September 19, 2021

Volume XI, Number 262

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Walmart Litigation Provides Guidance on Data Breach Class Action Suits Under the CCPA

Gardiner v. Walmart provided some guidance as to the specificity required to state a claim under the California Consumer Privacy Act (CCPA) and the types of damages that may be recoverable for breaches of California consumer data. On July 10, 2020, Lavarious Gardiner filed a proposed class action against Walmart, alleging that unauthorized individuals accessed his personal information through Walmart’s website. Although Walmart never disclosed the alleged breach or provided any formal notification to consumers (and maintains that no breach occurred), Gardiner claimed that he discovered his personal information on the dark web and was told by hackers that the information came from his Walmart online account. He also claims that by using cybersecurity scan software he discovered many vulnerabilities on Walmart’s website.

Gardiner claimed Walmart violated the CCPA and California’s Unfair Competition Law. In response, Walmart filed a motion to dismiss, which was granted on March 5, 2021 (of note – with leave to amend). While Gardiner has now amended his complaint, the court’s ruling on Walmart’s motion to dismiss addresses some important points related to data breach class actions, including:

  • The complaint MUST state when the alleged breach occurred. Gardiner had only alleged that his information was on the dark web, not when the breach actually occurred. The court also stated that for purposes of a CCPA claim, the relevant conduct is the actual data breach resulting from a “failure to implement and maintain reasonable security procedures and practices.” This means that the breach must have occurred on or after January 1, 2020, the effective date of the CCPA.

  • The complaint must sufficiently allege disclosure of personal information. Gardiner had only alleged that his credit card number was disclosed, but had not alleged that his 3-digit access code was affected.

  • Plaintiff’s damages arising from a data breach MUST not be speculative -this is common across courts that dismiss class action data breach suits. Here, Gardiner had not alleged that he incurred any fraudulent charges or suffered any identity theft or other harm.

The court also dismissed Gardiner’s unfair competition claims that were based on a benefit of the bargain theory.

The court also addressed the disclaimers in Walmart’s privacy policy; Walmart argued that Gardiner’s contract-based claims were barred by the its website Terms of Use, which included a warranty disclaimer and limitation of liability for data breaches. The court said that the limitation of liability was clear and emphasized with capitalization, which put Gardiner on notice of its contents. This is an important part of the decision for ANY company with online presence - a company’s website Privacy Policy and Terms of Use could be the final line of defense.

Gardiner has since amended his complaint. Whether the amendments will avoid another motion to dismiss is unknown. Still, this decision provides valuable insight for claims made under the CCPA and important lessons about website Privacy Policies and Terms of Use.

Copyright © 2021 Robinson & Cole LLP. All rights reserved.National Law Review, Volume XI, Number 91
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About this Author

Kathryn Rattigan Attorney Cybersecurity Data Privacy
Associate

Kathryn Rattigan is a member of the firm's Business Litigation Group and Data Privacy + Cybersecurity Team. She advises clients on data privacy and security, cybersecurity, and compliance with related state and federal laws. Kathryn also provides legal advice regarding the use of unmanned aerial systems (UAS, or drones) and Federal Aviation Administration (FAA) regulations. She represents clients across all industries, such as insurance, health care, education, energy, and construction.

Data Privacy and Cybersecurity Compliance

Kathryn helps clients comply...

401-709-3357
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