Two recent court decisions in the high-profile White Castle and BNSF Illinois Biometric Information Privacy Act (BIPA) matters have created additional uncertainty about damages in BIPA matters, likely driving up settlement and exposure in such matters in the near term. Below we summarize the recent developments.
White Castle: Petition for Rehearing Denied, Over Dissent
Today the Illinois Supreme Court denied White Castle’s petition for rehearing in the Cothron v. White Castle matter. Readers of our updates will recall that previously the Court had held, in a 4-3 decision, that a BIPA claim accrues, and therefore a violation of the statute occurs, with each and every use of the offending technology. Another part of the statute, not technically at issue in the White Castle case but clearly implicated by it, allows for statutory damages for “each violation” of the statute. In the case of a finger-scan verification system like the one at issue in White Castle, that could lead individual plaintiffs to seek potentially millions of dollars for each individual for their routine use of alleged biometric technology at work, such as through timekeeping, security, or point-of-sale devices.
White Castle filed a petition for rehearing and the Court denied it based on the same 4-3 split as the original action. The majority did not comment on the denial of the rehearing. Justice Overstreet, joined by Chief Justice Theis and Justice Holder White, dissented from the denial of the petition for rehearing in a new, scathing dissenting opinion. The dissenting justices argued that the majority opinion will directly lead to damages results that “will vastly exceed reasonable ratios between the damages awarded and the offense at issue.” In the dissenters’ view, this result “not only violates basic and fundamental principles of statutory construction but also raises serious due process concerns.” They added, among other comments: “For the majority’s flawed construction of the Act to prevail, it must be presumed that our legislature resolutely passed the Act for the purpose of establishing a statutory landmine, destroying commerce in its wake when negligently triggered.”
The dissenters therefore argued that the Court should grant rehearing to “determine if the resulting penalty to Illinois businesses” that arises from the majority opinion “passes constitutional scrutiny.”
They also argued, that, at a minimum, the Court should grant rehearing to provide more guidance on the “discretionary” aspect of the statutory damages suggested by the majority because “no guidance or criteria remain for who pays nothing and who suffers annihilative liability.” That issue is discussed more below.
The White Castle ruling is now final and the law of Illinois. Theoretically, White Castle could obtain review by the United States Supreme Court, or try to raise constitutional challenges on remand to the lower courts. The dissenting opinion seems to invite Supreme Court review by focusing on constitutional issues, but review by the United States Supreme Court is, of course, very rarely granted, especially on appeals from state supreme courts.
As we previously reported, attempts at BIPA reform failed in the Illinois legislature this year and are unlikely to be revived until early 2024 at the soonest.
BNSF: New Trial on Damages Granted (Not Necessarily Good News)
In a related development, on June 30 Judge Kennelly of the United States District Court for the Northern District of Illinois granted a new trial in the Rogers v. BNSF Railway case, the first BIPA case to be tried to a jury. That trial resulted in a $228 million verdict against BNSF last fall–a result cited by today’s dissent in White Castle as an example of the “confusion” on damages created by the White Castle ruling.
The grant of the new trial is based on the White Castle majority’s comments that damages are discretionary. In the original trial, jurors did not calculate damages. Instead, Judge Kennelly entered the $228 million verdict against BNSF after a jury had found that BNSF had acted intentionally or recklessly in violating BIPA by failing to inform or obtain written consent prior to obtaining truck drivers’ fingerprints when entering into BNSF’s Illinois railyards. Judge Kennelly entered the $228 million verdict by multiplying the statutory per-violation amount of $5,000 times each of the 45,600 drivers who had their fingerprints registered and scanned by the company. Jurors were not informed of the statutory damages available.
The new trial will be limited solely to whether BNSF should pay damages, and if so, how much. To determine what an appropriate damages award should be, Judge Kennelly noted that evidence barred from the first trial might now be relevant to the new jury’s damages decision. This included information regarding BNSF’s finances, and potential risks of identity theft that are possible with the collection of fingerprints. In addition, other relevant factors for a jury to consider in determining a damages award include the need to compensate the plaintiff, deterrence, and the level of harm suffered by those who had their fingerprint captured. We expect BNSF will argue that plaintiffs suffered no actual harm, while plaintiffs will raise the specter of identity theft and other possible harms as reasons they should be compensated. Plaintiffs also likely will try again to argue that they should be allowed to seek “per-scan” damages under White Castle, which Judge Kennelly has previously not allowed on the basis that the theory was not raised in a timely manner.
The new trial on damages is slated to start on October 2, 2023.
