When a data breach occurs at a company, not only is customer data vulnerable but so is employee information. But what obligations do employers owe their employees?

This issue was recently decided in part, at least with respect to Pennsylvania employers, in Dittman v. UPMC, 43 WAP 2017, 2018 WL 6072199, at *14 (Pa. Nov. 21, 2018).  In Dittman, a group of employees sued their employer, the University of Pittsburg Medical Center, for failure to take reasonable care to protect their personal private information.  On appeal, the Supreme Court of Pennsylvania overturned the decision of the lower court and held that an employer owes a common law duty of care to its employees to use reasonable care to safeguard their sensitive data as stored on the employer’s internet-accessible computer system. Notably, the employees’ position was not that the employer engaged in any misfeasance, but nonfeasance for failure to prevent the harm from occurring. The Supreme Court found that the mere fact that third parties committed the wrongdoing – the data breach – did not negate the duty of the employer to safeguard the employees’ sensitive information that they were required to provide the employer as a condition of employment.

The Dittman case is certainly not the first time a group of employees sued an employer based upon a data breach of the employer’s computer system that resulted in the disclosure of the employees’ personally identifiable information. In Sackin v. TransPerfect Global, Inc., 278 F. Supp. 739 (S.D.N.Y. 2017), the employer moved to dismiss a class action filed by the employees, which motion was denied, in part. Among other things, the district court found that the complaint sufficiently stated a cause of action for breach of common law duty of care and that the employer violated its duty to take reasonable steps to protect the employees’ data. The court also found that a viable cause of action existed for breach of the implied contract between the employer and employees, but not for breach of the terms of the employment contract. With respect to the former, the conduct and course of dealing between the parties was deemed to rise to the level of an implied contract because, as a prerequisite of employment, the employees were required to provide the employer with certain sensitive data, and given how commonplace data and identity theft are in the current day and age, the court found an implied assent by the recipient to protect that data.
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As the number of data breaches increases, so do the number of data breach-related lawsuits, whether styled as class actions or individual lawsuits. To the extent these lawsuits are commenced in the federal courts, it gives rise to the question of what satisfies Article III standing. Merely because a data breach may have occurred and personally identifiable information may have been exposed, or is at risk of being exposed, does not necessarily confer standing of the party whose information has been compromised in the absence of actual harm. As with most litigations, the answer also depends, at least in part, in what jurisdiction the lawsuit is commenced.

In Gilot v. Equivity, 18-CV-3492 (WFK), 2018 WL 3653150, at *1 (E.D.N.Y. July 31, 2018), the district court reinforced the Second Circuit’s position on what is required for a plaintiff to have Article III standing. In Gilot, an action commenced by an individual was dismissed for lack of standing where it was only alleged that the unauthorized release of her personally identifiable information to a third party without her consent could lead to potential identity theft. The words “could” and “potential” are important because in the Second Circuit, as in the First, Third and Eighth Circuits, having been put at risk, without actual harm, is insufficient to confer Article III standing upon a plaintiff.

The Eleventh Circuit generally follows the First, Second, Third, and Eighth Circuits; however, the threshold for damages to confer standing is lower. In Muransky v. Godiva Chocolatier, Inc., 905 F.3d 1200 (11th Cir. 2018), the plaintiff alleged that the merchant violated the Fair and Accurate Credit Transactions Act (FACTA) by printing an untruncated receipt with more than five digits of the customer’s credit card number. This statutory violation was sufficient to withstand a motion to dismiss for lack of standing since it constituted damages in the form of the plaintiff needing to bear the cost of safely keeping or disposing of the receipt to avoid someone obtaining the credit card number.
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On October 18, 2018, the Food and Drug Administration (“FDA”) released draft guidance outlining its plans for the management of cybersecurity risks in medical devices. Commenters now have until March 17, 2019, to submit comments to the FDA and get their concerns on the record. More information about submitting comments can be found at the end of this post.

This FDA guidance revision will replace existing guidance released in 2014, which as you can see, includes recommendations, but does not attempt to classify devices. The recent draft guidance takes a more aggressive posture and separates devices into those with a Tier 1 “Higher Cybersecurity Risk” and those with a Tier 2 “Standard Cybersecurity Risk.”

Tier 1 devices are those that meet the following criteria:

1) The device is capable of connecting (e.g., wired, wirelessly) to another medical or non-medical product, or to a network, or to the Internet; and

2) A cybersecurity incident affecting the device could directly result in harm to multiple patients.

Tier 2 devices are any medical device that does not meet the criteria in Tier 1.

The FDA has varying guidance for devices depending on the Tier of the device. The FDA provides guidance for Tier 1 and Tier 2 devices on applying the NIST Cybersecurity Framework, providing appropriate cybersecurity documentation, and adhering to labeling recommendations.

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Cathay Pacific recently disclosed that a data breach occurred exposing information for as many as 9.4 million people – the largest airline data breach ever. The extent of the information obtained varied from credit card information (although it is reported that only partial credit information was obtained or that the cards were expired), to telephone

Effective January 1, 2020, California will require manufacturers of “connected devices” to equip those devices with reasonable security features. An example of a reasonable security feature (provided in the bill) would be to assign each device a unique password or to prompt the user to generate a password on setup.

This new law follows a

As the lazy days of summer wind down slowly at first, and then all at once, now is a good time for a reminder that your own employees returning to work full steam may pose the biggest threat to your cybersecurity. According to the U.S. Department of Health and Human Services Office for Civil Rights,

Although the legislation has not yet been formally introduced, sponsors, Representative Blaine Luetkemeyer (R-Missouri) and Representative Carolyn Maloney (D-New York), released a draft of the “Data Acquisition and Technology Accountability and Security Act” for public consideration on February 16, 2018.  This draft bill would establish a federal security and breach notification regime enforced by the Federal Trade Commission and state attorneys general.

The draft bill would apply to “covered entities,” which are defined as “any person, partnership, corporation, trust, estate, cooperative, association, or other entity that accesses, maintains, or stores personal, or handles personal information.”  In addition to requiring covered entities to develop, implement, and maintain security safeguards appropriate to the particular entity’s size, activities, and the sensitivity of the personal information maintained, the draft bill sets forth a federal standard for data breach response.  Notably, the draft bill would require that a covered entity conduct a preliminary investigation and determine whether there has been an unauthorized acquisition of personal information and whether there is a “reasonable risk that the breach of data security has resulted in or will result in identity theft, fraud, or economic loss to the consumers to whom the personal information involved in the incident relates.”  If this standard is met, a covered entity would be required to notify certain government agencies, such as the Secret Service or the FBI, and other agencies, such as payment card networks and consumer reporting agencies (depending on the type of breach), but only in the event the breach involves the personal information of 5,000 or more consumers.  Furthermore, a covered entity’s obligation to notify affected consumers is triggered only if the covered entity determines that “there is a reasonable risk that the breach of data security has resulted in identity theft, fraud, or economic loss to any consumer . . . .”  Notice to relevant agencies and affected consumers must be provided “immediately” and “without unreasonable delay.”  Finally, the draft bill exempts insurers and expressly preempts state data security and breach notification laws.  As further described below, this proposed breach response regime is much less stringent in comparison to existing state breach notification laws.
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The PGA of America was hit with a troublesome ransomware attack in August ahead of golf’s final “major” tournament of the season, the 100th PGA Championship at Bellerive Country Club in St. Louis, MO.  The hackers were successful in locking many of the organization’s digital marketing files (e.g., logos, banners) specifically designed for the

On April 11, 2018, Arizona Governor Doug Ducey signed a bill into law that bolsters the state’s existing breach notification requirements. The revised law will take effect in July. One of the most notable amendments to the existing law is the expansion of the existing state law definition of “personal information” to also include an individual’s user name or e-mail address in combination with a password or security question and answer that allows access to an online account, as well an individual’s first name or first initial in combination with the following data elements: (i) an individual’s health insurance identification number; (ii) information about an individual’s medical or mental health treatment or diagnosis by a health care professional; (iii) an individual’s passport number; (iv) an individual’s taxpayer ID numbers; and (v) certain biometric data. Following Oregon’s lead, Arizona lawmakers also replaced the existing ambiguous notification timeframe language for notice to affected state residents with a definitive deadline of 45 days after a determination that a breach has occurred, unless a statutory exemption applies. The amendments also include a new requirement that the Arizona Attorney General and the three largest nationwide consumer reporting agencies be notified of the breach, in the event that the breach affects more than 1,000 state residents. Among other revisions, the amendments also prescribe the required content of the notices to impacted residents and clarify the available delivery methods for such notices.
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