In Hannaford Data Breach Case, First Circuit Says Card Replacement and ID Theft Insurance are Reasonable Mitigation Damages and Compensable–Anderson v. Hannaford Bros.

I’ve been reading a number of analyses and commentaries on the First Circuit’s ruling in the Hannaford Bros data breach case.  While some people have described the ruling as a “potential game-changer,” Venkat Balasubramani provides a less optimistic analysis of what the decision may portend. As a recap, most of the plaintiffs’ claims have been dismissed by the courts, but the First Circuit held that where plaintiffs actually expended money for reasonable measures to mitigate any harm or damages, those expenses are recoverable. Venkat writes, in part:

Although I’d chalk this up as a win for data breach plaintiffs, it’s a slight one. The court’s ruling appears limited to credit cards and the court relies heavily on the fact that the prospects of misuse were significant and had actually occurred. The court notes: “where neither the plaintiff nor those similarly situated have experienced fraudulent charges resulting from a theft or loss of data, the purchase of credit monitoring services may be unreasonable and not recoverable.” The court also ends up disapproving the bulk of the requested damages. At a minimum, the fact that the court disapproves of damages such as time spent dealing with remedial efforts, damages relating to rewards programs, and for emotional distress is significant. There’s no prospect of a damage free-for-all. In fact, in the event of this type of a breach, the prospective defendant(s) can limit their liability by covering the costs of free credit monitoring services and the costs of replacement cards.

Read his entire commentary on Technology & Marketing Law Blog.

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