On November 20, 2018, the Illinois Supreme Court will hear oral arguments in a case that has significant implications for Illinois employers, though it is not an employment-law case. Over the past two years, more than 100 class action lawsuits have been filed by employees claiming to be “aggrieved persons” under the Illinois Biometric Information Privacy Act (“BIPA”). The employees’ claims are predicated on their employer’s use of a biometric timeclock1 allegedly without complying with two of BIPA’s requirements: (1) providing written notice explaining the purpose for collecting, and the retention period for, the biometric data; and (2) obtaining employees’ written consent to the data collection. Because BIPA provides that “any person aggrieved by a violation of th[e] Act shall have a right of action,” the complaints in these cases allege that each employee in the putative class is entitled to recover statutory damages of at least $1,000 without pleading or proving actual harm.
On December 21, 2017, an Illinois appeals court rejected this theory, ruling that a private entity’s failure to comply with BIPA’s notice-and-consent requirements, without any allegation of actual harm, is nothing more than a “technical violation” for which a plaintiff cannot obtain relief. See Rosenbach v. Six Flags Entertainment Corp., 2017 IL App (2d) 170317, ¶¶ 23, 28. The court made clear: “Alleging only technical violations of the notice and consent provisions of the statute, as plaintiff did here, does not equate to alleging an adverse effect or harm.” Id. at ¶21. The Illinois Supreme Court2 allowed plaintiff’s petition for leave to appeal on May 30, 2018.
Within the next few months, that court will answer the question of whether an individual can obtain statutory damages or injunctive relief under BIPA when the only “injury” alleged is a violation of BIPA’s notice-and-consent requirements. In order for the court to answer that question, however, it likely will need to address several important underlying issues, and consider the potential ramifications of its ruling. This article outlines the issues the court may need to consider.
Issue #1: BIPA’s Legislative Intent. BIPA was enacted after Pay By Touch, the largest fingerprint scan system in Illinois, filed for bankruptcy, and the bankruptcy court approved the sale of Pay By Touch’s database of biometric data. See 740 ILCS 14/5 (“Legislative findings; intent”). At least one Illinois federal court has determined that the legislature’s intent in enacting BIPA was to “create a legal right to privacy in personal biometric data and to protect the right to control one’s biometric identifiers and information,” in support of its holding that actual harm need not be alleged to state a claim. Dixon v. The Washington and Jane Smith Community, No. 17-cv-08033, 2018 WL 2445292 (N.D. Ill. May 31, 2018).
The Illinois Supreme Court must first examine what the legislature intended on the question of injury. If the court were to recognize BIPA as creating a right of privacy, an employer’s failure to provide notice to, and obtain written consent from, the court likely would rule that employees who knowingly provide biometric data using the employer’s biometric timeclock without receiving notice or giving consent can state a claim even without pleading any actual harm.
Issue #2: Federal Court Rulings. Over the past two years, several federal district courts have ruled that an employee claiming a mere violation of BIPA’s notice-and-consent requirements has not suffered an injury-in-fact sufficient to support federal jurisdiction. Notably, a number of these cases involved biometric timeclocks.3 Though these rulings are not binding on the Illinois Supreme Court, it likely will need to address them, as state appellate courts commonly consider relevant federal court authority on state-law concerns.
Issue #3: Potential Spike in BIPA Class Actions. While the biometric technology used by a consumer—for example, a fingerprint scanner that signs a customer in to her local tanning salon, or a facial recognition scanner that a consumer uses to access his profile at a fast-food restaurant4—may be used by the consumer two or three times a month, an employer’s biometric timeclock typically will be used at least four times a day, five days a week, by a full-time, non-exempt employee. This frequent use of biometric technology in the workplace, coupled with the number of employees whose biometric data is captured each day, has inspired the plaintiffs’ bar to target employers. Employees can conceivably assert that BIPA entitles them to at least $1,000 in statutory damages for each time biometric data is collected without notice and consent.
If the Illinois Supreme Court were to decide that a failure to provide notice and obtain consent, standing alone, is enough to sustain a BIPA action, employers are almost certain to see an increase in BIPA litigation. Although it arguably may become harder for plaintiff’s lawyers to find employers that have failed to comply with BIPA’s notice-and-consent requirements, thanks to the headlines created by BIPA litigation, some employers may still fail to comply. Indeed, BIPA cases alleging violations of the notice-and-consent requirements have continued to be filed over the past 10 months, despite the ongoing headlines about BIPA actions.
Issue #4: Unforeseeable Liability. At present, the law itself provides the only guidance on calculating damages under BIPA. The law permits the following recovery for violations of the Act: (1) where a private entity “negligently” violates BIPA, the greater of $1,000 per violation, or actual damages; and (2) where a private entity “recklessly violates” BIPA, the greater of $5,000 per violation, or actual damages. The question then becomes what constitutes a “violation” for purposes of the statute.
The most logical reading would be that an employer’s failure to provide notice and obtain consent constitutes only one violation for each employee whose biometric data was collected. However, as noted above, some class action complaints appear to be seeking a measure of damages that would result in an award of statutory damages each time an employer collected biometric data from each employee without notice or consent. Given that many non-exempt employees clock in and out several times each day, such a method of calculation could result in potentially crippling liability for many businesses. The inability to accurately project potential exposure in BIPA litigation—at least until this issue is resolved—potentially is a significant concern for publicly traded companies and even for smaller companies trying to engage in forward-looking planning.
Conclusion. No matter how the Illinois Supreme Court rules, its decision will have significant consequences for Illinois employers. As employers await the court’s ruling in Rosenbach, they should use the time to evaluate their BIPA-compliance efforts.
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This article was originally published by Washington Legal Foundation, reprinted with permission.