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Financial Services Law Insights and Observations

9th Circuit reinstates class action data breach lawsuit against online retailer

Courts Ninth Circuit Appellate Privacy/Cyber Risk & Data Security Data Breach Class Action

Courts

On March 8, the U.S. Court of Appeals for the 9th Circuit reinstated a putative class action lawsuit against an online retailer, concluding that the increased risk of identity theft resulting from a 2012 data breach affecting over 24 million shoppers gave consumers Article III standing to sue. The three-judge panel held that the district court erred in dismissing claims brought by consumers who did not allege financial losses as a result of the data breach because the stolen information provided hackers the “means to commit fraud or identity theft.” The panel noted that evidence that another group of consumers had suffered financial losses from the same data breach undermined the argument that the data stolen would not lead to fraud or identity theft. In addition, although the defendant asserted that too much time had passed since the data breach for any harm to be considered imminent, the panel found that determining jurisdiction requires an assessment of a plaintiff’s standing at the time the suit was filed, and that the risk of harm was sufficiently imminent at the time of filing. The 9th Circuit remanded the case back to the lower court for review.

The panel also addressed a separate appeal by the class on the district court’s decision not to enforce a purported settlement agreement, affirming the lower court’s decision “because the parties did not have a meeting of the minds on all essential terms of the agreement.”

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