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On May 5, 2020, the Seventh Circuit held that violations of the section 15(b) disclosure and informed consent provisions of the Illinois Biometric Information Privacy Act, 740 ILCS 14/1 et seq. (“BIPA”) constitute “an invasion of personal rights that is both concrete and particularized” for the purposes of establishing Article III standing to sue in federal courts.  However, the Seventh Circuit also held that the alleged harms associated with violations of section 15(a) of BIPA were insufficient to establish Article III standing.  Section 15(a) mandates public disclosure of a retention schedule and guidelines for permanent destruction of collected biometric information.

Covington has previously discussed developments in BIPA litigation, which has proliferated in recent years with the advancement of relevant technologies.  The increase in BIPA litigation has been accompanied by a rise in disputes over the nature of the harm required to sustain an action, both in state and federal courts.  Although this issue was seemingly resolved at the state-level by the Illinois Supreme Court’s 2019 Rosenbach decision, federal courts have continued to grapple with the issue for the purposes of Article III standing. …
Continue Reading Seventh Circuit Rules on Article III Standing Issues in Illinois BIPA Lawsuit, Allowing Case to Proceed in Federal Court

As many data breach litigation cases have demonstrated over recent years, the question of a plaintiff’s standing can be quite important to the outcome of each case.  While the Supreme Court has addressed standing issues in several cases with potential applicability in the data breach litigation context, most recently in Spokeo, Inc. v. Robins and Clapper v. Amnesty International, the Court has not yet addressed head-on the question of standing requirements for plaintiffs in data breach litigation.  More recently, a cert petition in another data breach standing case (In re Zappos.com), discussed below, has been distributed for conference this Friday, December 7, 2018.  As the Court considers whether to grant cert and address this issue, this post provides an overview of the circuit split on standing in data breach litigation cases and efforts to convince the Court to revisit the issue and provide more precise guidance. …
Continue Reading Standing Issues in Data Breach Litigation: An Overview

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 to sue in federal court. …

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

A Seventh Circuit panel that allowed a data breach suit against Neiman Marcus to proceed misapplied the Supreme Court’s precedents on standing and, “if allowed to stand, will impose wasteful litigation burdens on retailers and the federal courts,” the retailer argues in a petition filed yesterday asking the full Seventh Circuit to rehear the case.

Last month, a Seventh Circuit panel ruled that Neiman Marcus customers whose credit card information potentially was exposed in a 2013 breach of the retailer’s computer systems could proceed with their proposed class action lawsuit against the retailer. The panel found that the plaintiffs alleged sufficient “injuries associated with resolving fraudulent charges and protecting oneself against future identity theft” to establish their standing to sue in federal court, and that affected customers “should not have to wait until hackers commit identity theft or credit‐card fraud in order to give the class standing, because there is an ‘objectively reasonable likelihood’ that such an injury will occur.” The panel also found it “telling” that the retailer offered affected customers a year of free credit monitoring and identity-theft protection, and appeared to interpret this as a tacit acknowledgment that the risk to customers was more than “ephemeral.”…
Continue Reading Neiman Marcus Asks Full 7th Circuit to Consider Standing Ruling in Breach Suit

Neiman Marcus customers whose credit card information potentially was exposed in a 2013 breach of the retailer’s computer systems may proceed with their proposed class action lawsuit against the retailer, a federal appeals court ruled Monday.

Neiman Marcus discovered in December 2013 that some of its customers had found fraudulent charges on their credit cards, and after an investigation the retailer disclosed in early January 2014 that a data breach had exposed about 350,000 credit cards, of which 9,200 were known to have been used fraudulently.  The plaintiffs sued Neiman Marcus, alleging — among other claims — that the company was negligent, breached its implied contract with customers, engaged in unfair and deceptive business practices, and violated state data breach laws.

Monday’s ruling comes at a preliminary stage of the case and addressed only whether the plaintiffs’ allegations, if proved, would meet 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.  The Supreme Court emphasized in a 2013 ruling, Clapper v. Amnesty International USA, that plaintiffs seeking to establish standing based on a risk of future injury must show that the threatened injury is “certainly impending,” a standard plaintiffs in other data breach cases have struggled to meet.…
Continue Reading Data Breach Plaintiffs Allege Enough Risk of Harm for Suit to Proceed, Appeals Court Rules

In the closely-watched case of Spokeo, Inc. v Robins, the Solicitor General recently filed an amicus brief urging the Court to deny certiorari and leave in place the 9th Circuit’s holding, which could encourage the rising tide of privacy class action litigation.  The Solicitor General’s brief—coauthored by the Consumer Financial Protection Bureau—argued that the…

On Monday, February 12, a Southern District of Ohio district court dismissed two proposed class actions relating to an October 2012 Nationwide Mutual Insurance Co. data breach. Galaria v. Nationwide Mutual Ins. Co., No. 2:13-cv-118 (S.D. Ohio Feb. 10, 2014); Hancox v. Nationwide Mutual Ins. Co., No. 2:13-cv-257 (S.D. Ohio Feb. 10, 2014). The court held that neither case could proceed because the Plaintiffs had not sufficiently alleged an injury that would give them standing to sue in federal court under Article III of the U.S. Constitution. In their complaint, Plaintiffs alleged several putative injuries, including increased risk of identity theft and fraud arising from the breach, costs associated with mitigating that increased risk, “loss of privacy,” and deprivation of the value of their personal information. The court rejected each theory, in turn. The opinion is the latest in a series of opinions holding that plaintiffs seeking to recover in data breach case must allege more than the mere possibility of future harm.

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Continue Reading Federal Court Dismisses Data Breach Suit Alleging Only Speculative Harms

This week, in a 5-4 decision in Clapper et al. v. Amnesty International USA et al., the United States Supreme Court rejected two theories of Article III standing presented by a group of attorneys, human rights, labor, legal, and media organizations who sought a declaration that surveillance under section 1881a of the Foreign Intelligence Surveillance Act (“FISA”) is unconstitutional as well as an injunction against section 1881a-authorized surveillance.

These respondents argued first that, because their work requires them to engage in sensitive and/or privileged communications with individuals located abroad who are likely targets of surveillance, there was an objectively reasonable likelihood that their communications would be acquired under section 1881a at some point in the future, thus causing them injury.  (Section 1881a, which was added by the FISA Amendments Act of 2008, authorizes, under certain circumstances, the government surveillance of individuals who are not “United States persons” and are reasonably believed to be located outside the United States).  Second, the respondents maintained that the risk of surveillance under section 1881a is so substantial that they had been forced to take costly and burdensome measures to protect the confidentiality of their communications that constitute present injury and are fairly traceable to section 1881a.

The Supreme Court rejected each of these arguments holding (1) that respondents’ “highly attenuated chain of possibilities” and theory of future injury was too speculative to satisfy the well-established Article III standing requirement that threatened injury be “certainly impending” and, moreover, that they could not establish that the injury was fairly traceable to section 1881a; and (2) that the respondents “cannot manufacture standing by choosing to make expenditures based on hypothetical future harm that is not certainly impending.”

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Continue Reading Supreme Court Nixes FISA Surveillance Suit on Standing Grounds

Yesterday, deeming LinkedIn’s motion to dismiss suitable for decision without oral argument, Judge Koh of the U.S. District Court for the Northern District of California dismissed all eight claims in Low v. LinkedIn with prejudice, ending this litigation.  Covington successfully represented LinkedIn in this case, in which plaintiffs alleged that the purported transmittal to certain…