Litigation

The closely watched lawsuit alleging Spokeo, Inc., violated the Fair Credit Reporting Act (“FCRA”) may proceed, after a federal appeals court ruled — on remand from the Supreme Court — that publication of the inaccuracies alleged by the plaintiff would constitute a sufficiently “concrete” harm to give the plaintiff standing…
Continue Reading Ninth Circuit Holds That Spokeo Plaintiff Has Standing to Proceed on Claim Over Inaccurate Information

By Alex Berengaut

[This article also was published in Law360.]

In May 2017, the “WannaCry” malware was used to launch a worldwide ransomware cyberattack. WannaCry encrypted files on victim computers and demanded a ransom payable in bitcoin to provide the encryption key. The attack was stopped when a British security researcher, Marcus Hutchins, accidentally discovered and activated a “kill switch” in the malware.

In a dramatic turn of events, Hutchins was arrested earlier this month by the FBI in Las Vegas as he was returning home from a cybersecurity conference. He wasn’t charged for anything to do with WannaCry; rather, the government alleged that he had created and conspired to sell a different piece of malware, the “Kronos Banking trojan,” a piece of software that recorded and stole user credentials and other personal identifying information. On Aug. 14, 2017, he pleaded not guilty to the charges against him.

Since Hutchins’ indictment, commentators have questioned whether the creation and selling of malware—without actually using the malware—violates the two statutes under which Hutchins was charged: the Computer Fraud and Abuse Act and the Wiretap Act.[1] It is likely that these issues will be litigated as the case unfolds.

But there is another question raised by the indictment: whether it violates Hutchins’ constitutional rights to charge him for his alleged conduct under any statute in this country. Several circuits—including the Seventh Circuit, where Hutchins’ case will be heard—have recognized that the federal government cannot charge anyone, anywhere in the world irrespective of their connections to the United States.[2] As the Second Circuit has put it, “[i]n order to apply extraterritorially a federal criminal statute to a defendant consistently with due process, there must be a sufficient nexus between the defendant and the United States so that such application would not be arbitrary and fundamentally unfair.”[3]
Continue Reading Is The Hutchins Indictment Over Malware Unconstitutional?

Customers’ allegations that they face a substantial risk of identity theft as a result of a 2014 data breach are sufficiently plausible to allow their suit against health insurer CareFirst to proceed, the U.S. Court of Appeals for the D.C. Circuit held in an August 1 decision.

CareFirst discovered in April 2015 — and announced a month later — that an unknown intruder had gained access in June 2014 to a database containing personal information about CareFirst’s customers.  Seven customers then brought a class-action lawsuit against CareFirst in the federal district court in Washington, D.C., alleging among other things that CareFirst was negligent in protecting customer data, and that customers as a result faced an increased risk of identity theft.

The district court dismissed the suit, finding that the plaintiffs had not alleged that hackers had accessed the plaintiffs’ social security numbers or credit card information, and that the risk of hackers stealing the plaintiffs’ identities without such information was too speculative to satisfy the requirements of Article III of the U.S. Constitution, which requires that federal courts hear only actual “cases or controversies.”  The Supreme Court has held that this requirement bars lawsuits where the plaintiffs have not alleged that they have suffered or imminently will suffer a concrete injury.
Continue Reading D.C. Circuit: Data Breach Plaintiffs Plausibly Allege ‘Substantial Risk’ of ID Theft Sufficient to Support Standing

The Ninth Circuit announced today that the full court will rehear the case in which the three-judge panel opinion had dismissed the FTC’s lawsuit against AT&T for allegedly violating Section 5 of the FTC Act due to past “throttling” practices around unlimited data plans.  According to the panel opinion, the…
Continue Reading Ninth Circuit Will Rehear Dismissal of FTC Throttling Suit

In Perry v. Cable News Network, the Eleventh Circuit dealt another loss to putative class-action plaintiffs seeking to use the Video Privacy Protection Act (“VPPA”) as a weapon against free online video services. The court affirmed that to be a “subscriber” of a video service—someone who can sue under the VPPA—one must have a genuine commitment, relationship, or association with that service. Because the Perry plaintiff could not show that, he lost.

The VPPA creates a cause of action for video service providers that disclose their consumers’ personally identifiable information alongside their viewing information. The typical Internet example is a paid video service that gives an advertiser a paying subscriber’s email address and viewing history.

To sue under the VPPA, a person must be a “consumer.” The VPPA defines that term as meaning a renter, purchaser, or subscriber of goods or services from a video service provider. “Subscriber” has raised the question of whether someone who downloads and uses a free app can be a “consumer” who can sue under the VPPA. At least in the Eleventh Circuit, Ellis v. Cartoon Network, Inc. answered that question: something more than mere use is needed. Instead, Ellis held that a proper VPPA plaintiff needs “some type of commitment, relationship, or association (financial or otherwise)” between the plaintiff and the video service provider.

In Perry, the district court relied on Ellis to dismiss plaintiff Perry’s suit without leave to amend because he was merely a user of CNN’s free app. Perry argued he could state a VPPA claim because he subscribed to CNN’s television channel through his cable package. This cable subscription let Perry access exclusive content via the CNN app. Perry said this made him a CNN app subscriber. He also said he paid CNN indirectly through his cable subscription. Perry appealed to the Eleventh Circuit on those theories.
Continue Reading Eleventh Circuit Hands Another VPPA Loss to Video App Plaintiffs

A Minnesota state court on February 1, 2017, issued an unusually broad search warrant directed to Google in connection with a wire fraud case.  The warrant seeks a broad set of data about all users who searched on Google for a specific person between December 1, 2016 and January 7, 2017.  The warrant became public after a researcher published an article discussing the warrant application and judge’s order.
Continue Reading Broad Minnesota Warrant Seeks Data on All Users Who Googled Fraud Victim

On Monday, the U.S. District Court for the District of Kansas ruled that the named plaintiff for a putative class of CareCentrix employees whose personal information was compromised had alleged enough harm for standing under Spokeo, Inc. v. Robins.  The case is Hapka v. CareCentrix, Inc.

In early…
Continue Reading Data Breach Allegations Sufficient for Standing After Spokeo, Court Says

On November 3, Judge Vince Chhabria of the U.S. District Court of the Northern District of California held that federal law does not bar the California Public Utilities Commission (CPUC) from requiring telecommunications companies to hand over, under an adequate protective order, confidential subscriber data to The Utility Reform Network (TURN) as part of an investigation into state market competitiveness.

However, Judge Chhabria also rejected a motion for summary judgment filed by CPUC and TURN because it has not yet been demonstrated that the proposed protective order would, in fact, adequately protect the companies from competitive harm.  Because such protection is a necessary predicate to avoiding a conflict with FCC regulations, Judge Chhabria reasoned, the adequacy of the protective order must be determined before CPUC can force companies to turn over such sensitive data.
Continue Reading California Judge Upholds CPUC Order to Share Confidential Subscriber Data, But Subject to Adequate Protective Order

On Monday, a panel of the Ninth Circuit unanimously ruled that Section 230 of the Communications Decency Act (“CDA”) protected Yelp from liability relating to an allegedly defamatory user-generated review.  In doing so, the Court rejected several attempts by the Plaintiff to plead around the CDA’s broad immunity provisions by…
Continue Reading Ninth Circuit Upholds CDA Immunity Against Plaintiff’s Attempt to “Push[] the Envelope of Creative Pleading”

In an opinion released today, the Ninth Circuit dismissed the Federal Trade Commission’s (“FTC”) lawsuit against AT&T for violating Section 5 of the FTC Act due to its throttling practices.  AT&T’s practice of throttling the speed of customers with unlimited data plans once they reached a certain data usage threshold had been challenged by the FTC as both unfair and deceptive under Section 5.  The Ninth Circuit reversed the district court’s prior ruling denying AT&T’s motion to dismiss on the ground that AT&T was a common carrier and therefore exempt from Section 5 of the FTC Act.
Continue Reading Ninth Circuit Dismisses FTC’s Throttling Suit Against AT&T