Industry: Consumer Products
Yesterday, we reported that the Department of Justice has asked the U.S. Supreme Court to remand its dispute with Microsoft Corp. concerning access to customer emails stored abroad to the U.S. Court of Appeals for the Second Circuit with instructions to dismiss it as moot. The government argued that the newly enacted “CLOUD” Act clarifies prior law and makes clear that information stored abroad can, under certain circumstances, be subject to a domestic warrant. The government added that it obtained a new warrant for Microsoft to turn over the requested information in the days following the CLOUD Act’s passage.
We’ve written several times about the landmark dispute between the U.S. government and Microsoft Corp. over access to a customer’s emails stored in Ireland. Now, a month after the U.S. Supreme Court heard oral argument on the government’s appeal, the Justice Department has asked the Court to remand the case to the U.S. Court of Appeals for the Second Circuit with instructions to dismiss it as moot.
On its face, last week’s report that the number of data breaches reported last year to New York’s Attorney General spiked to an all-time high of 1,583 – up 23 percent from 2016 – was not good news.
But behind the numbers are even more disturbing trends. Start with the fact that hacking – the handy work of outside intruders – was the leading cause of reported breaches last year, accounting for 44 percent of reported breaches. Hacking also accounted for nearly 95 percent of all personal information exposed. In second place was employee error or negligence, which represented 25 percent of last year’s reported breaches.
On Tuesday, a Senate subcommittee grilled Uber’s Chief Information Security Officer, John Flynn, over a 2016 data breach that affected nearly 57 million drivers and riders. At the hearing, Uber faced backlash from lawmakers for its “morally wrong and legally reprehensible” conduct that “violated not only the law but the norm of what should be expected.”
The fight over the privacy of electronic communications and the government’s ability to reach emails stored abroad in criminal investigations has finally moved to the U.S. Supreme Court.
Second in a two-part series.
Last week, in the first part of this series, we examined several key aspects of New York’s proposed data security law, Stop Hacks and Improve Data Security Act or SHIELD Act. In our second and final installment, we discuss three additional aspects of the proposed law.
First in a two-part series.
As we reported last week, New York Attorney General Eric T. Schneiderman has introduced a bill aimed at protecting New Yorkers from data breaches.
Court Rejects DOJ’s Depiction of Google as “Willful and Contemptuous” Tactics in Ongoing Battle over SCA Search Warrant
A federal judge in California has agreed to hold Google in contempt for not following his order to turn over data stored overseas. The order is largely symbolic, however, since a contempt order is required for Google to appeal the ruling.
The Supreme Court is poised to finally answer the question that’s been plaguing federal courts across the country: must U.S. tech companies comply with warrants issued under the Stored Communications Act (“SCA”) that demand information from customer accounts that is stored on servers in a foreign country?
The federal Computer Fraud and Abuse Act of 1986 (“CFAA”) has generated controversy and disagreement among courts and commentators regarding the scope of its application. The statute, 18 U.S.C. § 1030, which provides for both criminal and civil penalties, prohibits accessing a computer or protected computer “without authorization” or in a manner “exceeding authorized access.” Courts are divided as to the meaning of these phrases, yet the U.S. Supreme Court recently declined the opportunity to resolve the circuit split that has developed, leaving the exact scope of this important statute in question.
The ongoing dispute between the government and Google concerning the company’s refusal to hand over customer data stored on foreign servers has taken an odd twist. Now, the Justice Department is demanding that Google be sanctioned for not abiding by the court’s most recent decision—ordering it to produce data associated with 22 email accounts—and calling Google’s conduct “a willful and contemptuous disregard of various court orders.” The case is In the Matter of the Search of Content that Is Stored at Premises Controlled by Google, No. 16-mc-80263 (N.D. Cal.).
Richard F. Smith – who presided over Equifax Inc. as CEO during one of the largest data breaches in a generation – will testify before two congressional committees next week.
Yesterday, a District Court in Northern California weighed in on the U.S. Federal Trade Commission’s (FTC) authority to protect consumers from “unfair” and “deceptive” data security practices. The decision, which granted in part and denied in part the defendant’s motion to dismiss, is a mixed bag for the Commission.
Today, New York Governor Andrew M. Cuomo announced that he has directed the Department of Financial Services (DFS) to issue a new regulation requiring “credit reporting agencies to register with” the DFS, as well as comply with the Department’s “first-in-the-nation cybersecurity standard.” According to Governor Cuomo, the Equifax breach was a “wakeup call,” and New York is now “raising the bar for consumer protections” with the “hope” the DFS’s approach “will be replicated across the nation.”
As we have discussed in previous posts, Equifax Inc. suffered a cybersecurity breach potentially affecting 143 million individuals in the United States. Although Equifax’s investigation is ongoing, the data at risk includes Social Security numbers, birth dates, and addresses. Equifax has also said that the breach may have involved driver’s license numbers, credit card numbers, and “certain dispute documents with personal identifying information for approximately 182,000 U.S. consumers.” That leaves just about everyone asking: What should we do?
Cyber Briefing: Second "Envelope" Lawsuit Against Aetna, Yahoo to Answer for 1.5 Billion Hacked Accounts and Eighth Circuit Weighs In, Again, on Standing
As we head into the new week, here’s a quick summary of major data security developments from around the country.
In one of the first federal appellate court rulings following the Ninth Circuit’s decision in Robins v. Spokeo, the Eighth Circuit delivered a pyrrhic victory for customers victimized by a data breach. In Kuhns v. Scottrade, the Eighth Circuit ruled that, although the plaintiff had established standing to pursue a claim against Scottrade, Inc. resulting from a data breach that occurred in 2013, the customer failed to sufficiently allege that the brokerage firm breached its contractual obligations and affirmed dismissal of the case.
Judge Sides with Government over Google in the Latest Battle Rematch over the Territorial Reach of the SCA
Another federal judge has rejected the U.S. Court of Appeals for the Second Circuit’s interpretation of the Stored Communications Act (SCA), and has ordered Google to hand over customer email traffic—wherever located—to U.S. law enforcement. More than a year ago, the Second Circuit held that Microsoft Corp. was not required to produce customer emails stored on foreign servers in response to an SCA warrant. Since then, the Second Circuit’s ruling has been rejected by three different federal courts around the country.
A federal appeals court earlier this week dealt a blow to healthcare insurer CareFirst, Inc., concluding that a group of customers have the right to pursue a class action data breach lawsuit based on a 2014 cyberattack.
Over the past several years, we have witnessed a fundamental shift in orchestrated cyber-attacks from hacking credit card data and healthcare information to targeting businesses, their operations and bottom lines.
Another Rematch Between Tech Companies and the Government over the Territorial Reach of the Stored Communications Act
Lawyers for the tech community are gearing up for argument next month in the U.S. District Court in San Francisco, seeking to overturn another magistrate’s order that requires digital information stored outside of the U.S. to be turned over in response to a U.S. search warrant.
The Federal Trade Commission (FTC) – often criticized for not providing clear guidance as to what the agency considers reasonable data security – announced on Friday that it would publish a weekly blog discussing “lessons learned” from data security investigations that were closed without a formal enforcement action.
In the aftermath of two powerful global ransomware attacks, a Michigan-based medical equipment provider has disclosed that hackers “encrypted our data files” and accessed more than 500,000 patient records in what is believed to be the largest reported ransomware attack on health care information.
In a consequential test of the Federal Trade Commission’s authority as a data security regulator, the U.S. Court of Appeals for the Eleventh Circuit will hear argument tomorrow in a case that will determine whether the agency must show a concrete consumer injury as an element of an enforcement action, just as private plaintiffs have been required to do for years.
Justice Shirley Kornreich recently issued one of the few New York state court decisions that address the Computer Fraud and Abuse Act (“CFAA”). Spec Simple, Inc. v. Designer Pages Online LLC, No. 651860/2015, 2017 BL 160865 (N.Y. Sup. Ct. May 10, 2017). The CFAA criminalizes both accessing a computer without authorization and exceeding authorized access and thereby obtaining information from any protected computer. Id. at *3 (citing 18 U.S.C. § 1030(a)(2)(C)). The CFAA also provides a civil cause of action to any person who suffers damage or loss because of a violation of the CFAA. Id. at *4 (citing 18 U.S.C. § 1030(g)). As discussed below, the decision provides a helpful look into the interpretation of CFAA claims in the future.
The Federal Trade Commission’s (FTC) sprawling and contentious legal battle with now-defunct medical testing company LabMD recently turned especially personal when a federal court allowed LabMD (and its former CEO) to proceed with claims against two of the three FTC attorneys who handled the FTC’s investigation and prosecution of LabMD.
Today, the U.S. Court of Appeals for the Eighth Circuit vacated the class action settlement between Target Corp. and consumers whose card data was compromised in the company’s 2013 data breach.
On January 23, 2017, President Donald Trump named Ajit Pai as Chairman of the Federal Communications Commission (FCC). In his previous role as the senior Republican on the FCC under President Barack Obama, Mr. Pai was an outspoken critic of the agency’s decision to assert jurisdiction over Internet Service Providers (“ISPs”) and its rules governing broadband privacy. Pai’s appointment suggests that significant changes may be on the horizon.
Back in December 2013, a U.S. magistrate issued a seemingly routine warrant in a narcotics case demanding that Microsoft turn over messages from a customer’s email account that resided on a server in Ireland. That warrant, which issued under a 1986 law called the Stored Communications Act (“SCA”), 18 U.S.C. § 2703, is still being debated today.
The U.S. Federal Trade Commission (“FTC”) has filed suit against Taiwan-based D-Link Corporation and D-Link Systems, Inc. (collectively, “D-Link”), manufacturers and sellers of home networking devices including routers, cameras, baby monitors, and video recorders. The lawsuit claims that D-Link failed to take reasonable steps to protect its devices from known and foreseeable risks of unauthorized access.
Yesterday, the Federal Trade Commission (“FTC”) announced a settlement with the owners of “dating site” AshleyMadison.com, arising from a July 2015 data breach that received broad media coverage. According to a proposed order filed in the District Court for the District of Columbia, the operators of the website are also simultaneously settling with thirteen states—including New York—and the District of Columbia.
The transition of power from President Barack Obama to President-Elect Donald Trump is underway. Although President-Elect Trump did not lay out specific policy prescriptions about data privacy or consumer protection during his candidacy, his recent choice of Dr. Joshua D. Wright to lead transition efforts at the Federal Trade Commission provides some hints as to the direction the agency may take under a Trump administration.
There’s no denying it: Pokémon GO is a phenomenon.
The smartphone game, in which players use their mobile device camera and GPS to capture, battle, and train virtual creatures, was released in the United States on July 6th. In a month, it has shot to the top of the App Store charts to become the biggest mobile game in U.S. history. Within just days of its release, Pokémon GO already had surpassed app giants like Twitter and Tinder in number of downloads and active users, with more than 25 million users playing each day.
FTC Slaps Down ALJ’s Data Security Ruling in LabMD, Sets Broad Mandate for Protection of “Sensitive” Consumer Data
In a sweeping statement of its data security expectations for organizations that maintain consumer information, the Federal Trade Commission on Friday found that LabMD, the defunct medical testing lab, failed to employ adequate data security safeguards in violation of Section 5 of the FTC Act, even though there was no indication that any information had been misused or compromised.
In a ruling issued this morning, the Federal Trade Commission found that LabMD, the defunct Atlanta-based cancer detection lab, failed to protect patient information and is liable for unfair data security practices. The Commission’s ruling reverses an Initial Decision by an administrative law judge (ALJ) that had dismissed the FTC charges against LabMD.
The leadership team at Target Corp. has one less legal claim to worry about today from the company’s headline-making 2013 data breach. And in an unusual twist, the shareholders who filed a series of derivative actions against Target’s directors and officers have waived the symbolic “white flag” by agreeing that the cases could be dropped so long as they were able to come back to Court to recover their legal fees.
Last week, the U.S. Department of Homeland Security (“DHS”) and the U.S. Department of Justice (“DOJ”) provided guidance on an open question in the Cybersecurity Information Sharing Act (“CISA”): What type of information may companies share under CISA?
The Federal Trade Commission has decided to put off until late July a decision about whether to overturn a ruling by the agency’s chief administrative law judge in the closely watched data security action against LabMD, the Atlanta-based medical detection firm. In a one-paragraph order issued late yesterday, the Commission extended the deadline for decision until July 28th “in order to give full consideration to the issues presented by the appeal in this proceeding.”
The U.S. International Trade Commission (“ITC”) last week launched an investigation into United States Steel Corporation’s (“U.S. Steel”) complaint that Chinese hackers stole trade secret information—including proprietary methods for making lightweight steel—on behalf of Chinese steel producers.
Today, the U.S. Supreme Court decided one of the Term’s most closely watched cases: Spokeo, Inc. v. Robins. The 6-2 decision, while far from sweeping, creates a hurdle for plaintiffs in “no-injury” class actions.
More than a year and a half ago, Home Depot announced that it had been a victim of one of the largest data breaches in U.S. history. Media outlets reported that the breach had affected Home Depot’s customers who had made purchases using the company’s self-checkout terminals.
A contentious legal battle over data security between the Federal Trade Commission and LabMD, a small medical testing lab, is chronicled in the latest edition of Bloomberg Businessweek. Dune Lawrence’s report raises lingering questions about the FTC’s prosecution of a now-defunct company, tampered evidence and regulatory overreach.
For months, the technology and business communities have been waiting anxiously for a Federal appeals court ruling on whether American companies can be forced to turn over customer information to U.S. law enforcement when that information is stored on servers abroad. It’s the result of a legal appeal filed last year by Microsoft Corporation that was argued before the U.S. Court of Appeals for the Second Circuit more than seven months ago.
Yesterday, the Seventh Circuit held in Lewart v. P.F. Chang’s that customers who may have had personal information compromised in a P.F. Chang’s data breach have standing, at the motion-to-dismiss stage, to sue the company. Given the Seventh Circuit’s 2015 opinion in Remijas v. Neiman Marcus, which involved similar facts, the decision in Lewart is not particularly surprising.
A U.S. appeals court yesterday held that a traditional corporate general liability policy triggered an insurer’s duty to defend a class action lawsuit alleging that a medical records company failed to properly secure patient records on its server.
When it comes to buying cyber insurance, businesses might be right in taking comfort that they have mitigated the financial risks that come with a data breach. Just not all of them.
Recent surveys tell us that cybersecurity is the top risk faced by corporate America. The Bank Director’s 2016 Risk Practices survey – out yesterday – disclosed that three quarters of bank executives and board members believe cybersecurity is their top concern. And their general counsel agree. In another recent study, general counsel said that cybersecurity was their top area of organizational risk as well.
Faced with the prospect of overturning a decision by one of its own administrative law judges, the Federal Trade Commission on Tuesday explored ways in which to render a narrow decision. The argument was the most recent chapter in the long running data security enforcement action against LabMD, the now defunct medical testing laboratory.
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