Data breach class actions in 2013-2015: why standing is a problem ... except in the Seventh Circuit
Several class actions have been filed in recent years against companies that had their database compromised as a consequence of a data breach. The class usually consists of consumers whose information was stolen in the breach. The problem that plaintiffs have faced in the majority of these actions is lack of standing. Indeed, in most cases, it has not been possible to demonstrate that the breach had caused a damage to those consumers. An increased risk of identity fraud is not sufficient to ground standing. In 2013, the Supreme Court held that increased risk of identity fraud following a data breach is not enough to give standing and “threatened injury must be certainly impending to constitute injury in fact.” Clapper v. Amnesty International USA, 133 S. Ct. 1138 (2013).
The Clapper progeny has more or less kept out of courts, consumers who seek redress from a data breach but could not prove an injury.
[See full blog for list of 2014 and 2015 cases]
Fly in the face of the majority, in Remijas v. Neiman Marcus Grp., LLC. 794 F.3d 688 (7th Cir. 2015), the court granted standing to plaintiffs based on substantial risk that they could get harmed in the future by the data breach. The court found that plaintiff does not necessarily have to allege that their personal information has been misused. “Clapper does not, as the district court thought, foreclose any use whatsoever of future injuries to support Article III standing.” Citing In re Adobe Sys., Inc. Privacy Litig., 66 F. Supp. 3d 1197, 1214 (N.D. Cal. 2014), the Court found that it was “plausible to infer that the plaintiffs have shown a substantial risk of harm from the Neiman Marcus data breach.” Also, the court held that mitigation expenses plaintiffs incurred also qualify as an injury, in fact, relying on the First Circuit’s 2011 decision in Anderson v. Hannaford Bros. Co. 659 F.3d 151, 162 (1st Cir. 2011).
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For more information, Francesca Giannoni-Crystal