Last week, a plaintiff's putative class action alleging a violation of California's Shine the Light law, Cal. Civ. Code § 1798.83, was dismissed without prejudice. See Boorstein v. Men's Journal LLC, No. 12-cv-00771-DSF-E, 2012 WL 2152815 (C.D. Cal. June 14, 2012). The suit, one of several other similar pending suits, is the first reported decision applying the Shine the Light Law.
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.