Privacy Lawyer & Attorney : Proskauer Rose Law Firm : CAN-SPAM, FCRA, FACTA

Where the only “damages” alleged following a data security breach are the costs of credit monitoring, a plaintiff has no case, so ruled the Seventh Circuit on August 23, 2007. The decision dealt another blow to so-called “identity exposure” plaintiffs seeking to recover damages stemming from the unauthorized disclosure of their personal information, as the Seventh Circuit’s ruling joined the unanimous line of lower court decisions denying recovery in the absence of actual, present harm.

In Pisciotta v. Old National Bancorp, -- F.3d --, 2007 WL 2389770 (7th Cir. Aug. 23, 2007), the court ruled that “Indiana law would not recognize the costs of credit monitoring that the plaintiffs seek to recover in this case as compensable damages.” Id. at *6. In doing so, the Seventh Circuit joins a chorus of federal district courts that uniformly reject such costs as a form of cognizable injury sufficient to support legal claims for damages.

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We thought it might be helpful to provide citations to the 37 state (plus D.C. and Puerto Rico) breach notification laws that cover private entities (Oklahoma’s law, that only addresses state agencies, is not included).  We also provide links, or uploaded copies, where available.

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A recent decision from the Southern District of Ohio echoes prior decisions of district courts addressing negligence claims against companies that have experienced a data breach. The court held that the cost of obtaining credit monitoring services does not count as damages without evidence of identity fraud. Kahle v. Litton Loan Servicing LP, case no. 1:05cv756.   

On August 27, 2005, the defendant, Litton Loan Servicing LP, experienced a break-in involving the theft of more than $60,000 of computer equipment. The perpetrators took six unmarked hard drives, four of which contained the personal information of 229,501 people, including the plaintiff Patricia Kahle. The police conducted an investigation and Litton hired a private investigator who conducted a separate investigation. Litton provided notice of the theft to each person whose information was on the stolen hard drives approximately four weeks after the break-in. The notice included the type of information stolen, a Federal Trade Commission website that could be of assistance, and a toll free contact number at Litton. The notice also recommended that affected consumers place a fraud alert on their credit file.

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The protection of Social Security numbers (SSNs) from identity thieves has emerged as a hot news topic in the past few weeks. In California, it was revealed that, for the past three years, the Secretary of State’s office has been selling in bulk electronic UCC filings containing SSNs. Those filings were available to the public on the Secretary’s website, so that lenders and creditors could verify the availability of personal property used as collateral. Approximately one-third of the state’s two million UCC filings contained SSNs. Secretary of State Debra Bowen immediately shut off web-based access to the UCC filings and took down the offending part of the website.

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