out system, the claimant must show that it has support from at least a part of the group that it proposes to represent. The alleged 75.000 ‘likes’ that TPC had gathered via its website were insufficient according to the District Court, because insufficient information was provided about the case in the context of the ‘like button’ on the website. Also, TPC didn’t register contact and other details of the individuals ‘liking’ the action. Thus TPC could not establish whether these people belonged to the group it purportedly represented, and the District Court found that this is at odds with governance requirements under the WAMCA legislation. Furthermore, and in a surprising twist for many WAMCA practitioners, the District Court found that the support of civil society organizations does not contribute to TPC being sufficiently representative.

Amsterdam Court of Appeal

TPC entered an appeal against these decisions. This appeal is successful and the Court of Appeal has overturned the District Court decision. As a preliminary point, the higher court confirms that the admissibility test is to be performed ex nunc (as of now). Thus, the question is whether TPC fulfils the admissibility requirements now, meaning as of the time of the hearing in appeal, instead of ex tunc (as of then, e.g. the hearing at the District Court). The Court of Appeal further decides that TPC fulfills all admissibility requirements.

The “sufficiently representativeness” requirement

With respect to the requirement that a representative organization (i.e.: a claimant in a WAMCA proceeding) is sufficiently representative, the Court of Appeal finds as follows. It is not necessary to be able to determine exactly who constitutes the plaintiff’s constituency. Instead, it is sufficient that a constituency exists, meaning that a non-negligible number of persons belonging to the group support the action. In this context it is relevant that civil society organizations (such as large consumer organizations) support the collective action.

This is in our view the only correct interpretation. Of course such support should ‘count’ as evidence of representativeness. The Court of Appeal adds that in this particular case the ‘likes’ show that quite a number of natural persons support the action. This therefore is added evidence of representativeness of the claimant. Moreover, TPC has made effective use of the ex nunc test: it has properly amended the TPC website, ensuring that it is clear against which companies the claim has been initiated and what it is about. Therefore there no longer is a governance issue.

Similarity requirement

The similarity requirement is also fulfilled, with the collective action being more efficient and effective than group members bringing individual actions because the factual and legal issues are sufficiently similar. This is the case for all claims of TPC, including the damages claims – the latter having been heavily contested by the defendants.

The Court of Appeal further finds that because immaterial damages are generally highly dependent on the circumstances and the individual, it is quite possible that some members of the constituency may not have suffered immaterial damages at all. However, this does not mean that the similarity requirement is not met. The Court of Appeal notes that the legislative history of the WAMCA shows that the legislator appreciated that not all members of the constituency may have suffered equal damages. Therefore, the legislator has made it possible to categorize between different persons within the group, and the WAMCA allows for a categorization where a subgroup may have no damage. The Court of Appeal adds that TPC also – alternatively – claimed referral to damage assessment proceedings. This is relevant, because a bifurcation can lead to a claim being admissible sooner. This is due to the fact that the legal test for liability is different, and lower, in case of  bifurcated proceedings. The plaintiff at a liability stage only needs to show that there is a plausible chance that damage has been suffered by the represented group.

Impact on legal practice

By providing this clear and convincing decision regarding ‘sufficient representativeness’ and ‘similarity’, the Court of Appeal provides important guidance for future WAMCA damages cases. We anticipate that with this legal precedent in hand more claimants in WAMCAs will have admissible claims, because the legal test is more lenient than the previous precedent set by the District Court. Moreover, claimants will now know better how to ex nunc structure their governance and bookbuilding operations to ensure admissibility.

Contact Lindenbaum to learn more

The attorneys at Lindenbaum have been litigation counsel in in several of the leading collective actions in the Netherlands and Europe. Do not hesitate to contact one of our experts.