A federal court in California has ruled that the plaintiff in a putative class action alleging theft of non-sensitive personal information arising from a cybersecurity data breach lacks Article III standing to maintain his claims. In Rahman v. Marriott International, Inc., the Plaintiff asserted claims for violation of the California Consumer Privacy Act (“CCPA”), negligence, breach of implied contract, unjust enrichment, and violation of the California Unfair Competition Act. Plaintiff alleged that class members were victims of a cybersecurity incident when two employees of a Marriott franchise in Russia accessed class member names, addresses, phone numbers, email addresses, genders, birth dates, and loyalty account information. Although the CCPA requires a plaintiff to provide the defendant 30 days’ written notice and an opportunity to cure before filing suit for statutory damages, Cal. Civ. Code § 1798.150(b), Plaintiff provided written notice to Marriott on the same day he filed suit. He did not, however, assert a claim for statutory damages until he amended his complaint three months later.

Marriott moved to dismiss for lack of subject matter jurisdiction after confirming that no sensitive information – such as social security numbers, credit card information, or account information and passwords – were compromised in the breach. Marriott argued that although the bad actors accessed Plaintiff’s personal information, the data lacked the “sensitivity” required by the Ninth Circuit to merit a finding of injury in fact. Judge David O. Carter agreed with Marriott, finding that Ninth Circuit precedent is clear that injury in fact requires both “sensitivity of personal information, combined with its theft”. The court distinguished the only cited case finding standing where no social security numbers or credit card information was stolen because the hack in that case involved more than basic information, but also “a constellation of social-media data.” See, e.g., Adkins v. Facebook, Inc., 424 F. Supp. 3d 686 (N.D. Cal. 2019). Because the Plaintiff has not pleaded that “any of their more sensitive data – such as credit card information, passports, or social security numbers” was stolen, “Plaintiff has not suffered an injury in fact and cannot meet the constitutional requirements of standing.” The court did not address whether Plaintiff’s written notice, sent on the day the suit was filed but more than 30 days before a claim for statutory damages was asserted, was sufficient under the CCPA.

Importantly, the federal court also expressly rejected the argument that the value of Plaintiff’s personal information diminished as a result of the breach, joining a growing number of courts rejecting arguments alleging diminution of the value of PII stemming from data breaches. See, e.g., In re: Capital One Consumer Data Security Breach Litig., 2020 U.S. Dist. LEXIS 175304, *40 (E.D. Va. Sept. 18, 2020) (Plaintiffs “failed to plausibly allege damages based on the lost or reduced value of their PII.”) The court also ruled that it was “unmoved” by Plaintiff’s argument that he should be compensated for mitigation costs. Quoting Clapper v. Amnesty International USA, 568 U.S. 398 (2013), the district court held that “‘mitigation costs . . . rise and fall together’ with claims based on the risk of future harm.”

The case teaches that data breach defendants sued in California federal court or considering a California federal forum for MDL consolidated proceedings should carefully evaluate standing as a defense. Likewise, consumer lawyers initiating litigation should consider whether the personal information compromised is sensitive enough to survive the standing hurdle defendants will most certainly launch given the substantial precedent precluding lawsuits involving non-sensitive data in the Ninth Circuit.

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Photo of Mary C. Zinsner Mary C. Zinsner

Mary focuses her practice on litigation and strategy in lender liability, check and bank operation, class action, consumer finance, fiduciary matters, and creditor’s rights disputes. While Mary litigates extensively in the federal and state trial and appellate courts in Virginia, Maryland, and the…

Mary focuses her practice on litigation and strategy in lender liability, check and bank operation, class action, consumer finance, fiduciary matters, and creditor’s rights disputes. While Mary litigates extensively in the federal and state trial and appellate courts in Virginia, Maryland, and the District of Columbia, and the U.S. Court of Appeals for the Fourth Circuit, she represents banking clients in cases of all sizes nationwide.

Photo of David N. Anthony David N. Anthony

David Anthony handles litigation against consumer financial services businesses and other highly regulated companies across the United States. He is a strategic thinker who balances his extensive litigation experience with practical business advice to solve companies’ hardest problems.

Photo of Ronald I. Raether, Jr. Ronald I. Raether, Jr.

Ron leads the firm’s Privacy + Cyber team. Drawing from nearly 30 years of experience, he provides comprehensive services to companies in all aspects of privacy, security, data use, and risk mitigation. Clients rely on his in-depth understanding of technology and its application

Ron leads the firm’s Privacy + Cyber team. Drawing from nearly 30 years of experience, he provides comprehensive services to companies in all aspects of privacy, security, data use, and risk mitigation. Clients rely on his in-depth understanding of technology and its application to their business to solve their most important challenges — from implementation and strategy to litigation and incident response. Ron and his team have redefined the boundaries of typical law firm privacy and cyber services in offering a 360 degree approach to tackling information governance issues. Their holistic services include drafting and implementing bespoke privacy programs, program implementation, licensing, financing and M&A transactions, incident response, privacy and cyber litigation, regulatory investigations, and enforcement experience.

Photo of Noah DiPasquale Noah DiPasquale

Noah helps clients in the consumer finance industry navigate national class-action litigation by employing rigorous advocacy skills to pursue client goals.