Last week I highlighted the important decision handed down by Mr Justice Langstaff sitting in the English High Court in the case of Various Claimants v WM Morrisons Supermarket PLC  EWHC 3113 (QB). In that blog post I stated that the judgment was lengthy and would take some time to properly read and digest and that I would cover the judgment in much more detail in due course. It has indeed taken some time to read and digest, but I am now in a position to bring readers a much more in-depth consideration of the judgment.
The facts sitting behind the Morrisons decision are stark. An employee of the Defendants, Andrew Skelton, ran a business on the side. His business was connected to the slimming industry and involved him sending a perfectly legal drug, which was in the form of a white powder. On 20th May 2013, Mr Skelton left a pre-paid package with Morrisons’ mail room which contained this white powder. While the package was being handled by staff in the mail room it burst open and some of the contents spilled out. This triggered a process within Morrisons that could have resulted in the mail room being closed; however, that was not necessary.
Mr Skelton was eventually disciplined by Morrisons in connection with this incident. He had committed no criminal offences in connection with the incident: the drug was perfectly legal and he had paid for the postage himself. However, Morrisons decided that his conduct was not in keeping with their values and issued him with a verbal warning. Mr. Skelton disagreed with this sanction and utilised the company’s internal appeals process to appeal the disciplinary decision; that appeal was unsuccessful. Mr Skelton took exception to the way in which we was treated and began to embark upon a criminal enterprise which was designed to damage the Defendants.
Mr Skelton was employed as an IT internal auditor within Morrisons. This meant that he was highly literate in IT and also meant that he had access to personal data. It is not necessary to go into the facts in much more detail. It is suffice to say that in the course of his employment with Morrsions, Mr. Skelton lawfully processed personal data which had been extracted from the company’s payroll software.
As part of his nefarious endeavour, Mr. Skelton made a personal copy of the personal data and proceeded to post it onto the internet in January 2014. By this time, Mr. Skelton had left Morrisons (having resigned). By March 2014, the fact that vast quantities of personal data from Morrisons’ payroll software had been posted onto the internet had not been discovered. Mr. Skelton then, anonymously, sent a CD of the personal data to a number of local newspapers including a link to where the personal data had been posted. One of the local newspapers altered Morrisons to the publication of the personal data and Morrisons took steps to have it removed and to investigate matters.
Ultimately, Mr. Skelton was arrested and charged with various offences under both the Data Protection Act 1998 and the Fraud Act 2006. He was later convicted and sentenced to a period of imprisonment. With that context now set out, it is time to turn to the civil claim brought by over 5,000 of the affected data subjects against Morrisons.
The claimants effectively argued two primary positions: (1) that Morrisons was directly liable for the breach arising out of its own acts and omissions; and (2) alternatively, that Morrisons was vicariously liable in respect of Mr. Skelton’s actions.
In advancing the case for primary liability, Counsel for the Claimants argued that Morrisons was at all material times the data controller of the payroll data which Mr. Skelton had misused for his criminal enterprise. This argument was repelled by Langstaff J. Mr Justice Langstaff concluded that by taking it upon himself to decide that he was going to copy the personal data and place it on the internet, Mr. Skelton had put himself into the position of deciding what personal data would be processed and the purposes for which it would be processed. Mr. Skelton was therefore the data controller, not Morrisons. It was therefore Mr. Skelton’s actions that were in breach of the Data Protection Principles rather than the actions of Morrisons.
The rejection of the primary liability then brought Mr Justice Langstaff onto the question of secondary liability. Could Morrisons be held as being vicariously liable for the actions of Mr. Skelton, and if so, were they vicariously liable for the actions of Mr. Skelton? Mr Justice Langstaff decided that Morrisons could, and indeed were, vicariously liable for the actions of Mr. Skelton in publically disclosing the Claimants’ personal data on the internet. In reaching this conclusion, Mr Justice Langstaff has seemingly reached two contradictory conclusions: that Mr. Skelton was acting independently of Morrisons (thus making him a data controller in his own right) while at the same time holding that Mr. Skelton was acting in the course of his employment (thus opening the door for viacarious liability to attach to Morrisons). These are not necessarily easy to reconcile and as a consequence it may well end up in the Court of Appeal (or indeed, possibly even the Supreme Court) in due course. Morrisons have, as I previously noted, been granted permission to appeal the vicarious liability finding to the Court of Appeal by Langstaff J.
The Defendants essentially attacked the vicarious liability position using a three pronged approach. First, they argued, that the statutory scheme of the Data Protection Act 1998 excluded the possibility of there being vicarious liability at common law. Their second prong was very much based upon the premise of their first: they argued that if the statute impliedly excluded vicarious liability, it would not be constitutionally possible for the courts to impute such liability into the scheme. The third prong of their attack was based on Mr. Skelton acting as his own independent data controller. If he was so acting, the Defendants argued; then he could not also be acting in the course of his employment such as to make Morrisons vicariously liable for his actions.
Langstaff J, in holding that Morrisons were vicariously liable, looked closely at the timeline of events which had occurred. Mr Justice Langstaff took the view that “what happened was a seamless and continuous sequence of events” [para 183]. The actions of Mr. Skelton as an independent data controller were sufficiently linked to his employment at Morrisons so as to have the result of Morrisons being vicariously liable for his actions as an independent data controller.
It is clear from paragraph 196 of the judgment that Langstaff J was troubled by the conclusions that he had reached. One point was singled out for particular attention as the one which “most troubled” him; that was that by finding Morrisons as being vicariously liable he had in effect assisted Mr. Skelton in his criminal endeavours. The ultimate aim of Mr. Skelton’s nefarious activities was to cause harm to Morrisons; a finding of vicarious liability for the distress caused by the data subjects opens up the possibility that each and every single one of those affected will seek compensation from Morrisons. Even if the payments to each data subject are low; if they end up having to be made to the approximately 10,000 employees who were affected the financial burden to Morrisons is not going to be insignificant. That will represent a harm caused to Morrisons; perhaps harm that was not envisaged by Mr. Skelton when he started upon his nefarious activities; however, it is a harm that will be suffered by Morrisons arising. The ultimate aim of Mr. Skelton’s nefarious activities was to cause harm to Morrisons; a finding of vicarious liability for the distress caused by the data subjects opens up the possibility that each and every single one of those affected will seek compensation from Morrisons. Even if the payments to each data subject are low; if they end up having to be made to the approximately 10,000 employees who were affected the financial burdern to Morrisons is not going to be insignificant.
It remains to be seen whether Morrisons will appeal the judgement; they already have permission to take the matter to the Court of Appeal. Of course, the judgment of Lansgatff J is not binding upon any court in Scotland; however, it will likely be considered as persuasive authority in both the Sheriff Court and the Court of Session. Data Controllers in Scotland should pay as much attention to the case as those based in England and Wales.
If you would like to discuss an issue related to data protection, or any other information law matter, then contact Alistair Sloan on 0345 450 0123. Alternatively, you can send him an E-mail.