Reparations for immaterial damage under the GDPR: A new context
Written by Giorgos Arsenis*
A court in Austria sentenced a company to 800 Euros of compensation-payment towards a data-subject, for reasons of immaterial (emotional) harm, according to article 82 of the GDPR (General Data Protection Regulation). The verdict is not in force yet, since both parties have appealed the decision, but in case the verdict will remain unchanged in the second instance, then the company might be facing a mass lawsuit, where about 2 million data-subjects are involved.
The case has gained momentum since its outcome will constitute a legal paradigm, upon which future cases will be based. But let’s take a step back and have a broader look at this verdict and the consequences this application of article 82 might have towards the justice systems of other members of the European Union.
The fact that a Post Office gathers and saves personal data of its customers is nothing new. But after a data-subject’s request, it was revealed that Austria’s Post, allegedly, evaluated and stored data that concerned the political preferences of approximately 2 million of its clients.
The said company used statistical methods such as profiling, aiming to estimate the level of affinity of a person towards an Austrian political party (e.g. significant possibility of affinity for party A, insignificant possibility of affinity for party B). According to media, it appears that none of the customers had provided their consent for this processing activity and in certain cases that information was acquired by further entities.
Immaterial harm has a price
The local court of Feldkirch in Voralberg, a confederate state of Austria bordering with Lichtenstein, where the hearing took place in the first instance, ruled that the sheer feeling of distress sensed by the claimant due to the profiling he was subjected to without his consent, constitutes immaterial harm. Therefore, the accuser was awarded 800 Euros, from the 2.500 Euros he claimed initially.
The court acknowledged that the political beliefs of a person are a special category of personal data, according to article 9 of GDPR. However, it also acknowledged that every situation perceived as unfavorable treatment, cannot give rise for compensation claims based on moral damages. Nevertheless, the court concluded that in this case, fundamental rights of the data-subject had been violated.
The calculation of the compensation was based on a method that applies in Austria. In line with that method, the court took two main elements into account: (1) that political opinions are an especially sensitive category of personal data and (2) that the processing activity was conducted without the awareness of the data-subject.
The verdict is no surprise. Article 82 § 1 of the GDPR clearly foresees compensation payment for immaterial harm. However, with 2,2 million data-subjects affected from this processing activity and simply by doing the math, what derives is the amount of 1,7 billion Euros. Certain is, that if the court of appeal confirms the decision, there will be a plethora of similar cases for litigation. This is the reason why already, in neighbouring Germany, many companies specialize in cases like this.
The Independent Authority
After the decision of the local court in Feldkirch in the beginning of October 2019, towards the end of the same month (29.10.2019) the Austrian Data Protection Authority (Österreichische Datenschutzbehörde), announced that an administrative sanction of 18 million Euros was imposed to the Austrian Postal Service. Beyond political beliefs, the independent authority detected more violations. Via further processing, evidence about the frequency of package deliveries or residence change were obtained, which were used as means for direct-marketing advertisement. The Austrian Postal Service, which by half belongs to the state, reported that it will take legal action against this administrative measure and justified the purpose of the processing activities as legitimate market analysis.
What makes the verdict distinctive
The verdict in Feldkirch shows that the courts are able to impose fines for certain “adversities” caused by real or hypothetical violations of personal data.
Unlike the independent authority, that imposed the administrative sanction due to multiple violations of the GDPR-clauses, the local court in Feldkirch focused on the ‘disturbance’ sensed by the complainant.
The complainant simply stated that he ‘felt disturbed’ for what happened, i.e. without pleading a moral damage resulting from the processing activity, such as defamation, copyright abuse or harassment by phone calls or emails. The moral damage was induced by the fact that a company is processing personal data in an unlawful manner.
You can find the decision here.
* Giorgos Arsenis is an IT Consultant και DPO. He has long-standing experience in IT Systems Implementation & Maintenance, in a number of countries in Europe. He has been active for agencies and institutions of the EU and in the private sector. He is qualified in servers, networks, scientific modelling and virtual machine environments. Freelancer, specializes on Information Security Management Systems and Personal Data Protection.