District Court (NY) Says It’s Powerless to Approve Class Settlement Arising Out of Data Breach Due to Lack of Art. III Cognizable Injury

Scott J. Hyman of Severson & Werson PC writes:

In Steven v. Carlos Lopez & Assocs., No. 18-CV-6500 (JMF), 2019 U.S. Dist. LEXIS 203621 (S.D.N.Y. Nov. 22, 2019), Judge Furman declined to  approve settlement of a data breach class due to the absence of Art. III standing.

From the opinion:

In June 2018, an employee of Defendant Carlos Lopez & Associates, LLC (“CLA”), a provider of mental and behavioral health services to veterans and others, accidentally sent an email containing personal information about approximately 130 current and former CLA employees to a distribution list of current CLA employees (a group numbering about sixty five). ECF No. 18 (“Compl.”), ¶¶ 1, 19-20; see also Nov. 14, 2019 Tr. (“Tr.”) 10. Although there is no evidence that the personal information contained in the email was shared with anyone outside of CLA,  let alone misused, several people whose information had been shared sued on behalf of a class of all those whose information had been shared, alleging negligence and violations of several states’ laws. Compl. ¶¶ 21-23, 64-101. Defendants CLA and Carlos Lopez moved to dismiss for, among other things, lack of Article III standing, see ECF Nos. 24-25, but before Plaintiffs filed any opposition to that motion, the parties reached a class-wide settlement, see ECF No. 33. Plaintiffs now move, pursuant to Rule 23(e) of the Federal Rules of Civil Procedure, for approval of the parties’ settlement and an award of attorney’s fees. Although unopposed, Plaintiffs’ motion is denied.

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