In a significant development that could materially increase the liability risk associated with payment card security breaches (and personal data security breaches, in general), the U.S. Court of Appeals 1st Circuit (the "Court of Appeals") held that payment card replacement fees and identity theft insurance/credit monitoring costs are adequately alleged as mitigation damages for purposes of negligence and an implied breach of contract claim. The decision in Hannaford could be a game changer in terms of the legal risk environment related to personal data breaches, and especially payment card breaches where fraud has been perpetrated. In this post, we summarize the key issues and holdings of the Court of Appeals.
In what may be a sign of an evolving judicial atmosphere and approach concerning data breach lawsuits, a Federal judge in the Northern District of California District Court recently refused to dismiss various causes of action related to a data breach involving RockYou. In particular, the Court explored the issue of whether the plaintiff sufficiently alleged "harm" arising out of the data breach. This blog post takes a look the highlights of the Court's decision.
InfoLawGroup recently discovered a new data breach case, one of the first that we are aware of in the United States, that dives deep into the issue of whether a common law duty exists to safeguard personal information. In Cooney, et. al v. Chicago Public Schools, et. al¸ an Illinois appellate court actually rendered a decision holding that no such duty exists under Illinois law. In this blogpost we take a closer look at the court's rationale for dismissing the plaintiffs' negligence claim, as well as the other interesting holdings of the court.
Under New York law it's settled doctrine that "contractual provisions that 'clearly, directly and absolutely' limit liability for 'any act or omission' are enforceable, 'especially when entered into at arm's length by sophisticated contracting parties.'" And that New York courts "generally enforce contractual waivers or limitations of liability."
The Maine Supreme Court has rendered its opinion on the "damages" issue in the Hannaford Bros. consumer security breach lawsuit. Again, the plaintiffs have been unable to establish that they suffered any harm as a result of the Hannaford security breach. Specifically, the Court ruled that "time and effort" alone spent to avoid or remediate reasonably foreseeable harm do not constitute "a cognizable injury for which damages may be recovered." In this blogpost we take a closer look at the Court's rationale.
It often makes sense to refer to an information security management framework or standard in an outsourcing contract, but this is usually not very meaningful unless the customer also understands what particular security measures the vendor will apply to protect the customer's data.
Nearly every day, businesses are entering into arrangements to save the enterprise what appear tobe significant sums on information technology infrastructure by placing corporate data ''in the cloud.'' Win-win, right? Not so fast. If it seems too good to be true, it probably is. Many of these deals are negotiated quickly, or not negotiated at all, due to the perceived cost savings. Indeed, many are closed not in a conference room with signature blocks, ceremony, and champagne, but in a basement office with the click of a mouse. Unfortunately, with that single click, organizations may be putting the security of their sensitive data (personal information, trade secrets, intellectual property, and more) at risk, and may be overlooking critical compliance requirements of privacy and data security law (not to mention additional regulations). My article "Contracting for Cloud Computing Services: Privacy and Data Security Considerations," published this week in BNA's Privacy & Security Law Report, explores a number of contractual provisions that organizations should consider in purchasing cloud services. You can read the full article here, reprinted with the permission of BNA.
Service contracts that involve protected personal information should include provisions allocating responsibility for protecting that information and responding to security breaches. Increasingly, this means incorporating specific references to applicable laws and information security standards, and often certifications of conformance.