In its recent decision in Galaria v. Nationwide Mut. Ins. Co., no. 15-3386 (6th Cir. Sept. 12, 2016). Co., No. 15-3386 (6th Cir. Sept. 12, 2016), a divided Sixth Circuit panel held that plaintiffs had standing to assert claims arising from hackers’ alleged theft of data containing plaintiffs’ sensitive personal data, including dates of birth and Social Security numbers.  In so ruling, the court became the latest to hold that hackers’ targeted theft of personal identifying information (“PII”), standing alone, creates a substantial risk of harm that is sufficient to satisfy the concrete injury requirement for standing under Article III of the United States Constitution.

The lawsuit concerned a 2012 data breach in which hackers stole data that Nationwide collected for purposes of underwriting life insurance policies.  Plaintiffs were among those who received notice that hackers had stolen data containing the names, dates of birth, marital status, genders, occupations, employers, Social Security numbers and driver’s license numbers for individuals who had applied for insurance from Nationwide.  Criminals are increasingly targeting PII like that stolen here because it can be used to engage in fraudulent borrowing or to file false tax returns to obtain illegal refunds, making such data valuable on the black market.  However, as is true in many cases involving PII data breaches, plaintiffs did not allege that their PII had actually been misused.  Also, Nationwide offered a year of free credit monitoring and identity-theft protection insurance to individuals whose information has been stolen.  Based on those protections and plaintiffs’ failure to allege actual misuse of stolen data, the district court granted Nationwide’s motion to dismiss for lack of standing. Continue Reading Sixth Circuit Rules That Theft of PII from Insurance Company Results in Article III Standing

As has become typical in the data security space, there was quite a bit of activity in state legislatures over the previous year concerning data breach notification statutes.  Lawmakers are keenly aware of the high profile data breaches making headlines and the increasing concerns of constituents around identity theft and pervasive cybercrime.  In response, states are beefing up their data security statutes in order to provide greater protection for a broader range of data, to require notification to Attorneys General, and to speed up the timeline companies have to advise residents when their personal information has been compromised, to name a few steps. Please review our updated Mintz Matrix to make sure you understand the latest rules applicable to your business!

According to a recent summary published by the National Conference of State Legislatures, more than 25 states in 2016 have introduced or are currently considering security breach notification bills or resolutions.  While much legislation remains pending in statehouses across the country, statutory amendments passed in four states took effect over this past summer alone.  Here is a brief summary of significant amendments to data breach notification rules in Nebraska, Nevada, Rhode Island and Tennessee. Continue Reading Summer Round-Up: Four States Bolster Data Breach Notification Laws and More Changes on the Way

Last week the clothing retailer Eddie Bauer LLC issued a press release to announce that its point of sale (“POS”) system at retail stores was compromised by malware for more than six months earlier this year.  The communication provided few details but did specify that the malware allowed attackers to access payment card information related to purchases at Eddie Bauer’s more than 350 locations in the United States, Canada and other international markets from January 2 until July 17, 2016.  According to the company, its e-commerce website was not affected.

In an open letter posted online, Eddie Bauer’s CEO Mike Egeck explained that the company had conducted an investigation, involved third party experts and the FBI, and now is in the process of notifying customers and reviewing its IT systems to bolster security.  These are customary and important steps following a security breach to mitigate harm to customers, protect against future threats, and comply with state data breach notification laws.    Read on to find out more ….. Continue Reading Eddie Bauer Latest Victim of POS Malware Attack


Two recent data breach incidents in the healthcare industry prove what readers of this blog have heard all too often:  KNOW THY VENDORS.

Last week, Phoenix-based Banner Health reported one of the year’s largest data breaches.  Banner reported that it had suffered a massive cyberattack potentially affecting the information of 3.7 million patients, health plan members and beneficiaries, providers.   This attack is notable for all companies and not just healthcare providers covered by HIPAA.   Reportedly, the attack occurred through the computer systems that process food and beverage purchases in the Banner system.  In the incident, according to reports, the hackers gained access to the larger systems through the point-of-sale computer system that processes food and beverage purchases.  The attack was discovered on July 13, and Banner believes hackers originally gained access on June 17. Continue Reading To Protect Data: Keep Your Network Access Close, and Your Vendors Closer

In a terse two-page order, Senior District Court Judge Paul Magnuson dismissed derivative claims brought against officers and directors of Target in connection with the 2013 holiday-season data breach.  The dismissed claims, brought by Target shareholders on behalf of the corporation, alleged that the data breach had resulted from management failures by the defendant officers and directors.  The Target board of directors appointed a special litigation committee (“SLC”) to investigate the shareholders’ allegations and determine whether or not to pursue the claims.  The SLC, composed of two newly-appointed independent directors represented by independent counsel, recommended that Target not pursue claims against the officers and directors.  The SLC then moved to dismiss, as did Target and the defendant officers and directors.  Plaintiffs declined to oppose and the court’s order followed. Continue Reading Fizzled Suit Against Target Officers and Directors Raises Question as to the Value of Derivative Claims in Data Breach Cases

In 2004, Mintz Levin created a compendium of state data breach notification laws and has been updating it on a regular basis ever since.imitated

Our latest update is available here, and it should be part of your incident response “toolbox” and part of your planning.

Some changes of note

Tennessee is our most recent state to amend its existing state data breach notification law.  Last week, the Governor signed an amendment into law that takes effect on July 1, 2016:

  • Joins several other states in tightening the notice period to “no later than 45 days from the discovery or notification of the breach…”
  • Eliminates the “encryption safe harbor,” i.e., notification obligations are triggered even where the accessed or acquired data elements are encrypted.
  • Specifically defines “unauthorized person” to include an employee “who is discovered … to have obtained personal information and intentionally used it for an unlawful purpose.”

California, Connecticut, Montana, Nevada, North Dakota, Oregon, Rhode Island, Washington and Wyoming all amended data breach laws in 2015.  Some amendments signed into law in 2015 do not take effect until later this year, so make sure to note the effective dates on  the Mintz Matrix when consulting various states.

What should you do now?

Spring cleaning.   Given the number of changes at the state level (and no prospect for federal legislation easing this pain….), spring is a good time to review your incident response plan and data privacy policies to bring everything in line.    In particular:

  • Note tightened response deadlines (Rhode Island, Tennessee)
  • Add identity theft prevention or identity theft mitigation services (Connecticut, California)
  • Review data classification to take into account expanded definitions of personal information (Montana, Wyoming)
  • Revise notice templates to comply with the new California format

As always, the Mintz Matrix is for informational purposes only and does not constitute legal advice or opinions regarding any specific facts relating to specific data breach incidents. You should seek the advice of experienced legal counsel (e.g., the Mintz Levin privacy team) when reviewing options and obligations in responding to a particular data security breach.

Hat tip to the newest member of the Mintz Levin Privacy team, Michael Katz, for great work on this update!

21st Century Oncology Holdings, a company that operates a chain of 181 cancer treatment centers in the US and Latin America, announced on Friday March 4 that it was latest victim of a cyber-attack affecting 2.2 million individuals. When did the attack occur? Months ago.   Read on for the gory details….. Continue Reading Not again …. yet another health care data breach

Last week, a federal court in Atlanta issued an order preliminarily approving a proposed settlement – valued up to $19.5 million – of the consumer claims arising from the 2014 theft of payment card data from Home Depot.  The cash and noncash terms of the proposed settlement are unexceptional.  What is unusual about this settlement is its timing.  According to plaintiffs’ brief seeking preliminary approval of the settlement, rather than wait for a decision on Home Depot’s still-pending motion to dismiss, the parties conducted a mediation after argument on the motion, and concluded a negotiated settlement before the motion was decided.  The decision to settle early in the case – before discovery or summary judgment – may signal a recognition that the likely settlement value of the case did not warrant the substantial cost of additional litigation for either side.  Insofar as that logic would apply with equal force in just about any consumer payment card data breach case, the early resolution of the Home Depot case could provide a model for future settlements. Continue Reading Early Settlement of the Home Depot Consumer Data Breach Claims – The Start of a Trend?

Yesterday, we reviewed the staggering numbers in California Attorney General Kamala Harris’ 2016 Data Breach Report.california-flag-graphic

In addition to providing a comprehensive analysis of four years of data breaches, the report provides what is an answer to the vexing question of what her office considers to be “reasonable security.”

Continue Reading California by the Numbers (Part 2): How to Stay out of the 2017 Report