April 23, 2019

April 23, 2019

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April 22, 2019

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Biometric Privacy Update – Actual Harm Not Required

Since the passage of the Illinois Biometric Information Privacy Act (BIPA) in 2008, it has been used by plaintiffs’ attorneys to sue companies that use biometric identification technologies. Many BIPA cases have failed because courts routinely dismissed such actions for failing to allege proof of actual damages or actual injury. A recent decision of the Illinois Supreme Court changed the landscape of pending and future actions when it held that a mere technical violation of BIPA was sufficient to establish that a person was “aggrieved” such that he/she can recover statutory damages under the Act.

IN DEPTH


A recent decision by the Illinois Supreme Court raises the stakes for organizations that are required to comply with the Illinois Biometric Information Privacy Act (the Act or BIPA).

On January 25, 2019, in Rosenbach v. Six Flags Entertainment Corporation et al., the Illinois Supreme Court held that a plaintiff need not demonstrate actual injury or harm in order to be awarded monetary damages under BIPA. Broadly summarized, BIPA vests in individuals the right to control their biometric information by requiring notice to the individual before an organization collects the information and by giving the individual an opportunity to object by withholding consent to that collection. The Illinois Supreme Court held that failure to adhere to these procedures is not just a “technical” violation of BIPA but rather results in “the right of the individual to maintain [his or] her biometric privacy vanish[ing] into thin air,” which is a “real and significant” injury and the “precise harm the Illinois legislature sought to prevent” with BIPA.

This decision underscores the need for organizations implementing biometric technologies, particularly in Illinois, to maintain robust programs for compliance with the developing set of laws regulating the collection and processing of biometric information.

The Regulatory Landscape

Biometric identification technologies are increasingly prevalent in daily life. Employees may encounter them for timekeeping purposes, consumers may use them to pay at grocery stores and gas stations, and air travelers may encounter them at security checkpoints. While biometric identification technologies offer obvious benefits to individuals in terms of convenience, there are countervailing privacy and security considerations, and state legislatures are responding.

Illinois became the first state to regulate the collection, use, safeguarding, handling, storage, retention and destruction of biometric data (e.g., retina or iris scan, fingerprint, voiceprint, or hand- or face-geometry scan) with the enactment of BIPA in 2008. The Illinois legislature recognized the unique privacy and security considerations around biometric identifiers in its legislative findings.

Biometrics are unlike other unique identifiers that are used to access finances or other sensitive information. For example, social security numbers, when compromised, can be changed. Biometrics, however, are biologically unique to the individual; therefore, once compromised, the individual has no recourse, is at heightened risk for identity theft, and is likely to withdraw from biometric-facilitated transactions.

BIPA requires organizations to, among other things (i) inform an individual in writing of the biometric data collected and the purpose and length of time for which the company will collect, store and use such data, and (ii) receive a written release prior to taking or retaining his or her biometric information.

While other states have adopted similar statutory protections (Texas and Washington) and yet others have considered them (Alaska, Connecticut, Montana, and New Hampshire), Illinois is the only state that has provided individuals with a private right of action to obtain damages for violations of the Act.

The full weight of BIPA’s impact did not occur until several years after its enactment when numerous class action complaints were filed, primarily by employees against employers for violating the notice and consent provisions of the Act. Over the last few years, we have seen a surge in biometric privacy lawsuits in Illinois. Illinois circuit courts have presided over at least 100 BIPA cases in the last two years, particularly because BIPA provides for a private right of action for violations. The cost of non-compliance can be substantial. In the case of negligent violations, private entities are liable for $1,000 per violation in liquidated damages or the amount of actual damages, whichever is greater. For intentional or reckless violations, liquidated damages increase to $5,000 per violation or actual damages. Private entities are also liable for reasonable attorneys’ fees, costs, experts’ fees, and injunctive relief.

BIPA expressly provides that “any person aggrieved by a violation” of the Act may pursue money damages and injunctive relief against the offending party, however, the Act does not define the term “aggrieved” or “person aggrieved.” The issue addressed by the Illinois Supreme Court was whether a plaintiff who alleged only a “technical” violation of the Act without alleging some actual injury or damage is an aggrieved person. Defendants most often, and most successfully, cited to the US Supreme Court’s decision in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), which holds that “a bare procedural violation, divorced from any concrete harm,” fails to satisfy the injury-in-fact requirement to show “standing” to sue under Article III of the US Constitution. Id. at 1549. While Article III does not constrain state courts, the Spokeo arguments proffered by defendants in federal cases inspired the arguments made by defendants in BIPA cases—that violations of BIPA were merely technical violations of a statute that do not “aggrieve” a person because the injury does not result in actual harm. In Rosenbach v. Six Flags Corporation, the Illinois Supreme Court rejected these arguments regarding the definition of “aggrieved” in BIPA.

Rosenbach v. Six Flags Corporation

The Illinois Appellate Court entered the fray as to the meaning of “aggrieved” through two opinions: Rosenbach v. Six Flags Entertainment Corp., 2017 IL App (2d) 170317 and Sekura v. Krishna Schaumburg Tan, Inc., 2018 IL App (1st) 180175.

The Second District Appellate Court issued the first ruling in Rosenbach. The Rosenbach plaintiff—a 14-year-old boy—asserted a violation of BIPA after he purchased a season pass for a Great America theme park. At the time he registered, defendants obtained his fingerprints, but defendants allegedly failed to obtain his written consent or disclosed its plan for the collection, storage, use or destruction of the biometric information, both of which are required by BIPA. Plaintiff did not allege any actual injury, but simply alleged that if plaintiff was fully aware of defendants’ conduct, the boy would have never purchased the pass. The trial court denied defendants’ motion to dismiss but certified two questions to the Appellate Court on the meaning of “aggrieved” person under the Act.

In answering these questions, the Second District analyzed how “aggrieved” person was viewed in other legal contexts, i.e., by a federal district court dealing with BIPA, the Wisconsin Appellate Court, and the Hawaii Supreme Court, all of which equated “aggrieved” with an actual injury. Rosenbach, 2017 IL App (2d) 170317, ¶ 22; see McCollough v. Smarte Carte, Inc., No. 16-C-03777, 2016 WL 4077108 (N.D. Ill. Aug. 1, 2016); Avudria v. McGlone Mortgage Co., 2011 WI App 95, 802 N.W.2d 524 (2011); AlohaCare v. Ito, 271 P.3d 621 (Haw. 2012). The Second District found that a private right of action for a “technical” violation of the statute, i.e., a violation that did not cause actual harm, would render the word “aggrieved” superfluous in the Act. Id. at ¶ 23. As a result, the Second District found that in order to maintain a private right of action, a “person aggrieved” must allege some actual harm.

Ten months later, the First District Appellate Court reached the opposite conclusion in Sekura. Here, a customer of L.A. Tan provided her fingerprint when she purchased membership at the tanning salon. Sekura, 2018 IL App (1st) 180175, ¶ 8. The First District analyzed the plain language of BIPA noting that the Act “does not state a person aggrieved by a violation of this Act—plus some additional harm—may sue.” Id. at ¶ 50 (emphasis in original). Instead, the legislature chose to state only a “violation of this Act” gives rise to a private right of action. Id. These two decisions caused a serious fissure in Illinois law as one required actual harm to sue under BIPA and the other did not. Both decisions were appealed to the Illinois Supreme Court.

The Illinois Supreme Court resolved this split through its unanimous opinion in Rosenbach, 2019 IL 123186, by reversing the Second District decision in Rosenbach and implicitly affirming the First District in Sekura. The court reviewed various Illinois statutory provisions which provided individuals a private right of action and divided them into two categories: those that imposed a requirement of actual harm, e.g., Section 10(a) of the Consumer Fraud and Deceptive Business Practices Act, and those that do not, e.g., the AIDS Confidentiality Act. Id. at ¶¶ 25, 26. Based on the statutory language, the court viewed BIPA as falling to the latter category in not requiring an actual injury. Further, the court, going back to precedence from 1913, noted that the term “aggrieved” as defined under the law does not require one to be actually harmed. Id. at ¶¶ 30, 31.

Finally, the court rejected the very concept of a “technical” violation of the Act. The court noted that the Act “vests in individuals and customers the right to control their biometric information by requiring notice before collection and giving them the power to say no by withholding consent.” Id. at ¶ 34. The court continued that “[t]hese procedural protections are particularly crucial in our digital world because technology now permits the wholesale collection and storage or an individual’s unique biometric identifiers—identifiers that cannot be changed if compromised or misused.” Id. quoting Patel v. Facebook Inc., 290 F. Supp. 3d 948, 954 (N.D. Cal. 2018). When this biometric information is risked—through the failure to adhere to the statutory requirements set forth in the Act—the court found that it is “no mere technicality” and “[t]he injury is real and significant,” which allows for a private right of action as designed by the legislature. Id. at ¶ 34. By rejecting the very concept of a “technical” violation of the Act, the Illinois Supreme Court impliedly rejected arguments based on US Supreme Court’s rationale in Spokeo, discussed above. Indeed, Spokeo is not mentioned in the Illinois Supreme Court decision at all. This is notable because several amicus briefs cited the parallels between the rationale in Spokeo and how that rationale is consistent with Illinois precedent. In ignoring the Spokeo rationale, the Rosenbach decision highlights the different approaches to injury between state courts, which do not have to meet the high bar of Article III standing, and federal courts, which do.

Significance of Rosenbach Decision

Rosenbach will have significant implications for organizations implementing biometric technologies and on the 200+ similar pending cases in Illinois. To avoid litigation, organizations should closely scrutinize their biometric practices to comply with BIPA, including by providing adequate notice sufficient to create an informed, written consent to the collection, use and disclosure of biometric data before such data is collected. Organizations should also limit the scope of their collection and use of biometric information as narrowly as possible so that the minimal amount of biometric information is in the organizations’ possession. Organizations should take stock of their current practices involving the collection, use, and storage of biometric information to ensure their policies at least encompass the minimum requirements of the law. The series of lawsuits alleging BIPA violations demonstrates that no infraction is too small to draw ire from a potential plaintiff. Therefore, once an organization has proper policies and notice and consent processes in place, the organization will need to provide detailed training to its employees charged with carrying out the organization’s biometric information practices on an annual and as needed basis.

In addition to the steps organizations can take to comply with the BIPA, it is important to involve litigators early in the process when sued for a BIPA violation. There are several strategies that organizations can use to defend against BIPA-related lawsuits. Early involvement of counsel is important as we anticipate that the Rosenbach decision will result in hundreds more BIPA actions, many of which we believe will be pursued as class or collective actions, which will dramatically increase the cost of defense and the amounts at issue in the cases.

© 2019 McDermott Will & Emery

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About this Author

Partner

Ryan S. Higgins is a partner in the law firm of McDermott Will & Emery LLP and is based in the Firm’s Chicago office. He focuses his practice on representing hospitals, health systems, private equity firms and platform companies, and other health care organizations in corporate and transactional matters, including mergers, acquisitions, joint ventures, and management arrangements. He also focuses a significant portion of his practice on representing health care organizations in matters involving health information privacy and security and HIPAA compliance.

312-984-2052
Partner

Michael W. Weaver focuses his national practice on product liability litigation which includes representing medical device, manufacturing, and consumer goods clients in complex litigation matters. He counsels clients on product recalls and compliance with the United States Consumer Product Safety Commission (CPSC) standards and labeling requirements.

He also advises companies on litigation risks associated with business decisions and commercial disputes which include significant experience in enforcing or opposing non-compete / non-solicitation employment provisions in the context of temporary restraining orders and/or preliminary injunctions.

RESULTS

  • Serves as regional coordinator on a national counsel team representing a Fortune 100 company in its mass tort litigation; oversees and manages a significant docket of claims, which regularly includes significant complex medical and scientific issues, and handles all aspects of the overall defense strategy, including several appellate successes:

    • Schwartz v. Honeywell International Inc., 2018-Ohio-474, in which the Ohio Supreme Court reversed a multi-million dollar jury verdict by rejecting the application of the “cumulative exposure” theory to establish causation

    • Watkins v. Affinia Group., 2016-Ohio-2830, 54 N.E.3d 174 (8th Dist.), in which the Ohio Appellate Court reversed the jury verdict based on the improper admission of expert testimony

    • Gillenwater v. Honeywell International Inc., 2013 IL App (4th) 120929, 996 N.E.2d 1179 (4th Dist. 2013) further review denied at 3 N.E.3d 795 (Ill. 2014), in which the Illinois Appellate Court affirmed the trial court’s reversal of a multimillion-dollar jury verdict that was based on plaintiff’s allegation that certain companies conspired to suppress health and safety information concerning asbestos

  • Menssen v. Pneumo Abex Corp., 2012 IL App (4th) 100904, 975 N.E.2d 345 (4th Dist. 2012) in which the Illinois Appellate Court overturned a multimillion-dollar jury verdict that was based on plaintiff’s allegation that certain companies conspired to suppress health and safety information concerning asbestos

  • In re Estate of Hoogerwerf, 2012 IL App (4th) 110329, in which the Illinois Appellate Court vacated a default judgment based on the trial court’s improper application of Illinois Supreme Court Rule 237

  • Rodarmel v. Pneumo Abex, LLC, 2011 IL App (4th) 100463, 957 N.E.2d 107 (4th Dist. 2011), in which the Illinois Appellate Court overturned a multimillion-dollar jury verdict that was based on plaintiff’s allegation that certain companies conspired to suppress health and safety information concerning asbestos

  • Estate of Holmes v. Pneumo Abex, LLC, 2011 IL App (4th) 100462, 955 N.E.2d 1173 (4th Dist. 2011), in which the Illinois Appellate Court overturned a multimillion-dollar jury verdict finding there is no duty owed to plaintiff in a household or “take-home” asbestos exposure case

312-984-5820
Attorney

Lynette Arce focuses her practice in privacy and data security matters. She assists clients with drafting domestic privacy policies in accordance with state and federal laws, as well as custom incident response plans in the event of a breach. She also assesses companies cybersecurity preparedness and cyber risk exposure in the context of corporate mergers and acquisitions. Lynette is a Certified Information Privacy Professional (CIPP/US) by the International Association of Privacy Professionals (IAPP).

While in law school, Lynette was a member...

312 984 2759
Daniel Campbell, McDermott Law Firm, Commercial Litigation Attorney
Associate

Daniel Campbell focuses his practice on commercial litigation matters, including collective and class actions, and products liability actions.

At McDermott, Daniel has argued before the US Court of Appeals for the Seventh Circuit. Daniel has also first-chaired a stage-three evidentiary hearing in a post-conviction actual innocence case. He has experience taking and defending party depositions in large class actions, and has managed large-scale discovery and production in numerous cases. Daniel has worked on aviation product liability, bankruptcy...

312-984-2167
Matthew Cin, McDermott Law Firm, Chicago, Cybersecurity Law Attorney
Associate

Matthew R. Cin focuses his practice in technology transactional and regulatory matters, with particular focus on software licensing and data privacy and security in the United States and internationally. He represents technology companies, cloud service providers, health care providers, health information technology vendors, retailers, financial institutions and consumer analysis providers with US and international privacy, security and security breach response issues, including navigating the Health Insurance Portability and Accountability Act of...

312-984-2099