Pennsylvania Supreme Court Holds Employers Have Duty to Protect Employee Data from Cyberattacks

by White and Williams LLP

White and Williams LLP

As much of the country’s workforce traveled on Wednesday for the Thanksgiving holiday, the Supreme Court of Pennsylvania issued a decision that some may view as a turkey: under Pennsylvania law, employers have an independent duty to protect employee data from cyberattacks. Specifically, in Dittman v. UPMC, 2018 Pa. LEXIS 6051 (Pa. Nov. 21, 2018), the court held that:

  • An employer has “a legal duty to exercise reasonable care to safeguard” employee personal data stored on internet-accessible computer systems.
  • Under the economic loss doctrine, recovery for purely pecuniary damages is permissible under a negligence theory “provided that the plaintiff can establish the defendant’s breach of a legal duty arising under common law that is independent of any duty assumed pursuant to contract.”

Translation: given that the court now recognizes a common law duty for data protection, employees now may sue their employers for purely economic loss arising from the failure to safeguard their data.

Critically, the decision is a reflection of the changing times. With more and more regulation across the country and internationally (e.g., the NY cyber regulations, recent SEC guidance, NAIC Model Law on Data Security, the GDPR, etc.), and changing perceptions toward cyberattacks, companies that collect data are expected to protect that data. Dittman makes this the clear rule of law in Pennsylvania. The decision marks an expansion of risk under business, E&O, ELP, and cybersecurity insurance. Some markets, like the small-to-medium enterprise (SME) market that has members with inadequate cybersecurity programs, may see a big impact from Dittman and a rise in costly litigation. Is this a case where plaintiffs’ attorneys may start their engines? Maybe. In so holding, the Pennsylvania Supreme Court ignored the trial court’s plea for judicial restraint. (The trial court believed imposing an affirmative duty upon employers should be left to the legislative branch.) Certainly, employers and their insurers need to understand this decision.

The Case

In Dittman, current and former employees of the Pittsburgh Medical Center (UPMC) commenced an operative class action following a data breach in which personal information, including names, birth dates, social security numbers, addresses, tax forms, and bank account information, of 62,000 employees was accessed and stolen from UPMC’s computer systems. The data, which UPMC had collected from employees as a condition of their employment, later was used to file fraudulent tax returns. Id. at *2. Plaintiffs, which asserted claims for negligence and breach of implied contract, alleged that UPMC, as their employer, had a duty of care to protect their personal information. They alleged UPMC breached this duty by: 

  • Failing to design, maintain, and test its data security program to ensure that plaintiffs’ data was adequately protected;
  • Failing to implement “processes that would detect a breach of its security systems in a timely manner”;
  • Violating “administrative guidelines”; and
  • Failing to “meet current data security industry standards,” such as proper encryption, adequate firewall protection, and authentication protocols.

Plaintiffs alleged that as a result of UPMC’s breach of the duty of care, they incurred damages from fraudulently filed tax returns and are “at an increased and imminent risk of becoming victims of identity theft crimes, fraud and abuse.” Id. at *2-4.  

The trial court dismissed the lawsuit. Because plaintiffs did not allege any physical injury or property damage, plaintiffs could not recover solely economic damages under Pennsylvania’s economic loss doctrine. The trial court also opined that the courts should not create a new affirmative duty of care that would permit such litigation. Fearing such a duty would create a wave of litigation upon an already over-burdened judiciary, the trial court stated that the decision to impose such a duty upon employers should be left to the legislative branch. Id. at *6-9. The Superior Court affirmed, noting that although the relationship between the parties favored imposing a duty upon UPMC, UPMC nevertheless did owe plaintiffs a special duty under Pennsylvania law. The Superior Court further agreed that the economic loss doctrine would prohibit recovery. Id.  at *10-12. The Pennsylvania Supreme Court reversed.

Dittman plaintiffs argued that by requiring its employees to provide it with personal information, UPMC owed a duty to exercise reasonable care to protect the data. Id. at *15. Plaintiffs contended that such a requirement fell within the general principle of tort law that “anyone who does an affirmative act is under a duty to others to exercise the care of a reasonable man to protect them against an unreasonable risk of harm to them arising out of the act.” Id. at *16. Plaintiffs contended that although this duty was limited by the concept of foreseeability, here, it was foreseeable that “troves of electronic data stored on internet-accessible computers held by large entities are obvious targets for cyber criminals.” Id. at *17. UPMC disagreed, arguing that its actions did not increase the risk of criminal activity, and that a new duty should not be created (or that it should be held liable) “merely because of the general prevalence or conceivable risk of data breaches.” Id. at *19-20. UPMC also argued that the criminal actions of a third party (i.e., the hacker) should be a superseding event that absolved it of liability. Id. at *20.

The Dittman court disagreed with UPMC, concluding as a threshold matter that the case before it did not involve the creation of a “new” duty, but instead the “application of an existing duty to a novel factual scenario.” Id. at *21. Is this semantics? Maybe. Agreeing that tort law required those who undertake affirmative acts “to exercise the care of a reasonable man to protect [others] against an unreasonable risk of harm to them arising out of the act,’” the Dittman court concluded that UPMC’s requirement that plaintiffs provide personal information triggered a duty of care:

… UPMC required them [employees] to provide certain personal and financial information, which UPMC collected and stored on its internet-accessible computer system without use of adequate security measures, including proper encryption, adequate firewalls, and an adequate authentication protocol. These factual assertions plainly constitute affirmative conduct on the part of UPMC. . . . Employees [also] have sufficiently alleged that UPMC’s affirmative conduct created the risk of a data breach. Thus, we agree with Employees that, in collecting and storing Employees’ data on its computer systems, UPMC owed Employees a duty to exercise reasonable care to protect them against an unreasonable risk of harm arising out of that act.

Id. at *22-24. 

The court rejected the contention that the third-party hacking created a superseding event to absolve UPMC of liability. Generally, under tort law, the wrongful actions of a third party are not deemed foreseeable and may serve as a superseding event to prohibit liability. This limitation, however, does not apply where the defendant “realized or should have realized” the likelihood that his actions could create a situation in which a third party might avail himself of an opportunity to commit a tort or crime. Id. at *24-25. In the case before it, the Dittman court held that UPMC’s data collection and storage created a situation in which UPMC knew or should have known that a third party might try to hack into its network. Thus, according to the court, “the criminal acts of third parties in executing the data breach do not alleviate UPMC of its duty to protect Employees’ personal and financial information from that breach.” Id. at *25-26.

Finally, addressing the economic loss doctrine, the Supreme Court rejected both lower courts’ readings of the economic loss doctrine to preclude recovery of solely economic damages based on negligence. Id. at *38-39. Instead, the Dittman court determined that Pennsylvania recognizes “that purely economic losses are recoverable in a variety of tort actions,” and that “a plaintiff is not barred from recovering economic losses simply because the action sounds in tort rather than contract law.” Id. at *39. With this expanded reading of the economic loss doctrine, and combined with the duty of care the court now placed on employers to protect data, the court held that the doctrine permitted recovery for the underlying data beach: 

Here, Employees have asserted that UPMC breached its common law duty to act with reasonable care in collecting and storing their personal and financial information on its computer systems. As this legal duty exists independently from any contractual obligations between the parties, the economic loss doctrine does not bar Employees’ claim.

Id. at *42-43.

What This Case Means

The Dittman holding allows current and former employees to sue their employers who suffer a data breach (or other cybersecurity incident, for that matter) involving their information. In a vacuum, the holding does not seem that extraordinary. In the context of heightening cybersecurity regulation, perhaps it should not come as a great surprise. However, when considering boilerplate claims such as “increased risk” of fraud, lost hours expended to undertake proactive measures to prevent identity theft (or remedy it), or lost value of data on the dark web, when combined with the high costs of class action litigation, the costs this decision may impose on employers and their insurance carriers are unmistakable. The greatest impact may be upon the SME market, as small to mid-sized companies are less likely to have implemented adequate cybersecurity programs. 

There are some silver linings. Increased litigation against larger companies may not materialize. Given increased regulation, whether by governmental agencies or consensus standards, and greater emphasis on risk allocation (i.e., steep indemnity provisions) in business contracts, many companies have been forced to improve their cybersecurity programs to levels that may match the duty of care now imposed by Dittman. Also, a prominent decision like Dittman, in lieu of the judicial creep of lesser-known decisions, provides companies with fair warning to assess and improve their cybersecurity programs now. Insurers also should consider the decision when assessing risks of their Pennsylvania policyholders. Finally, a decision like Dittman will lead to better overall cybersecurity among Pennsylvania companies, whether achieved by proactive measures undertaken by them, or bet-the-company litigation.

[View source.]

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.

© White and Williams LLP | Attorney Advertising

Written by:

White and Williams LLP

White and Williams LLP 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:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. 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. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our 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 are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to

Changes in Our Privacy Policy

We reserve the right to change this Privacy 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 our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at:

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit
  • New Relic - For more information on New Relic cookies, please visit
  • Google Analytics - For more information on Google Analytics cookies, visit To opt-out of being tracked by Google Analytics across all websites visit This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at:

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.