Supreme Court’s Clapper Decision Raises Bar for Standing in Data Security Breach Litigation

more+
less-

On February 26, 2013, the United States Supreme Court in Clapper v. Amnesty International adopted a demanding standard for Article III standing in privacy cases. Although the case addressed issues of Constitutional privacy, the decision also will likely assist companies that have suffered data security breaches in obtaining dismissal of ensuing lawsuits by consumers claiming that their data was compromised in the breach. The Court held that in order to satisfy Article III’s standing requirement based on a threat of future harm, a plaintiff must show that the threatened injury is “certainly impending.” This holding has broad implications for data security breach litigation, where consumers often cannot plead, much less show, that any exposure of their data in the breach has resulted or will imminently result in criminals committing identity theft or otherwise causing them financial injury.

A plaintiff seeking to invoke the jurisdiction of the federal courts must satisfy the standing requirements of Article III of the Constitution, which require that a plaintiff allege an “injury in fact.” Specifically, as explained in prior Supreme Court decisions such as Lujan v. Defenders of Wildlife, a plaintiff must show an “invasion of a legally protected interest which is (a) concrete and particularized” and “(b) actual or imminent, not conjectural or hypothetical.” Constitutional standing also requires a causal connection between the injury alleged and the conduct complained of.

To date, courts have inconsistently applied this standard in data security breach litigation. Some courts held that the standard was satisfied in cases where consumers claimed that a data security breach exposed them to an increased risk of future identity theft. Other courts have required plaintiffs to go further and allege that criminals actually used the data to commit identity theft or make fraudulent charges to their financial accounts. Courts also have disagreed as to whether steps consumers take to preemptively “mitigate” potential harm from a data security breach, such as by enrolling in credit monitoring services, constitute a sufficiently concrete injury to confer standing.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.