Proposed Law Allows for Data Breach Lawsuits Without Proof of Injury

by Fisher Phillips
Contact

SB 1121, which is making its way through the California Legislature, would allow businesses to be sued for data breaches even when no one was actually injured. This includes being sued for failing to implement and maintain reasonable security procedures as well as for failing to properly notify affected individuals of a breach of their personal information. Opponents of this bill are calling it a “job killer”.

Think there is enough litigation in California? Well, California could soon surpass its own record of being the most litigious state in the history of the world by opening the floodgates to more lawsuits in the aftermath of a data breach. Introduced on February 13, 2018, SB 1121 is currently moving through the California Senate and generating an uproar among business leaders. If enacted, SB 1121 would empower anyone “whose personal information has been or is reasonably believed to have been breached” to file a civil lawsuit against a business on whose watch the personal information was breached, whether or not the person suffered any actual harm or monetary loss.

Specifically, under SB 1121, an individual who believes they were a victim of a data breach can assert a claim against the business responsible for the breach for any violation of the California statute that requires the business to (a) implement and maintain “reasonable” security measures to protect personal information from falling into the wrong hands, and (b) disclose a data breach to all California residents whose unencrypted personal information fell into the wrong hands. Existing law contains a more concrete injury requirement that limits claims to only those who were injured by a violation of the statute. In contrast, SB 1121 appears to lower the threshold so anyone whose personal information has been leaked, whether or not they actually suffered any injury as a result of the leak, can file a lawsuit even for technical violations of the statute. SB 1121 also expands the statute of limitations for claims under this statute to four years.

It is no surprise that a coalition of business and industry groups have banded together to advocate against SB 1121, calling it a “Job Killer.” Among the voices in opposition are the California Chamber of Commerce, at least ten other local chambers of commerce, California Bankers Association, California Hospital Association, California Retailers Association, and various technology advocacy groups and trade organizations. These groups argue that SB 1121 would drastically expand the civil liability of businesses without much added benefit to consumers, and that consumer class action attorneys stand to benefit greatly if this bill is enacted into law.

SB 1121 would impose a minimum of $200 in damages per consumer without requiring any proof of consumer injury. This would turn even a small data breach in which no one was actually injured or where the disclosed information was actually recovered and there was no risk of identity theft resulting from the breach into a potential class action lawsuit.

Although this bill has a long way to go in the Legislature before getting to the Governor’s desk, the prospect of such a bill being enacted should be of concern to all businesses and employers in California. If your business has not recently undergone a computer security assessment, now is the time to plan this in your budget for the remainder of 2018. As data breaches occur at a more frequent rate, it may just be a matter of time when you find yourself having to call a Fisher Phillips attorney at 7pm on a Friday asking whether a leak of information qualifies as a data breach under the statute and having to quickly respond to a data breach. Employers are wise to see the introduction of SB 1121 as an opportunity to stay ahead of the data breach trend and focus on prevention and compliance.

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.

© Fisher Phillips | Attorney Advertising

Written by:

Fisher Phillips
Contact
more
less

Fisher Phillips 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.
Custom Email Digest
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.