Ruling in Neiman Marcus Data Breach is no Sea Change, Hutchins Writes

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In new blog post, LeClairRyan privacy and data security attorney highlights the complex legal issues in class actions involving data breaches.

John P. Hutchins

There has still never been a court that has certified a class in a data breach case. And in Neiman, all the Seventh Circuit has done is remand the case for further proceedings.

A federal appeals court ruling in the Neiman Marcus data breach case (Remijas v. Neiman Marcus, No. 14-3122) is being portrayed by some as a tipping point toward victims of cyber fraud. But John P. Hutchins, a LeClairRyan shareholder and leader of the national law firm’s Privacy & Data Security practice team, cautions against this interpretation.

“We’re not so sure that the Seventh Circuit’s ruling in Neiman is any sort of a great sea change in the 10-year long and, thus far, mostly fruitless effort by plaintiffs’ lawyers to turn data breaches into the next asbestos,” writes the Atlanta-based Hutchins in a new blog post at InformationCounts.com, which focuses on the rapidly evolving information economy.

A 2013 data breach compromised the credit card data of 350,000 Neiman Marcus customers with, by the retailer’s own admission, fraudulent charges occurring in 9,200 of those accounts, according to court documents. The breach triggered a February 2014 class action lawsuit in which customers sought $5 million in damages.

While the U.S. District Court for the Northern District of Illinois-Eastern Division dismissed the case (No. 14C 1735) —in part because customers had been reimbursed for the false charges—the appeals court last month reversed that dismissal. In his post, Hutchins notes the importance of understanding the procedural context in which the Seventh Circuit reviewed the Neiman case. The veteran attorney describes the legal questions in play, many of which hinge on issues related to standing and harm in class action lawsuits.

“There has still never been a court that has certified a class in a data breach case,” the attorney writes. “And in Neiman, all the Seventh Circuit has done is remand the case for further proceedings … even if the plaintiffs succeed in getting over the standing hurdle, they still need to overcome the even more significant hurdle of getting the court to certify a class.”

The full blog post is available at
http://informationcounts.com/neiman-case-a-harbinger-for-data-breach-cases-not-so-fast/
LeClairRyan offers a full array of legal services related to the information economy. These include cyber security risk-assessment and incident response; regulatory and compliance counseling; policy/best practices program development; procurement, outsourcing, e-commerce, and information management.

About LeClairRyan
As a trusted advisor, LeClairRyan provides business counsel and client representation in corporate law and litigation. In this role, the firm applies its knowledge, insight and skill to help clients achieve their business objectives while managing and minimizing their legal risks, difficulties and expenses. With offices in California, Colorado, Connecticut, Georgia, Maryland, Massachusetts, Michigan, Nevada, New Jersey, New York, Pennsylvania, Texas, Virginia and Washington, D.C., the firm has approximately 380 attorneys representing a wide variety of clients throughout the nation. For more information about LeClairRyan, visit http://www.leclairryan.com.
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