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
Orrick partners Emily Tabatabai, Tony Kim and Jennifer Martin authored this article for Corporate Counsel on the sweeping implications for businesses of California’s newly-enacted privacy law. Members of our global Cybersecurity, Privacy and Data Innovation Practice, Emily, Tony and Jennifer outline the reasons the new law will have “a significant impact on core business operations.”
Noting the “astounding” statistics on the use of smartphones and other mobile devices to “shop, bank, play, read, post, watch, date, record, and go” across consumer populations, the FTC has recently re-focused its attention on mobile security issues. As the amount of information collected on mobile devices, and through applications on those devices, continues to rise exponentially, unsurprisingly, mobile devices have become increasingly fertile grounds for cyberattacks. Against this backdrop, in February 2018 the FTC issued a 134-page report titled Mobile Security Updates: Understanding the Issues (the “Report”). Not long afterward, on April 2, 2018, the FTC appointed a new Acting General Counsel, Alden Abbot, who has substantial experience in the mobile-communication industry, including serving in key legal roles at Blackberry Corporation and the National Telecommunications and Information Administration in the Department of Commerce. Although the Report is narrowly focused on processes for patching vulnerabilities and software updates, the FTC notes that the Report is “part of an on-going dialogue” and that it intends to work with industry, consumer groups, and lawmakers to further the “goals of reasonable security and greater transparency” in its efforts to improve mobile-device security. READ MORE
The Clarifying Lawful Overseas Use of Data (“CLOUD”) Act was enacted into law on March 23, 2018. The Act provides that U.S. law-enforcement orders issued under the Stored Communications Act (SCA) may reach certain data located in other countries – a key question in United States v. Microsoft Corporation, No. 17-2, a case argued before the Supreme Court on February 27. Both the government and Microsoft recently agreed that the closely watched case is now moot following the CLOUD Act. READ MORE
Much has been written about the SEC’s interpretive guidance on cybersecurity disclosures, issued in late February, including Commissioner Stein’s statement that it under-delivers for investors, public companies, and the capital markets. As many observers have noted, the Commission largely repackaged the Division of Corporation Finance’s prior October 2011 guidance. Further, by issuing interpretive guidance, rather than engaging in formal rulemaking, the SEC’s pronouncement does not have the force and effect of law and is not accorded such weight in the adjudicatory process.
Cybersecurity continues to be “top-of-mind” for the Security and Exchange Commission (SEC). That point couldn’t be made more clear than in comments and remarks made during the annual “SEC Speaks” conference in Washington, D.C. on February 23 and 24. Read more for a full summary of the conference, including the SEC’s discussion of cybersecurity-related risk and incident disclosures, the Enforcement division’s formation of a Cyber Unit in the fall of 2017, and the SEC’s increased emphasis on the need for insider trading policies that address the impact of cyber events.
Given the explosive growth in the connectivity of every day “things,” several government agencies are focused on how best to support innovation and the benefits of an increasingly connected, data driven society, while weighing options for mitigating the cybersecurity and privacy risks relating to the Internet of Things. The pace of development with respect to connected cars and autonomous vehicles has drawn particular attention. 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
(Editors’ note: Thanks to Orrick trainee associate, Arne Senger, for his help with this blog post.)
With its recent ruling in Bărbulescu v. Romania (application no. 61496/08), the Grand Chamber of the European Court of Human Rights (ECHR) made a decision of enormous impact for employers in Europe. The decision makes clear that even when private use of business resources is prohibited, employers do not have unlimited access to all communications that occur on corporate systems.
Companies should carefully review their policies to ensure that they can access their corporate IT equipment, at least to the extent permitted by European data privacy law. READ MORE