LinkedIn Data Breach Lawsuit Dismissed For Lack Of Standing

by Perkins Coie
Contact

A federal judge in the Northern District of California recently added to the growing list of cases rejecting attempts to recover damages resulting from data breaches.  In In re LinkedIn User Privacy Litigation, Case no. 5:12-CV-03088 EJD (March 6, 2013), the court dismissed a lawsuit brought by LinkedIn users who were upset over the June 2012 posting of 6.5 million stolen LinkedIn user passwords.  The court reasoned that plaintiffs lacked standing to sue because they had not sufficiently pled either economic harm or increased risk of future harm. 

The putative class attempted to show harm by limiting the class to "premium" LinkedIn members who paid monthly fees for access to features not available to non-paying users, alleging that LinkedIn’s failure to “salt”[1] users' passwords before encrypting them—and thereby enhance password security—was not consistent with industry standards, and that because of this security lapse, among others, plaintiffs did not receive the premium product they paid for.  Plaintiffs pointed to the security portion of LinkedIn’s privacy policy as the basis of LinkedIn’s security promises.   

The court quoted several portions of LinkedIn’s privacy policy that were referenced in the complaint, including the following: 

All information that you provide will be protected with industry standard protocols and technology….  In order to help secure your personal information, access to your data on LinkedIn is password-protected, and sensitive data (such as credit card information) is protected by SSL encryption when it is exchanged between your web browser and the LinkedIn website.  To protect any data you store on our servers, LinkedIn also regularly audits its system for possible vulnerabilities and attacks, and we use a tier-one secured-access data center.  However, since the internet is not a 100% secure environment, we cannot ensure or warrant the security of any information you transmit to LinkedIn.  

While plaintiffs’ limitation of the purported class to paying premium LinkedIn members attempted to get around a common problem faced by data breach plaintiffs—that they have suffered no damage—the court was not persuaded and identified four problems with plaintiffs’ theory of "economic harm:"

  1. LinkedIn’s security promises applied to all LinkedIn users, not just those who paid for premium accounts, so the premium members did not provide any monetary consideration for LinkedIn’s security services;
  2. Plaintiffs did not allege that they actually read the alleged misrepresentations regarding security contained in LinkedIn's privacy policy and therefore could not have relied on those promises in purchasing premium accounts;
  3. Plaintiffs' claims were primarily based on breach of contract for LinkedIn’s failure to use the promised level of security, but this economic loss would have occurred at some point before the breach, so the damages proffered by plaintiffs cannot form the basis of standing for their breach of contract-related claims; and 
  4. If viewed as a defective product claim, economic harm requires not only that the plaintiffs have bought the defective product, but that they have been damaged in some way by it, and plaintiffs here did not allege "something more" than overpaying for a “defective” product.  The court noted that the “something more” could be a harm that occurred as a result of the alleged deficient security services and security breach, such as, for example, theft of their personally identifiable information.

One of the putative class representatives also alleged a "fear of future harm" theory, based on the fact that her LinkedIn password was posted on the Internet.   But the court rejected that theory and noted that an allegation that her password was merely posted online does not equate to a legally cognizable injury, such as identify theft or theft of her personally identifiable information.  

The court then dismissed the complaint without prejudice and gave plaintiffs leave to amend. 


[1] “Salting” is an encryption process in which random values are combined with a password before the text is encrypted.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Perkins Coie | Attorney Advertising

Written by:

Perkins Coie
Contact
more
less

Perkins Coie on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.