Privacy & Cybersecurity Litigation partner Michelle Visser, counsel David Cohen and associate Nicole Gelsomini authored this blog post for the Washington Legal Foundation on the unsettled state of the law on constitutional standing in privacy and cybersecurity cases in the wake of two recent Supreme Court developments. Constitutional standing challenges are, and will continue to be, an important potential tool for privacy and cybersecurity defendants seeking to dismiss certain class actions brought in federal court. To establish standing, a private plaintiff must show, among other things, that he or she faces an actual or imminent concrete injury from the defendant’s conduct. As explained in the Washington Legal Foundation post, however, the Supreme Court recently passed on two chances to clarify the test that will govern this standing inquiry, leaving defendants to wade through conflicting and ambiguous lower court precedent. The uncertain and nuanced state of this area of law underscores the importance of retaining experienced cybersecurity and privacy defense counsel when faced with this type of suit.
A recent decision from the Supreme Court of Illinois heightens the risks faced by companies collecting biometric information by holding that an individual who is the subject of a violation of Illinois’ Biometric Information Privacy Act—but who suffered no separate harm from the violation—is an “aggrieved party” with a cause of action under the statute. Rosenbach v. Six Flags Entertainment Corp., No. 123186 (Ill. Jan. 25, 2019). This decision will only further embolden plaintiffs’ lawyers to bring biometric privacy suits, and the risk to companies collecting biometric information will likely increase as newly enacted and proposed legislation comes into effect. In this post, we discuss what happened, what is on the horizon, and some steps to consider. READ MORE
Rivera v. Google, a recent federal court decision from the Northern District of Illinois, highlights how challenges to Article III standing are a versatile and useful tool for corporate defendants in privacy and cybersecurity litigation. At the same time, the litigation underscores the significant legal risk faced by entities that collect biometric information and the consequent need to proactively assess and mitigate that risk. READ MORE
This past September Governor Brown signed into law Senate Bill 327, which is the first state law designed to regulate the security features of Internet of Things (IoT) devices. The bill sets minimum security requirements for connected device manufacturers, and provides for enforcement by the California Attorney General. The law will come into effect on January 1, 2020, provided that the state legislature passes Assembly Bill 1906, which is identical to Senate Bill 327. READ MORE
The California Consumer Privacy Act of 2018 (the “CCPA” or the “Act”), which we reported on here and here continues to make headlines as the California legislature fast-tracked a “clean up” bill to amend the CCPA before the end of the 2018 legislative session. In a flurry of legislative activity, the amendment bill (“SB 1121” or the “Amendment”) was revised at least twice in the last week prior to its passage late in the evening on August 31, just hours before the legislative session came to a close. The Amendment now awaits the governor’s signature.
Although many were hoping for substantial clarification on many of the Act’s provisions, the Amendment focuses primarily on cleaning up the text of the hastily-passed CCPA, and falls far short of addressing many of the more substantive questions raised by companies and industry advocates as to the Act’s applicability and implementation. READ MORE
Game-changing Calif. Consumer Privacy Act of 2018 puts statutory breach damages on the table
The recently-enacted California Consumer Privacy Act of 2018 is a game-changer in a number of respects. The Act imports European GDPR-style rights around data ownership, transparency, and control. It also contains features that are new to the American privacy landscape, including “pay-for-privacy” (i.e., financial incentives for the collection, sale, and even deletion of personal information) and “anti-discrimination” (i.e., prohibition of different pricing or service-levels to consumers who exercise privacy rights, unless such differentials are “reasonably related to the value provided to the consumer of the consumer’s data”). Privacy teams will be hard at work assessing and implementing compliance in advance of the January 1, 2020 effective date. READ MORE
A recent skirmish about standing in data breach class actions (this time in the Eighth Circuit), involving securities and brokerage firm Scottrade, suggests that, even if plaintiffs win that limited question, there are other key battles that can win the war for defendants. As we reported with Neiman Marcus, P.F. Chang’s, Nationwide, and Barnes & Noble, the Eighth Circuit’s decision in Kuhn v. Scottrade offers important proactive steps that organizations should consider taking that can mitigate post-breach litigation exposure. READ MORE
This week, a high profile plaintiffs’ firm (Edelson) stated that “if done right,” the data breach class actions against Equifax should yield more than $1 billion in cash going directly to more than 143 million consumers (i.e., roughly $7 per person).
No defendant to date has paid anything close to $1 billion. In fact, the largest class settlements in breach cases hardly get close: Target Stores paid $10 million (cash reimbursement for actual losses) and The Home Depot paid $13 million (cash reimbursement for actual losses + credit monitoring). Will Equifax be different?
Part of the answer revolves around the increasingly debated role and importance of “consumer harm” in resolving data breach disputes. READ MORE
In the latest sign that data breach class actions are here to stay—and, indeed, growing—the D.C. Circuit resuscitated claims against health insurer CareFirst BlueCross and Blue Shield, following a 2015 breach that compromised member names, dates of birth, email addresses, and subscriber identification numbers of approximately 1.1 million individuals. The decision aligns the second most powerful federal appellate court in the nation with pre-Spokeo decisions in Neiman Marcus and P.F. Chang and post-Spokeo decisions in other circuits (Third, Seventh, and Eleventh). In short, an increased risk of identity theft constitutes an imminent injury-in-fact, and the risk of future injury is substantial enough to support Article III standing.
The D.C. Circuit’s holding is an important development. First, the D.C. Circuit went beyond credit card numbers and social security numbers to expand the scope of data types that create a risk to individuals (i.e., names, birthdates, emails, and health insurance subscriber ID numbers). Second, the decision makes clear that organizations should carefully consider the interplay between encryption (plus other technical data protection measures) and “risk of harm” exceptions to notification, including exceptions that may be available under HIPAA and GLBA statutory regimes. READ MORE
We at Trust Anchor have our ears to the ground. Here are some of the most important things we heard regulators, courts, and legislatures say about cybersecurity in 2016, and what they mean for you and your organization
There is no such thing as compliance with the NIST Cybersecurity Framework (FTC). In September, the FTC dispelled a commonly held misconception regarding the NIST Framework: It “is not, and isn’t intended to be, a standard or checklist. . . . there’s really no such thing as ‘complying with the Framework.'” The Framework provides guidance on process. It does not proscribe the specific practices that must be implemented. Rather, the NIST Framework lays out a risk-based approach to assessment and mitigation that is “fully consistent” with the concept of “reasonableness” embedded in the FTC’s Section 5 enforcement record. Takeaway: Organizations should consider using the NIST Framework—or another framework—to guide their cybersecurity investments and program development. Use of the NIST Framework alone does not signal that an organization is secure.