The Third Circuit recently overturned a district court’s ruling on In re Horizon Healthcare Services Inc. Data Breach Litigation and gave new life to a putative class action over a data breach. No. 15-2309 (Jan. 20, 2017). The Third Circuit panel held that allegations of unauthorized disclosure of personal information in violation of the Fair Credit Reporting Act (“FCRA”) constituted a de facto injury sufficient to establish Article III standing. Plaintiffs did not allege identity theft, any other misuse of the compromised data, or even any mitigation costs.
The closely followed case challenging the validity of Standard Contractual Clauses for the transfer of personal data outside the EEA to countries considered not to provide an adequate level of data protection, including the US, is progressing with a hearing coming up February 7th and schedule set for the proceedings, including amicus participation.
2016 was a year of seismic changes in the global data protection and privacy landscape. Here, we look back at the top ten events and issues that shaped 2016, and are poised to shape the year ahead as well.
Year In Review
1. GDPR Adoption
On April 14, the European Parliament voted to adopt the long-awaited EU General Data Protection Regulation (GDPR), formally completing adoption of the GDPR. The GDPR was published in the Official Journal of the EU on May 25, 2016, giving companies and Member States until the May 25, 2018 effective date to implement the Regulation fully. In the wake of its adoption, businesses should have planning under way for implementation of the significantly expanded Regulation by evaluating whether they are subject to the expanded jurisdiction, and if so, completing an internal gap analysis of current data protection practices as compared with the new requirements and rights under the Regulation. Some of the key aspects to consider include data breach response planning under the new 72-hour notice requirement, reviewing existing data protection notices and consents for the more robust obligations, identifying current profiling activities and existing data protection and retention policies and procedures, ensuring privacy impact assessments are carried out where required, and evaluating whether there is an obligation to appoint a data protection officer. Despite the time until the effective date, the extensive preparation necessary to comply presents a challenge as companies around the world refocus resources to develop compliance plans.
2. Political Cyber Warfare
There is a new front in geopolitical battles. (more…)
The Court of Justice of the European Union (“CJEU”) issued, on December 21, 2016, its ruling in the joined cases, Tele2 Sverige AB v. Post-och telestyrelsen (C-203/15), and Secretary of State for Home Department v. Tom Watson and Others (C-698/15), concerning the interpretation of EU’s Article 15(1) of the ePrivacy Directive (2002/58/EC). Article 15(1) enables EU Member States to adopt measures that restrict privacy rights granted to users of Electronic Communication Services (“ECSs”) when they are “necessary, appropriate and proportionate… to safeguard national security”. Examples of ECSs include private and public companies in Internet, telecommunication, satellite and cable businesses. (more…)
The third edition of The Privacy, Data Protection and Cybersecurity Law Review appears as the world is converging on more privacy laws that cover more areas of business and are subject to more enforcement. Several Sidley lawyers in the Privacy, Data Security and Information Law practice have contributed to this publication.
As part of a housekeeping effort, the U.S. Copyright Office issued a final rule that changes the designated agent mechanism protecting online service providers from certain copyright infringement liability under the Digital Millennium Copyright Act (“DMCA”). Companies will now have to re-register every three years, and existing registrations will cease to be valid by the end of next year.
On November 23, 2016, the Court of Justice of the European Union (CJEU) set aside a judgment by the lower General Court which could have set a dangerous precedent for the protection of business secrets and confidential business information (CBI) in environmental cases in the European Union. *
The U.S. Court of Appeals for the Eleventh Circuit has ordered the FTC to halt enforcement of its data security order against LabMD while LabMD challenges the action.
To recap the events leading up to this stay, a data security company allegedly obtained sensitive data from LabMD via a peer-to-peer file-sharing program. Allegedly, after LabMD refused to purchase the company’s security products, it reported the alleged data security vulnerability to the FTC. The FTC accused LabMD of unfair practices in failing to provide reasonable and appropriate security for customers’ personal information, which was allegedly likely to cause harm to customers. In 2015, an Administrative Law Judge dismissed the case, finding that the FTC failed to prove LabMD’s practices were likely to cause substantial customer injury. In July 2016, upon appeal to the full Commission, the FTC reversed the ALJ decision. Although LabMD stopped operating in 2014, the FTC nevertheless ordered LabMD to implement several information security compliance measures because the Lab still maintains medical records. LabMD appealed to the Eleventh Circuit and filed a motion to stay the FTC’s order.
Last week, we posted a brief account of the two challenges that have been filed in the General Court of the Court of Justice of the European Union challenging the Privacy Shield, first by Digital Rights Ireland in September and then by La Quadrature du Net last Monday. Today, the Official Journal of the European Union published notice of the Digital Rights Ireland pleading, the first time it has been publicly available.
This posting means the clock has started running on applications to intervene. Applications to intervene are due in 60 days, or January 6, 2016. To establish a right to intervene, an application must include a statement of the circumstances showing “an interest in the result” of the case.
Two legal challenges have been filed at the Court of Justice of the European Union (“CJEU”) against the European Commission’s adequacy decision on the EU-U.S. Privacy Shield. Privacy Shield was adopted on July 12, 2016 after the CJEU struck down the earlier Safe Harbour agreement in October 2015 over concerns about U.S. surveillance techniques.