Photo of Litigation Blog Chad Layton clayton@smsm.com
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Chad Layton is a Shareholder in the firm's Chicago office and serves as Co-Chair of the firm's Technology and Cyber Risk Practice Group. Mr. Layton is a trial attorney and …

Showing 17 posts by Chad Layton.

CUBI: Everything You Need to Know About Texas' Biometric Law and Beyond...

As companies continue to take advantage of developing technologies involving the use of biometric information, it is crucial that businesses and legal practitioners alike stay informed of the legal and compliance concerns associated with the use of such information. For instance, companies conducting business in Texas should be aware of Capture of Use of Biometric Identifiers Act (“CUBI”) (Tex. Bus. & Com. Code §503.001). Passed in 2009, CUBI regulates biometric identifiers that are used for a “commercial purpose.” While “commercial purpose” is not itself defined by CUBI and Texas courts have yet to meaningfully interpret that phrase, Texas courts have construed the term “commercial purpose” broadly, in other contexts when no definition is available (see e.g., Texas’ Product Liability Act, Tex. Bus. & Com. Code §503.001, et al.).  CUBI related concerns have created a buzz around employers’ use of kiosks and other devices for contact-tracing and other reasons, as practitioners believe that any collection of biometric identifiers for this purpose will likely fall within CUBI’s restrictions.  Importantly, while CUBI does not itself authorize a private cause of action, the Texas Attorney General is empowered to pursue violators who are subject to a penalty of up to $25,000 per violation. More »

Illinois Appellate Court Eliminates Key Defense to BIPA Claims

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On September 18, 2020, the Fifth District Appellate Court in Illinois unanimously held that the exclusivity provision of Illinois’ Workers Compensation Act does not bar employees’ statutory damages claims for violation of Illinois’ biometric privacy law.[1]  The Fifth District’s ruling has eliminated a key defense advanced by employers defending against alleged violations of the Illinois Biometric Information Privacy Act (“BIPA”).[2]

In 2017, plaintiff Marquita McDonald filed a class action lawsuit against her employer Symphony Bronzeville, Park, LLC.  Plaintiff alleged that the defendant-employer required its employees to provide biometric information by scanning fingerprints into a fingerprint-based time clock system.  The lawsuit alleged that the employer violated BIPA by: (1) failing to inform employees in advance and in writing of the specific purpose and length of time for which their fingerprints were being collected, stored, and used; (2) failing to provide a publicly available retention schedule and guidelines for permanently destroying the scanned fingerprints; and (3) failing to obtain a written release from employers prior to collecting their fingerprints.  More »

Seventh Circuit Recently Clarifies Article III Standing in BIPA Cases

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One longstanding debate among U.S. District Courts lies at the very heart of the judicial process—what, precisely, is sufficient to confer Article III standing in lawsuits alleging violations of Illinois’ Biometric Information Privacy Act (“BIPA”)? The Seventh Circuit has now provided clarity for certain BIPA claims. More »

Best Practices for Cyber-Resilience in Uncertain Times

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Cyber resilience is an essential component of modern-day life in corporate America.  It is critical that companies of all sizes take reasonable steps to prepare for an adverse cyber event that is, in all likelihood, inevitable in today’s business climate.  The COVID-19 pandemic has brought with it a heightened cyber threat to companies that have increasingly embraced remote employment, as well as to critical industries including medical manufacturers and suppliers, financial services, healthcare, and others.  Industry data indicates that cyber criminals have recently increased phishing campaigns and malware attacks.  In times such as these, it is prudent for a company to evaluate its cyber-risk management and resilience practices – its ability to execute and deliver its business function following an adverse cyber event. More »

CYBER RISK CLIENT ALERT: The SHIELD Act Requires Corporations to Implement Cyber-Security Measures

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Introduction

New York will soon take another step forward towards protecting residents’ confidential data. As of March 21, 2020, any company that owns or licenses computer data that contains the private information of a New York resident must implement and maintain reasonable measures to protect that information.  This new legislation impacts any business that obtains or preserves New York residents’ confidential information regardless of where that business is located.  New York’s expanding protection serves as yet another reminder of the importance of corporate cyber-resilience.

In 2005, New York enacted the “Information Security Breach and Notification Act.”[1] (“Notification Act”).  As with other states throughout the country, the New York State legislature recognized the significant adverse impact of data security breaches as well as identity theft, and further recognized that New York residents were “hindered by a lack of information regarding breaches. . . .”  Accordingly, the state legislature enacted the Notification Act to ensure that New York residents are properly informed in the event of a data breach, as such information would empower residents to implement measures designed to repair damage and, if possible, prevent future damage from a data breach. More »

CYBER RISK CLIENT ALERT: Will This Become a National Trend? Pennsylvania Supreme Court Rules That Employers Have a Legal Duty to Protect Employees' Electronic Data

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Recently, the Pennsylvania Supreme Court, in Dittman v. UPMC, ruled that employers have a have a legal duty to exercise reasonable care to safeguard employees’ electronically stored personal information.  The dispute in Dittman arose after a data breach at the University of Pittsburgh Medical Center (“UPMC”) impacted 62,000 employees.  Hackers accessed UPMC’s computer system, and stole employees’ personal and financial information including birth dates, social security numbers, tax forms, addresses and bank account information.   More »

Illinois Appellate Court Concludes that Actual Harm is not Required under Biometric Information Privacy Act

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An Illinois appellate court’s recent opinion may very well open the flood gates for litigation arising out of alleged violations of the Illinois Biometric Information Privacy Act (“BIPA”) by eliminating the need to allege actual harm to have standing to sue. Sekura v. Krishna Schaumburg Tan, Inc., 2018 IL App (1st) 180175. More »

DATA BREACH LITIGATION UPDATE: District Court Judge Rejects Remijas Settlement and Decertifies Class

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A judge for the U.S. District Court for the Northern District of Illinois has dealt the latest blow to a consumer class seeking recovery from Neiman Marcus following the 2013 exposure of credit card information, as the result of a data breach. On September 17, 2018, Judge Sharon Johnson Coleman decertified the class and rejected a $1.6 million settlement reached between the class and Neiman Marcus Group LLC.   More »

Effective Cyber-Risk Management For Small and Mid-Sized Companies

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Introduction

The risk of a cyber-attack is not just a “big business” problem. Due to the media’s reporting, many organizations have the impression that large companies – such as Target and Experian – are the only victims of cyber hacks and breaches. This line of thinking, however, is inconsistent with industry data, which demonstrates that small and mid-size companies are, in fact, vulnerable to this risk. 

Companies of all sizes, large and small, must ask themselves whether competitors are trying to steal their trade secrets, whether companies or others are interested in their intellectual property, and whether their business contracts make them a target for a security breach. The regulatory and litigation costs associated with a data breach are monumental and, in some cases – especially those involving small or mid-sized companies – can be catastrophic. It therefore behooves every company, regardless of size, to create an effective strategy for managing and minimizing the risk of a cyber event. 

There is no cookie cutter approach to managing this risk, and a cyber risk management strategy must be tailored to a company’s specific needs. As discussed below, best practices provide that a company must assess and address its cyber risk, and engage in additional activities in order to effectively manage this risk.   More »

TECHNOLOGY & CYBER RISK CLIENT ALERT: The Battle for Standing in Data-Breach Litigation Rages On

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The battle over standing in cyber-security litigation continues. . . .

The latest example appears to be related to a data-breach involving the Hudson Bay Company. Founded in 1670, the Hudson Bay Company is one of the oldest companies in North America. On April 1, 2018 it joined the ever growing list of corporations that have been victimized by cyber-security breaches. Specifically, the Hudson Bay Company, which is the corporate parent of luxury department stores Saks Fifth Avenue, Saks Off 5th, and Lord & Taylor, posted a statement on its company web pages explaining that it had become aware of a data security issue involving customer payment data at certain North American stores. The statement goes on to inform customers that Hudson Bay Company is working with security investigators regarding the breach. On April 2nd, the statement was updated to reassure customers that there was no indication that social security numbers, drivers licenses numbers, and pins had been compromised, and that the company was conducting a diligent investigation to gain an understanding of the scope of the breach. More »

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