What’s next in consumer data breach litigation? Minimizing the risk

The language of agreements may very well become pivotal in determining whether claims survive the pleadings stage

In this series of articles, we examined the challenges plaintiffs historically encountered in bringing privacy and data breach claims, and the recent attempts by plaintiffs’ counsel to overcome these obstacles by casting claims under alternate legal theories. In this final installment we now examine the impact these emerging trends may have on companies and how their own end-user agreements and privacy policies might, unintentionally, create an opening for similar claims.

As we have seen, plaintiffs recently achieved some success by framing their data breach claims in common law misrepresentation and related legal theories. For instance, in the Sony Gaming Network case, the plaintiffs alleged that Sony’s privacy policy and end-user agreements misrepresented the steps Sony would take to secure customers’ personal information by using industry-standard encryption to prevent unauthorized access to sensitive financial information. Upon review, the Sony court held that misrepresentation claims passed legal muster under California state law and allowed them to proceed. It further observed that, although Sony disclaimed the ability to provide “perfect security,” there was an issue of fact regarding plaintiff’s allegation that “Sony’s representations regarding ‘reasonable security’ were deceptive, in light of Sony’s additional representations regarding ‘industry-standard’ encryption.”

Contributing Author

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Stephen M. Prignano

Stephen M. Prignano is a partner in the Providence, Rhode Island office of Edwards Wildman Palmer LLP.  His practice focuses on the defense of class...

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Contributing Author

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Matthew Murphy

Matthew Murphy is an associate in the Providence, Rhode Island office of Edwards Wildman Palmer LLP.  His practice focuses on commercial litigation, insurance coverage and...

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