Cybersecurity litigation is currently at a crossroads. Courts have struggled in these cases, coming out in wildly inconsistent ways about whether a data breach causes harm. Although the litigation landscape is uncertain, there are some near certainties about cybersecurity generally: There will be many data breaches, and they will be terrible and costly. We thus have seen the rise of cybersecurity insurance to address this emergent and troublesome risk vector.
I am delighted to be interviewing Kimberly Horn, who is the Global Focus Group Leader for Cyber Claims at Beazley. Kim has significant experience in data privacy and cyber security matters, including guiding insureds through immediate and comprehensive responses to data breaches and network intrusions. She also has extensive experience managing class action litigation, regulatory investigations, and PCI negotiations arising out of privacy breaches.
My new article was just published: Risk and Anxiety: A Theory of Data Breach Harms, 96 Texas Law Review 737 (2018). I co-authored the piece with Professor Danielle Keats Citron. We argue that the issue of harm needs a serious rethinking. Courts are too quick to conclude that data breaches don’t create harm. There are two key dimensions to data breach harm — risk and anxiety — both of which have been an area of struggle for courts.
Many courts find that anything involving risk is too difficult to measure and not concrete enough to constitute actual injury. Yet, outside of the world of the judiciary, other fields and industries have recognized risk as something concrete. Today, risk is readily quantified, addressed, and factored into countless decisions of great importance. As we note in the article: “Ironically, the very companies being sued for data breaches make high-stakes decisions about cyber security based upon an analysis of risk.” Despite the challenges of addressing risk, courts in other areas of law have done just that. These bodies of law are oddly ignored in data breach cases.
When it comes to anxiety — the emotional distress people might feel based upon a breach — courts often quickly dismiss it by noting that emotional distress alone is too vague and unsupportable in proof to be recognized as harm. Yet in other areas of law, emotional distress alone is sufficient to establish harm. In many cases, this fact is so well-settled that harm is rarely an issue in dispute.
We aim to provide greater coherence to this troubled body of law. We work our way through a series of examples — various types of data breach — and discuss whether harm should be recognized. We don’t think harm should be recognized in all instances, but there are many situations where we would find harm where the majority of courts today would not.
If there’s a big data breach, the class action lawyers will start nipping like a bunch of hungry crocodiles. Upwards of forty separate lawsuits were filed against Target after its data breach, and one was filed the day after the breach became public knowledge.
The law, however, has thus far been far from kind to plaintiffs in data breaches. Most courts dismiss claims for lack of harm. I have written extensively about harm in a series of posts on this blog, and I have chided courts for failing to recognize harm when they should.