Academic journal article The Journal of High Technology Law

Defending with Clapper: Applying the Supreme Court's Article III Standing Interpretation to Data Breach Lawsuits

Academic journal article The Journal of High Technology Law

Defending with Clapper: Applying the Supreme Court's Article III Standing Interpretation to Data Breach Lawsuits

Article excerpt

I. Introduction

Massive amounts of personal data are collected, analyzed, and stored in today's digital economy. (1) United States citizens are more susceptible to threats in the cyber-security landscape than ever before, and historical notions of personal privacy have significantly eroded. (2) By purchasing just one song on i Tunes, creating a single social media account, or signing up for online banking, a consumer invariably increases the risk of their personal information being stolen and put up for sale on the Darknet. (3) While consumer participation in the digital economy evolved from convenient to mandatory, the chances of an unauthorized breach of personal data have increased from possible to likely. (4) Despite strict protections under federal law, the healthcare industry's adoption of modern digital practices have made our medical records vulnerable to fraud like all other content on the Internet. (5) Swiping your credit card at a brick and mortar retail store like Target, Inc. could result in the exploitation of cardholder data by identity thieves hacking through a backdoor to the computer network. (6)

There are countless examples just over the last few years where corporations proved to be incapable of protecting their client's personal information. (7) Sony Entertainment, Yahoo, Target, and EBay all have been subject to data breaches in recent years, and there does not appear to be any relief in sight. (8) In the aftermath of any data breach, a class-action lawsuit of affected persons typically follows in an attempt to hold the corporation accountable for violation of its duty to adequately protect its customers' personal information. (9) In order to overcome the initial hurdle necessary to sue the corporation, that is, to acquire Article III standing, a plaintiff must prove they experienced an injury-in-fact, such as identity theft or fraud. (10) While consumers do not always experience these harms immediately following a data breach, they are arguably at an increased risk of identity theft due to the public exposure of their sensitive personal information. (11) The Supreme Court most recently provided guidance on Article III standing analysis in Clapper v. Amnesty International. (12) While most circuits now refer to Clapper as the precedent for standing analysis in the corporate data breach context, some circuits disagree as to its applicability. (13)

Part II of this note traces the historical background of the Constitutional limitations on courts to hear cases and controversies when a plaintiff lacks standing. (14) Then, I will analyze standing in the data breach context, showing different examples of how the Seventh and Ninth circuits dealt with data breach class-actions in the pre-Clapper environment, along with a brief outline of the circumstances relevant to the Clapper decision. Part III will analyze the Supreme Court's decision in Clapper and its impact on the various circuit courts' standing analysis. (15) By highlighting the need for business certainty that Clapper brings to the issue of standing, Part IV of this note will defend Clapper's assertion of the firm injury-in-fact requirement. (16) Part IV will also assert that Clapper offers the most realistic guidance to the courts when participation in the digital economy backfires and a corporation experiences a data breach. (17) Part V will advocate that the Supreme Court hear a case regarding a data breach and hold the same result with respect to its earlier Clapper decision. (18) Businesses face unprecedented exposure to litigation in the digital economy and they simply cannot withstand the dangerous exposure to a lower standing threshold than was intended under the Constitution. (19)

I. History

A. Constitutional Basis for Standing

The framers of the Constitution granted federal courts limited jurisdiction to hear cases and controversies. (20) Standing law is associated with the Constitutional theory of separation of powers, and is intended to prevent litigants from using the judicial process to usurp the powers of the legislative and executive branches. …

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