Data Breach Plaintiffs’ Allegations Sufficient for Standing in Employee’s Suit Against CareCentrix

Ted Karch writes:

On Monday, the court in Hapka v. CareCentrix, Inc. ruled that employees of CareCentrix whose personal information was compromised have alleged enough harm for standing under Spokeo, Inc. v. Robins.

In early 2016, a phishing attack compromised defendant CareCentrix’s systems, revealing personal information of up to two thousand employees.  CareCentrix notified the plaintiff of the data breach on March 27, 2016, and on April 18, the plaintiff received a letter from the IRS stating that someone had filed a fraudulent tax return in her name.

Read more on Covington & Burling InsidePrivacy.

This is a case where a plaintiff could allege actual, concrete injury, but there is something else notable about the opinion, I think. Karch writes:

The court also ruled that the plaintiff had adequately pleaded the elements of a negligence claim, alleging that defendant had failed to implement reasonable data security measures to protect employees’ personal information from disclosure.

From the opinion and order, which I’ve uploaded here, it appears the court rejected the defendant’s argument that in the absence of a statutory duty to protect employee data, the plaintiffs had to show a common-law duty and had failed to do so:

Plaintiff responds that defendant’s duty is to exercise reasonable care when it collects and stores the personal information of its employees. In this instance, defendant was obligated to implement reasonable data security measures to protect that information from disclosure. See In re Target Corp. Customer Data Sec. Breach Litig., 64 F. Supp. 3d 1304, 1308 (D. Minn. 2014) (“[G]eneral negligence law imposes a general duty of reasonable care when the defendant’s own conduct creates a foreseeable risk of injury to a foreseeable plaintiff.”) (citations omitted).

The court agrees with plaintiff that requiring identification of a statutory duty is unnecessary. Given plaintiff’s allegations that the harm was foreseeable, defendant had the duty to exercise reasonable care to prevent that harm. The court will not dismiss plaintiff’s claim for failure to identify a more specific duty.

A case to watch, indeed.

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