A recent decision in Indiana highlights the data security liability risks facing employers based on the actions of their employees, extending vicarious liability even to cases where the employees were acting wholly for personal purposes. In SoderVick v. Parkview Health Sys., Inc., the Court of Appeals of Indiana reversed summary judgment in favor of the defendant, reviving claims of respondeat superior against Parkview Health Systems, Inc. (“Parkview”) where the hospital’s employee texted personal health information to a third party. No. 19A-CT-2671, 2020 WL 2503923 (Ind. Ct. App. May 15, 2020). We recently noted a decision of the Supreme Court of the United Kingdom in WM Morrison Supermarks plc v. Various Claimants (“Morrison”) where the Court made the contrary determination, ruling that the large supermarket chain Morrison could not be held vicariously liable as a matter of law for the intentional acts of a rogue employee who posted the payroll data of Morrison employees on the Internet. But as we also explained, businesses that collect personal information should be cautious about reading too much into that ruling: while the Court allowed the appeal in favor of Morrison, the decision turned on the particular facts of the case (where the rogue employee actively tried to damage his employer). The Parkview Health decision further underscores this need for caution, especially with increased remote work due to COVID-19 where the risk of employers being sued over security breaches caused by their employees is, unfortunately, ever-increasing. READ MORE
Seth counsels clients through all stages of a privacy or data security incident, navigating the array of legal issues that arise, managing the response and investigation of an incident and defending clients against resulting litigation and regulatory investigations. He is also a trusted advisor of top U.S. companies on cyber risk insurance, leveraging his experience to provide a nuanced understanding when evaluating cyber risk insurance contracts.
Seth collaborates with colleagues firmwide on privacy and cybersecurity compliance and on incident response, applying lessons learned from significant incidents to help clients ensure compliance and effective planning.
Seth also has experience representing clients in connection with claims by credit card brands and financial institutions around payment card-related data breaches. He advises clients on the Payment Card Industry Data Security Standards and negotiation of agreements implicating payment card data.
Posts by: Seth Harrington
The possibility of a cybersecurity incident—and ensuing litigation—is a fact of life for almost every business. Even companies that do not process or handle consumer information collect personal information about their employees that can be targeted by hackers or phishing scams or even inadvertently disclosed, exposing the company to potential liability.
While eliminating cybersecurity litigation risk entirely likely is not feasible, recent cases do highlight some steps that companies seeking to reduce potential exposure to cybersecurity litigation can take:
(1) Recognize that pre-incident statements about the company’s cybersecurity measures can be used to sustain deception-related claims.
(2) Assess the “reasonableness” of your cybersecurity, despite the difficulty of doing so.
(3) Pay attention to how you structure cybersecurity initiatives to protect related documents and communications based on the attorney-client privilege and work product protection.
(4) Recognize that your statements about a cybersecurity incident may be relied on by courts to sustain plaintiffs’ claims.
(5) Consider arbitration clauses, but do so cautiously.
(6) Consider opportunities to contractually allocate or disclaim liability. READ MORE
On August 21, 2019, the U.S. Court of Appeals for the Seventh Circuit held in FTC v. Credit Bureau Center, LLC, 2019 WL 3940917 (7th Cir. 2019) that the Federal Trade Commission (“FTC”) lacks authority to obtain monetary relief under Section 13(b) of the FTC Act. The FTC has relied on Section 13(b) to seek money relief in consumer protection enforcement actions, including privacy and cybersecurity matters, and had, prior to the Credit Bureau decision, suggested an intent to do so more frequently in the future. READ MORE