T-Mobile Named as a Defendant in Nearly 30 Data Privacy Litigations in Wake of Massive Cyberattack: Where Are We Now a Month In?
Last month, T-Mobile disclosed that it had been targeted in a cyberattack that resulted in the compromise of some current, former and prospective customers’ SSN, name, address, date of birth and driver’s license/ID information. According to T-Mobile, “the breach did not expose any customer financial information, credit card information, debit or other payment information.” However, this has not prevented impacted individuals from filing nearly 30 data privacy class actions nationwide—at one point with new litigations coming in on a daily basis. T-Mobile recently requested that several of the litigations should be paused while the Judicial Panel on Multidistrict Litigation (“JPML”) considers a pending motion to transfer for consolidated or coordinated pretrial proceedings under 28 U.S.C. § 1407, filed on August 23, 2021. See In re: T-Mobile Customer Data Sec. Breach Litig., MDL Docket No. 3019 (ECF No. 1). These cases raise common procedural considerations that can arise in data privacy litigations—some of which we address in a primer below.
First, let’s take a look at multidistrict litigations (“MDLs”). Generally speaking, MDLs are a way of handling multiple civil actions at once for coordinated discovery and pretrial proceedings, and can be formed when separate actions in different federal district courts share a common question of fact. 28 U.S.C. Section 1407(a) provides that:
When civil actions involving one or more common questions of fact are pending in different districts, such actions may be transferred to any district for coordinated or consolidated pretrial proceedings. Such transfers shall be made by the judicial panel on multidistrict litigation authorized by this section upon its determination that transfers for such proceedings will be for the convenience of parties and witnesses and will promote the just and efficient conduct of such actions . . . .
28 U.S.C. §1407(a).
On a motion filed by either party, those separate actions can be flagged to the JPML. The JPML then decides whether the litigations should be consolidated and transferred into one federal court for consolidated pretrial proceedings. [Note: Don’t assume that just because a party requests formation of a MDL it will happen. This year alone, the JPML denied requests for several data privacy MDLs and in fact denies the majority of such motions—although cyber/data event MDLs are becoming increasingly common].
In ruling on a motion to transfer and consolidate, the JPML will usually consider four factors: (i) the elimination of duplication in discovery; (ii) the avoidance of conflicting rules and schedules; (iii) the reduction of litigation cost; and (iv) the conservation of the time and effort of the parties, attorneys, witnesses, and courts.
In the brief it filed with the JPML last month, T-Mobile argued that the litigations brought against it in the wake of the cyberattack should be consolidated and transferred for coordinated proceedings as the requirements of 28 U.S.C. Section 1407 were plainly satisfied here. First, it argued, the litigations involved common questions of fact as each complaint alleged “that T-Mobile allowed a massive security breach in violation of various statutes and state common law” and sought to certify overlapping classes and subclasses. Second, absent transfer the parties will face duplicative and burdensome discovery in all cases. Third, transfer and consolidation will prevent conflicting rulings on T-Mobile’s asserted defenses, class certification issues, and other legal matters implicated in the litigations. And fourth, there is a sufficient critical mass of cases to support transfer and consolidation.
Final briefing before the JPML is due September 21, 2021 (today). And last week T-Mobile requested oral argument on its motion for transfer and consolidation, representing to the JPML that “[t]he issues of the litigation are such that oral argument will benefit the JPML in its deliberations and ultimate decision-making role. As there is disagreement between the parties as to the proper transferee forum, the Motion for Transfer raises issues that are particularly appropriate for argument.” The JPML has yet to respond to T-Mobile’s request.
As T-Mobile awaits on a ruling from the JPML (which should come out this fall), it has also sought relief in the pending litigations to prevent discovery and motion practice from proceeding in courts across the country by moving to temporarily pause those cases.
As just one example, Henry Thang vs. T-Mobile US, Inc., which was filed on August 20, 2021, is included on the list of cases to be considered for consolidation by the JPML. Again, Henry Thang alleges the same claims and issues connected to the same data security incident as the other cases against T-Mobile. Because of the motion to transfer and coordinate or consolidate, T-Mobile filed a motion to stay the proceedings in Henry Thang pending action by the JPML. In support of issuance of a stay, T-Mobile argued that a majority of courts have concluded that it is appropriate to stay preliminary pretrial proceedings while a motion to transfer and consolidate is pending with the JPML because of the judicial resources that are conserved. In addition, T-Mobile argued that judges across the country have granted motions to stay proceedings pending JPML rulings, finding that it would waste judicial resources to allow an action to proceed if there is a likelihood of consolidation.
Generally speaking, to stay a litigation, district courts usually consider (1) potential prejudice to the non-moving party if the stay is granted, (2) hardship to the moving party if the stay is not granted, and (3) economical use of judicial resources. T-Mobile argued in its briefing in Henry Thang all three criteria support issuance of a stay here.
First, T-Mobile asserted that there will not be any prejudice to the Plaintiff if the stay is granted because if the stay is only in effect until the JPML issues a decision on transfer, there will be no extended delay in the commencement of discovery. Second, T-Mobile argued that both parties would be harmed if the stay is not granted as both parties would be required to expend resources litigating the case only to likely have it transferred later. In addition, T-Mobile argued that it will face hardship as it will be required to litigate the same issues and claims in multiple venues, conducting duplicative discovery and motion practice, and face potentially inconsistent rulings on identical issues. Finally, T-Mobile contended if the stay is not granted, the Court (and several other courts) risks burdening its docket with a case that will require time, energy, resources and attention but may ultimately not remain with the court’s caseload. For instance, T-Mobile argued that without a stay nearly thirty motions to dismiss will likely be filed raising virtually identical arguments. T-Mobile argued that there is no reason for these courts to devote the time, energy, and resources, when the JPML will likely consolidate and transfer all of those related actions into a single proceeding before a single judge for consolidated pretrial purposes.
Suffice to say, these cases will be a must watch as we wait for a ruling from the JPML—including where they will all land assuming a MDL is created here (which is all but certain in CPW’s prediction, given the sheer number of cases pending against T-Mobile and their significant overlap of factual issues).