Assessing Risk: Data Breach Litigation in U.S. Courts

Along with the growth of electronic consumer databases, there has been an increase in the numbers of data breaches. A June 2011 Ponemon Institute study revealed that 90 percent of surveyed companies had experienced a data breach within the past year.Companies may want to assess the level of risk posed by the possibility of litigation when determining how to respond to a data breach. Common factors that may impact the likelihood that a lawsuit will be filed following a data breach includes:type of data breached; cause of the breach; misuse of personal information; and size of the breach. Until recently, consumer plaintiffs have met with very little success in the courtroom, but this could change as the general public becomes increasingly aware that companies are maintaining detailed information about their customers. Courts may soon recognize that an individual consumer has a reasonable expectation that such information should be protected and that a data breach violates that expectation. In addition to consumer lawsuits, companies should be aware of other sources of litigation risk, including federal regulators, state attorneys general and/or financial institutions impacted by the data breach.

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