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High-profile data breaches are making headlines every now and then. In recent years, companies such as Microsoft, Wattpad, Meta/Facebook, Estee Lauder, Whisper and Advanced Info Service, have experienced major breaches affecting hundreds of millions of their records. The risk of this risk is high for companies across industries as the move to remote work, cloud-based storage, and the rise of cybercriminals have compromised data security.
The aftershocks of these data breaches can be devastating for the companies that are targeted. An estimate shows that the average cost for a US company to respond to a data breach reached a new high in 2022 – $9.44 million. There’s also a high risk of paybacks because 83% of the companies in this study experienced at least one data breach. The legal exposure that comes from these breaches is also growing when companies are in trouble: data breach lawsuits brought by plaintiffs. This is similar to the style of classy business suits. There were 36 major data breach class actions filed in 2021, a 44% increase from 2020, with complaints brought within four weeks of the breach being announced.
It is my understanding and belief that these individual efforts would have been far less successful if they had been pursued a decade ago. At that time, plaintiffs were able to breach private data to establish a position or successfully assert liability, causation and damages.
They were also hampered by the lack of federal data breach legislation – a situation that continues to this day, as bills establishing a national standard of care for data security have been stymied by concerns of consumers (who fear such bills have too low a bar of protection) and say (who worry that, through prohibition, federal law will intrude on their rights). In this environment, low value settlements or outright dismissal of data breach class actions are routine.
The situation today has changed dramatically. High-cost settlements in consumer data breach cases occur regularly, with notable settlements involving T-Mobile ($350 million to consumers), Equifax ($380.5 million), Capital One ($190 million), Zoom ($85 million), Hy-Vee ($20 million), and Home Depot ($17.5 million). These decisions have been driven by the increased activity of plaintiffs, who have developed a series of new concepts that are succeeding in moving data breach class actions beyond the application area.
Private data breach claimants are now using a number of local law enforcement issues to avoid the limitations of federal law. It is not unusual to see negligence claims survive motions to dismiss, as industry guidelines for data security become the standard of care. Additionally, plaintiffs can allege that a company has a duty to take “reasonable precautions” to prevent the theft of sensitive personal information it contains.
Several courts have held that privacy policies on corporate websites or in clickwrap contracts can support breach of contract claims. Although breach of fiduciary duty claims are difficult, adverse enrichment claims have a basis, as do many other legal claims such as invasion of privacy. Although federal legal claims are rare, California enacted a new consumer privacy law that took effect in 2020 — the California Consumer Privacy Act (CCPA) (to be amended in 2023). Unlike most federal privacy laws, the CCPA provides individual rights of action and substantial legal fees for each consumer for each incident. These factors make CCPA claims very attractive for plaintiffs to sue in California’s minority classes and very dangerous for defendants.
Who has standing to challenge these creative claims that have become the subject of a data breach lawsuit? While it is well established that those who suffered direct economic injury from the breach (such as fraudulent payments) still have standing, and those who rightly claim their data was improperly accessed, members’ standing of the group without agency. The degree to which their data was accessed or misused by an unauthorized party is highly debatable.
Plaintiffs’ attorneys say there are many “mistakes” in trying to establish a recognized injury in this section. These “disadvantages” include the loss of economic value of their personal information, the high cost of defendant’s services, lost “marketability,” and increased risk of future identity theft.
The US Supreme Court, through the TransUnion case, contributing to the explanation of the data breach analysis in June 2021. Instead of doing so, the decision of the Court followed the words of Salvador Dali: “What is important is to spread shame, don’t get rid of it.” Although some parts of the Court’s decision may have adverse effects on this latter group of plaintiffs, the Court remains open to any emotional distress or general invasion of privacy, and the greater the risk of future harm, the more likely it is to stand. There is also an open question about it TransUnion in relation to application-phase challenges or claims for compensation.
Therefore, operators should expect to see new and increasing injury theories. But not all new things appear on the side of the plaintiffs. Defendants are likely to act in ways seen in other contexts to frustrate plaintiffs’ efforts. For example, companies may require users and employees to agree to a “privacy policy” in which they agree to (1) comply with administrative procedures, such as providing written notices or entering into a settlement; free dispute, before their infringement claims mature. ; (2) agree to settle their claims; (3) deny their ability to seek help in class or face-to-face; and/or (4) agree to waive their legal claims in exchange for the defendant’s services. Indeed, some courts favor these considerations in the data breach context. Inevitably, plaintiffs will continue to attack the basic ability of data breach claimants to enforce a valid class action that is often comprised of individual cases.
Given this unprecedented situation, it is important that companies work with their advisors to ensure compliance with regulatory requirements, design and implement a breach response plan, and develop a comprehensive data breach investigation strategy. good.
The information here is not investment, tax or financial. You should consult a licensed professional for advice on your specific situation.
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