A High Court decision granted Claimants only £2 in damages for stolen Company data
How much is too little in damages?
In a recent and enlightening decision, Marathon Asset Management LLP & Others v Seddon & Others, the High Court ruled that the Claimants were only entitled to £2 in compensation, having claimed £15 million for stolen data by former employees.
The facts in this case are relatively straightforward.
Marathon Asset Management is an investment management business based in London. One of the Company’s three founders (Mr Seddon), and his employee (Mr Bridgeman), left the Company to set up a competing business.
Mr Seddon admitted to saving files containing information about Marathon’s business on a shared drive. The files were downloaded and retained onto USB by Mr Bridgeman who had also copied other confidential information. It was claimed that around 40,000 files worth of material was taken, without permission of the Marathon.
The Defendants asserted that they did not access and use the files after they left employment. The Defendants also said they had only taken data which was made publicly available. Nonetheless, the Claimants were aggrieved and said the Defendants should be sued for the value of what they had taken rather than for the actual gain from stealing the data. The Claimants relied on the principle that if you take something, you should pay for it, i.e. that damages should be payable for the mere fact that, effectively, something of value had been stolen.
Understandably, the Claimants considered the Defendants’ actions to be unlawful and dishonest and claimed the total sum of £15 million, representing the value of the stolen data.
The Court found the Defendants guilty for breaching their contract of employment by copying and retaining files belonging to the Claimant.
However, Mr Justice Leggatt ruled that there was no injury sustained for which Marathon should be entitled to such a significant amount of compensation in damages. The Judge said:
‘In circumstances where the misuse of confidential information by the defendants has neither caused Marathon to suffer any financial loss nor resulted in the defendants makes any financial gain, it is hard to see how Marathon could be entitled to any remedy other than an award of nominal damages.’
He also added that:
‘The law does not compensate people for being exposed to a risk of injury.’
It was held that the Claimants were only entitled to nominal damages of £1 from each of the Defendants to compensate for wrongdoing and not as a result of suffering financial loss from the stolen data.
Comment: What are the lessons learned?
As the judgment demonstrates, it is difficult to actually establish the value for the use of material which had been taken. It was interesting that the Judge did not award £15 million in damages having noted Marathon lost important and confidential data to a competing business. It appears that the Judge took the Wroxham Park damages approach in that the Judge did not quantify how much the aggrieved party lost or how much the wrongdoer had gained.
The decision is likely to raise concerns amongst litigators who may discourage Claimants from seeking damages where it is difficult to show any loss had been sustained, or that the improperly obtained data had been used. Claimants should carefully consider whether or not it is in their interests to bring a huge claim for damages. As we have seen, it could be detrimental to a Claimant who could incur significant legal expenses to pursue a potentially unsuccessful claim. The decision may act to encourage more settlement negotiations.
This may not be the end of the matter however, as the Supreme Court is likely to consider this Judgment in detail in the upcoming case of One Step v Morris Garner and may further clarify the law in this area.
You can read the Judgment in full via this link: http://www.bailii.org/ew/cases/EWHC/Comm/2017/300.html
How can Askews help you?
Askews Legal LLP solicitors has a dedicated team of Litigation specialists who can assist with any legal action required. For further advice or to obtain a quote, please contact Kuljeet Sandhu at Askews Legal LLP
E: KSandhu(at)askewslegal.co T: 024 76 231000
Askews Legal LLP – Solicitors Coventry.