The U.S. Court of Appeals for the Seventh Circuit held that data breach victims suffer injury for purposes of Article III standing and can thus have their day in court against companies who fail to protect their personal information from hackers.
Ahdoot & Wolfson, PC, a national class action law firm leading this lawsuit on behalf of people who had their personal information accessed by a hacker in the Neiman Marcus data breach, says this is a groundbreaking decision in light of continued data security issues.
The class action against Neiman Marcus alleged that the data breach plaintiffs suffered injuries even if they have not yet been victims of identity theft or other fraud. These injuries include an increased risk of future fraudulent charges and greater susceptibility to identity theft. Chief Judge Wood noted that “the Neiman Marcus customers should not have to wait until hackers commit identity theft or credit-card fraud in order to give the class standing, because there is an ‘objective reasonable likelihood’ that such an injury will occur.”
“This decision is a monumental win for all current and future data breach victims, who have no choice but to entrust their sensitive personal information to large corporations for safekeeping in order to function in our society,” says Tina Wolfson, founding partner at Ahdoot & Wolfson, PC, who represents the victims in this case.
The Seventh Circuit’s decision yesterday is favorable for all consumers, whether or not they have yet been victims of a data hack. In support of its finding that these plaintiffs have standing to sue Neiman Marcus, the Court reasoned that: “Presumably, the purpose of the hack is, sooner or later, to make fraudulent charges or assume those consumers’ identities.” The Court also found that the present injuries associated with resolving fraudulent charges and protecting oneself against future identity theft gave Plaintiffs standing to bring their suit.
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