Legal beavers... question of where to look or what to look for...

Myranda

Situation: A friend had a computer which failed in some way (he suspects a hard drive failure). The manufacturer didn't want to replace and recover data, so it was returned to the shop (Amazon) for a refund. On the drive was an Ethereum keychain for about £7,000.

So I'm googling for any kind of case-law which suggests that the failure of the drive and the unwillingness to offer recovery of date could in any way be seen as the cause of the loss of data with direct financial value.

My thought is that it's a "you're f***ed" position. Drives fail, personally I'd imagine that The Man On The Clapham Omnibus would know to backup family photos, let alone something that's advertised to be secure and irreplaceable like a keychain key... but then I'm literally trained to be an Expert Witness in matters of computer data storage and computer forensics, so I'm not an ordinary user and don't think like one, and arguably I couldn't even (legally speaking) speculate on what they MIGHT think ... and the computer manufacturer offered to repair the system (though without recovery, is that just replacing defective hard drive? Well that wont return the data)... 

Searches including the words loss and data get a squillion legal arguments or case-law examples concerning personal data and data-breaches but focusing it down to cryptocurrency is proving impossible...

So I put it to the legal minds - is there any way in which data stored on a computer which is lost due to the computer failing (under warranty) is in some way the liability of the manufacturer? Given the amount my friend understandably doesn't want to write it off, but given the size of claim it's a £410 fee just to file it with the small claims court and potentially more when it hits a judges desk if it progresses so it's not unsubstantial cost (given that invested money was already lost)

What I can find of ASUS warranty pages all say they accept no liability for data lost - but it's unclear as to the jurisdiction of those warranties as the UK sight needs you to register a serial number to read their warranty, and just because they put it in a contract doesn't mean it's not in violation of UK law so would only be a guide... in google scholar I can only find US cases talking about the 14th amendment, and articles about the legality of cryptocurrencies in general or in relation to tax... but arguable they're a semi-tangible asset so something on a computer has genuine value.

My other question would be - should he go down this route (if there's a reasonable chance of success) does he have to prove in any way the amount of Ethereum lost? The only (easily accessible) place that stores the contents of his wallet would be the wallet he can't access (less easily is within the Keychain itself - the data exists to ensure transactions so there is a record of it, but how accessible to the company is probably strictly confidential and likely they can only show transactions were made ...) so this is an area of law that could be open to exploitation, as such I'd imagine it is very complicated - not least because judges wont be experts on the workings of cryptocurrency and even the workings (or failings) of a hard drive are unlikely to be something they understand well, and with small claims courts not being the expert witness area due to costs it seems likely to be too complicated for some.

So... yeah. Thoughts? 

Emp_Fab

My thought is also "he's f*cked".  More f*cked than a chicken with a limp on an island full of starving baboons who love chicken.  Regardless of the validity of his claim, can you imagine what floodgates would be opened if any court found the manufacturer responsible for data loss ?  Can you imagine the legal resources Global Megacorp Hardware inc would put into defending their case ?

In short, in my considered and utterly unqualified opinion, he stands a better chance of securing combined judgement against The Queen for conspiracy to murder Diana and Tony Blair for war crimes AND getting Rose West pardoned, all on the same day...  Christmas Day.  

Myranda

Emp_Fab said:

My thought is also "he's f*cked".  More f*cked than a chicken with a limp on an island full of starving baboons who love chicken.  Regardless of the validity of his claim, can you imagine what floodgates would be opened if any court found the manufacturer responsible for data loss ?  Can you imagine the legal resources Global Megacorp Hardware inc would put into defending their case ?

In short, in my considered and utterly unqualified opinion, he stands a better chance of securing combined judgement against The Queen for conspiracy to murder Diana and Tony Blair for war crimes AND getting Rose West pardoned, all on the same day.

Well, small claims don't (can't?) set legal precedent - though, a few smaller cases might be seen as a signal to try a case in proper court... manufacturers would make that case a carnival of experts... cheaper to pay anyone who has ever talked about hard drives and data anywhere ever to testify that it's not possible to guarantee data on a drive by drive basis, than in would be to lose cases like that...

But in the small claims court... anything can go if the judge says so

kaypeejay

Surely Legal Eagles? 

monquixote

Backing up drives is your responsibility.

If he had data on one drive and lost it that's his problem.

Troy

What about sending it to a data recovery company? Sure, it's expensive but will be less then what he's lost

ennspek

I suspect he's got no chance legally in terms of the data.

fretmeister

Read the warranty paperwork.

I'll get you a shiny pound there is a specific clause in there that prevents claiming for anything other than the cost of a replacement drive.

crunchman

Don't know what brand of hard drive it is but I found this on the Seagate website:

What Does This Limited Warranty Not Cover?

This limited warranty does not cover any problem that is caused by (a) commercial use, accident, abuse, neglect, shock, electrostatic discharge, degaussing, heat or humidity beyond product specifications, improper installation, operation, maintenance or modification; or (b) any misuse contrary to the instructions in the user manual; or (c) lost passwords; or (d) malfunctions caused by other equipment. This limited warranty is void if a product is returned with removed, damaged or tampered labels or any alterations (including the unauthorised removal of any component or external cover). This limited warranty does not cover data loss – back-up the contents of your drive to a separate storage medium on a regular basis. Also, consequential damages; incidental damages; and costs related to data recovery, removal, and installation are not recoverable under this warranty. This limited warranty applies only to hardware products; software, media, and manuals are licensed (and warranted where applicable) pursuant to separate written agreement.

I would be absolutely certain that every hard drive on the market would have similar words in the warranty.

I think the legal avenue would just be a waste of time and money.

Myranda

crunchman said:

Don't know what brand of hard drive it is but I found this on the Seagate website:

What Does This Limited Warranty Not Cover?

This limited warranty does not cover any problem that is caused by (a) commercial use, accident, abuse, neglect, shock, electrostatic discharge, degaussing, heat or humidity beyond product specifications, improper installation, operation, maintenance or modification; or (b) any misuse contrary to the instructions in the user manual; or (c) lost passwords; or (d) malfunctions caused by other equipment. This limited warranty is void if a product is returned with removed, damaged or tampered labels or any alterations (including the unauthorised removal of any component or external cover). This limited warranty does not cover data loss – back-up the contents of your drive to a separate storage medium on a regular basis. Also, consequential damages; incidental damages; and costs related to data recovery, removal, and installation are not recoverable under this warranty. This limited warranty applies only to hardware products; software, media, and manuals are licensed (and warranted where applicable) pursuant to separate written agreement.

I would be absolutely certain that every hard drive on the market would have similar words in the warranty.

I think the legal avenue would just be a waste of time and money.

This sums up my opinion...

And... that's the warranty of the drive manufacturer - a drive has one purpose, to store and allow retrieval of data, arguably failure to store data is a potentially fit-for-purpose issue

But, my friend is hoping to sue the laptop manufacturer ... who merely assembled parts to make a whole computer... to me its no different to a puncture on a car tyre - sucks, but very unlikely to be the car makers fault.

... so, open and shut obvious no-hope case...

The friend is a qualified (though not practicing yet) barrister, and the other friend advising is a qualified (and practising for several years) solicitor and they both seem to think it less hopeless... but even searching google scholar for "cryptocurrency" under case law didn't show a single case anywhere in the english speaking world where someone had taken someone to court over loss of bitcoin (there were only 5 cases shown so it didn't take long to rule them out).

My lay persons understanding of law is there was no contract to protect the owners data, the cryptocurrency tells people that the user accepts the risks of using a cryptocurrency and with no prior case-law that's relevant, it would require all sorts of expert witnesses to get a genuine understanding conveyed to the court

As a technology user since I was a child, as a student of hard drive mechanics (we have to understand them pretty well to find all the things a sneaky criminal type might do to hide their malfeasance) etc... if your data can't be downloaded again BACK IT UP... if it can't be downloaded again and is valuable - BACK IT UP SEVERAL TIMES. 

stickyfiddle

I can't comprehend you'd get a win based on fit-for-purpose laws, not least because there is no way to economically manufacture HDDs that will never fail. It's an accepted part of the technology, hence the disclaimers. 

Jalapeno

monquixote said:

Backing up drives is your responsibility.

If he had data on one drive and lost it that's his problem.

This.

fretmeister

All claimants have a duty to mitigate their loss. That means making back ups.

There is probably a valid claim if a customer bought 2 or 3 drives of the same model from 1 supplier and there was a primary and backups and then they all failed within a few days of each other.

I cannot see the courts allowing a claim for the content on a drive when the content could not be foreseen by the defendant. At one end it could be some cat photos. At the other end the single copy of MS Word 2020.

Hugely different values, but in both cases the supplier has no knowledge of what the drive will be used for.

ALSO...

You say it has been returned for a refund? That may well be the most stupid element of the situation.

1: Was there an attempt to instruct a data recovery firm to try and get the data off it? If not - failure to mitigate loss
2: Could the Ethereum keychain (WTF is that?) be re-obtained from wherever it came from? - Ask!

3: By returning the drive to Amazon you have ruined the opporunity to preserve chain of custody for inspection of the drive by a suitably qualified and independent expert.


TRY AND GET THE DRIVE BACK FROM AMAZON EVEN IF THAT MEANS UNDOING THE REFUND

It will be needed.

fretmeister

Just a thought, and without insulting your young lawyer friends:

It is very easy to look at this from a single claim position.

Product A has failed leaving Claimant with a loss.

The Defendant - whether that be Amazon or the drive maker, or someone in between will not just be defending this claim. They will be defending every other claim that might come after this one.

They are not defending a claim for £7000. They will defend a claim of £7000 for every single drive they sell per day.

They have to. The claim is an attack on the viability of their product and the extent of their liability if the product fails. They cannot afford to have a decision where they are found liable for the loss of anything other than the replacement cost / refund of the drive purchase price.

If I was Amazon I'd refund and then refuse anything further.

If I was the drive maker I would deny all liability due to there not being a direct contract, and because the drive no longer has good chain of custody.

Then I'd get nasty.

At a level of £7000 the claim would appear to be suitable for allocation to the Small Claims track in the County Court.
If I was the defendant, I'd then try and convince the Court that the expert evidence needed would mean a trial length of 2 to 3 days.

If I was successful at that then the court would allocate the claim to the Multi-Track.

Why is this important?

Because in the Small Claims the liabilities for legal costs are severely limited. Almost at nil. So if the claimant loses, the cost liability to the winning defendant is very low.

In the Multi-Track the costs are open season. If the claimant loses there, then the Defendant will claim their full costs at their (no doubt City Solicitor) full hourly rate. Probably at over £350 + vat per hour, + barristers + experts.

If the claim is allocated to the Multi-Track then losing the claim could cause the claimant to be ordered to pay the defendant's costs. And they'll be a hell of a lot more expensive than £7000

Ravenous

The name "Wilson" doesn't ring a bell does it? I'm half-joking as it probably happens to people all the time:

https://github.com/ethereum/mist/issues/2311

- basically someone in this report lost their key. The user needs to get back the file that was on that drive.  Either a backup or data recovery is the only fix.

Limited liability I'm afraid. If you have money (or its equivalent) in your computer, you should know you need to protect it.

digitalscream

Hang on...let me get this straight: he didn't back up his £7k keychain, he didn't want to pay a few hundred quid for data recovery of his £7k keychain, so he sent the whole computer back for a refund (at which point it becomes the property of the manufacturer or retailer to be disposed of accordingly), and now he's asking a court to fix the problem he created by his own actions on the three separate occasions when he had a chance to keep the data in his possession and avoid all of this?

If he took it to court, and unless there's some very specific case law around, I'd imagine that the judge or magistrate would still be laughing about it come Christmas.

stickyfiddle

digitalscream said:

Hang on...let me get this straight: he didn't back up his £7k keychain, he didn't want to pay a few hundred quid for data recovery of his £7k keychain, so he sent the whole computer back for a refund (at which point it becomes the property of the manufacturer or retailer to be disposed of accordingly), and now he's asking a court to fix the problem he created by his own actions on the three separate occasions when he had a chance to keep the data in his possession and avoid all of this?

I missed this element in my first reading. That was a massive mistake, and frankly screams of naivety while also undermining any claim of the value of the thing, since you wouldn't send something back for a refund that was potentially worth 7k to you, when the maximum potential refund would, presumably, be significantly less than that amount.