wildercb/PrivacyTextBooks1.2 · Datasets at Hugging Face

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Thus, the typical story with data security enforcement involves
regulators collecting some money that is dumped into government
treasuries, with barely anything going to consumers.
PRIVATE LITIGATION
In the years following the ChoicePoint breach, another body of law bubbled
up out of nearly nowhere—waves of private litigation after nearly every
major data breach. Over the past 15 years, there has been an extensive
amount of data breach litigation.
The Rise of Data Breach Lawsuits
Lawsuits usually follow quickly after breaches. For example, in the
aftermath of its breach, Target faced 140 lawsuits. One lawsuit was even
filed the day after the breach was announced to the public. Target
eventually settled the consolidated consumer lawsuits for $10 million.
One study of about 230 lawsuits for data security breaches from 2004–
2014 found more than “86 different causes of actions brought by plaintiffs
for essentially the same kind of event.”53 Causes of action involved tort,
contract, state statutes, and federal statutes.
Problems with Private Litigation
In theory, the way that data breach litigation is supposed to work is to
empower consumers to seek redress for harms from data breaches and to
supplement regulatory enforcement with private enforcement in the courts.
Thus far, however, private litigation has failed to make a meaningful
difference in improving data security. Litigation has increased the costs of
data breaches but has accomplished little else.
CASES IMPROPERLY DISMISSED FOR LACK OF HARM
The key issue in data breach cases is harm. Most causes of action that
plaintiffs can sue under require what is known as a “legally cognizable
harm.” Even if a defendant acted wrongly, the law often requires a plaintiff
to prove that the defendant’s actions caused harm. Courts have often
struggled to understand the harm from data breaches, so data breach cases
have often been dismissed.54
In federal court, plaintiffs must make an additional preliminary showing
of harm to proceed with their case. Plaintiffs must establish “standing” to be
able to sue in federal court.55 For standing, plaintiffs must demonstrate an
“injury in fact” that is “concrete and particularized” and “actual or
imminent, not conjectural or hypothetical.”56
Data breach plaintiffs argued that the exposure of their data has caused
them emotional distress. Many courts, however, are reluctant to recognize
harm that consists purely of emotional distress.57 In the words of one court,
“Emotional distress in the wake of a security breach is insufficient to
establish standing.”58 Courts seem so quick to dismiss claims of anxiety
over a data breach that they ignore many other areas of law where anxiety
alone is recognized as a cognizable harm.59
Plaintiffs have also alleged that the exposure of their data has subjected
them to an increased risk of harm from identity theft, fraud, or other injury.
Many courts, however, require harms to be “vested”—already materialized
in the here and now.60
Additionally, plaintiffs argue that the exposure of their data has resulted
in their having to expend time and money to prevent future fraud, such as
signing up for credit monitoring, contacting credit reporting agencies and
placing fraud alerts on their accounts, and so on. Courts have been skeptical
of these claims too.
A classic example is Reilly v. Ceridian Corp. Reilly was an employee of
a law firm that was a customer of Ceridian, a payroll processing firm. After
an attacker compromised its servers, Ceridian notified its customers that
their personal information was affected. Reilly and other victims argued
that they suffered injuries resulting from an increased risk of identity theft.
The court rejected their argument, holding that the harm was too distant
because the plaintiffs’ “conjectures” about being victimized by identity
theft hadn’t yet “come true.”61 The plaintiffs’ fears were based “on entirely
speculative, future actions of an unknown third-party.”62 The court further
stated: “Here, no evidence suggests that the data has been—or will ever be
—misused. The present test is actuality, not hypothetical speculations
concerning the possibility of future injury.”63
A 2013 Supreme Court case, Clapper v. Amnesty International USA, has
had an enormous influence on data breach cases even though the case had
nothing to do with data breaches. A group of attorneys, journalists, and
others contended that government surveillance violated their constitutional
rights. They could not establish that they were definitely under surveillance,
but they had a legitimate reason to suspect that they were under surveillance
because they represented or spoke to individuals who the government
viewed as suspicious.
The U.S. Supreme Court held that plaintiffs lacked standing because
they could not demonstrate that “future surveillance is certainly
impending.” The Court found that the plaintiffs could only “speculate” as to
future surveillance.
The plaintiffs also contended that they were injured because they had to
take measures to avoid the risk that they were under surveillance. For
example, instead of talking to clients on the phone, they had traveled to
meet them in person. The Court, however, held that plaintiffs “cannot
manufacture standing by incurring costs in anticipation of non-imminent
harm.”64
After Clapper, several courts have used Clapper’s reasoning to deny
standing to plaintiffs in data breach cases when plaintiffs claim injury due
to an increased risk of future harm or expenditures to reduce the risk of
future harm.
For example, in one case, thieves stole backup tapes with the medical
data of more than 4 million service members. The tapes also included
Social Security Numbers, addresses, birth dates, and phone numbers, along
with extensive health information. An employee of a company had put the
tapes in his car—an all-too-common blunder.65
A group of 33 plaintiffs sued. One of the plaintiffs alleged that loans
were fraudulently taken out in his name by using his Social Security
Number, birth date, address, and other data from the tapes. Two plaintiffs
claimed that marketers contacted them by phone and email about their
medical conditions. Other plaintiffs alleged other harms. Many plaintiffs
argued the exposure of their medical information to an unknown third party
was an injury in itself. Several plaintiffs argued that they spent time and
money monitoring their credit and bank accounts after the incident.
The court took issue with several plaintiffs who argued a risk of future

Thus, the typical story with data security enforcement involves

regulators collecting some money that is dumped into government

treasuries, with barely anything going to consumers.

PRIVATE LITIGATION

In the years following the ChoicePoint breach, another body of law bubbled

up out of nearly nowhere—waves of private litigation after nearly every

major data breach. Over the past 15 years, there has been an extensive

amount of data breach litigation.

The Rise of Data Breach Lawsuits

Lawsuits usually follow quickly after breaches. For example, in the

aftermath of its breach, Target faced 140 lawsuits. One lawsuit was even

filed the day after the breach was announced to the public. Target

eventually settled the consolidated consumer lawsuits for $10 million.

One study of about 230 lawsuits for data security breaches from 2004–

2014 found more than “86 different causes of actions brought by plaintiffs

for essentially the same kind of event.”53 Causes of action involved tort,

contract, state statutes, and federal statutes.

Problems with Private Litigation

In theory, the way that data breach litigation is supposed to work is to

empower consumers to seek redress for harms from data breaches and to

supplement regulatory enforcement with private enforcement in the courts.

Thus far, however, private litigation has failed to make a meaningful

difference in improving data security. Litigation has increased the costs of

data breaches but has accomplished little else.

CASES IMPROPERLY DISMISSED FOR LACK OF HARM

The key issue in data breach cases is harm. Most causes of action that

plaintiffs can sue under require what is known as a “legally cognizable

harm.” Even if a defendant acted wrongly, the law often requires a plaintiff

to prove that the defendant’s actions caused harm. Courts have often

struggled to understand the harm from data breaches, so data breach cases

have often been dismissed.54

In federal court, plaintiffs must make an additional preliminary showing

of harm to proceed with their case. Plaintiffs must establish “standing” to be

able to sue in federal court.55 For standing, plaintiffs must demonstrate an

“injury in fact” that is “concrete and particularized” and “actual or

imminent, not conjectural or hypothetical.”56

Data breach plaintiffs argued that the exposure of their data has caused

them emotional distress. Many courts, however, are reluctant to recognize

harm that consists purely of emotional distress.57 In the words of one court,

“Emotional distress in the wake of a security breach is insufficient to

establish standing.”58 Courts seem so quick to dismiss claims of anxiety

over a data breach that they ignore many other areas of law where anxiety

alone is recognized as a cognizable harm.59

Plaintiffs have also alleged that the exposure of their data has subjected

them to an increased risk of harm from identity theft, fraud, or other injury.

Many courts, however, require harms to be “vested”—already materialized

in the here and now.60

Additionally, plaintiffs argue that the exposure of their data has resulted

in their having to expend time and money to prevent future fraud, such as

signing up for credit monitoring, contacting credit reporting agencies and

placing fraud alerts on their accounts, and so on. Courts have been skeptical

of these claims too.

A classic example is Reilly v. Ceridian Corp. Reilly was an employee of

a law firm that was a customer of Ceridian, a payroll processing firm. After

an attacker compromised its servers, Ceridian notified its customers that

their personal information was affected. Reilly and other victims argued

that they suffered injuries resulting from an increased risk of identity theft.

The court rejected their argument, holding that the harm was too distant

because the plaintiffs’ “conjectures” about being victimized by identity

theft hadn’t yet “come true.”61 The plaintiffs’ fears were based “on entirely

speculative, future actions of an unknown third-party.”62 The court further

stated: “Here, no evidence suggests that the data has been—or will ever be

—misused. The present test is actuality, not hypothetical speculations

concerning the possibility of future injury.”63

A 2013 Supreme Court case, Clapper v. Amnesty International USA, has

had an enormous influence on data breach cases even though the case had

nothing to do with data breaches. A group of attorneys, journalists, and

others contended that government surveillance violated their constitutional

rights. They could not establish that they were definitely under surveillance,

but they had a legitimate reason to suspect that they were under surveillance

because they represented or spoke to individuals who the government

viewed as suspicious.

The U.S. Supreme Court held that plaintiffs lacked standing because

they could not demonstrate that “future surveillance is certainly

impending.” The Court found that the plaintiffs could only “speculate” as to

future surveillance.

The plaintiffs also contended that they were injured because they had to

take measures to avoid the risk that they were under surveillance. For

example, instead of talking to clients on the phone, they had traveled to

meet them in person. The Court, however, held that plaintiffs “cannot

manufacture standing by incurring costs in anticipation of non-imminent

harm.”64

After Clapper, several courts have used Clapper’s reasoning to deny

standing to plaintiffs in data breach cases when plaintiffs claim injury due

to an increased risk of future harm or expenditures to reduce the risk of

future harm.

For example, in one case, thieves stole backup tapes with the medical

data of more than 4 million service members. The tapes also included

Social Security Numbers, addresses, birth dates, and phone numbers, along

with extensive health information. An employee of a company had put the

tapes in his car—an all-too-common blunder.65

A group of 33 plaintiffs sued. One of the plaintiffs alleged that loans

were fraudulently taken out in his name by using his Social Security

Number, birth date, address, and other data from the tapes. Two plaintiffs

claimed that marketers contacted them by phone and email about their

medical conditions. Other plaintiffs alleged other harms. Many plaintiffs

argued the exposure of their medical information to an unknown third party

was an injury in itself. Several plaintiffs argued that they spent time and

money monitoring their credit and bank accounts after the incident.

The court took issue with several plaintiffs who argued a risk of future