January 31, 2017

Third Circuit Reverses Dismissal of Data Breach Class Action Claim

John Austin

On January 20, 2017, the Third Circuit reversed a lower court’s ruling, dismissing the class action claim. In a putative class action arising out of the theft from a health insurer of two laptop computers containing sensitive personal information, plaintiffs alleged willful and negligent violations of the Fair Credit Reporting Act (FCRA), 15 U.S.C. section 1681, et seq., as well as numerous violations of New Jersey state law. The District Court of New Jersey granted the defendants’ motion under Rule 12(b)(1) for lack of Article III standing.

According to the district court, none of the plaintiffs had claimed a cognizable injury because, although their personal information had been stolen, none of them had adequately alleged that the information was actually used to their detriment. The Third Circuit reversed, stating, “In light of the congressional decision to create a remedy for the unauthorized transfer of personal information, a violation of FCRA gives rise to an injury sufficient for Article III standing purposes. Even without evidence that the Plaintiffs’ information was in fact used improperly, the alleged disclosure of their personal information created a de facto injury.” Under the language of the law, the circuit court reasoned, “[A]ll of the Plaintiffs suffered a cognizable injury, and the Complaint should not have been dismissed under Rule 12(b)(1).”

John Austin

Principal at John Austin Law Firm in Raleigh, North Carolina.