As discussed in a previous DBR on Data post, the U.S. Department of Education (“ED”) in recent years has repeatedly emphasized the importance of higher education institutions taking all appropriate measures to secure and protect their data systems and data from breaches and inadvertent disclosures. The threats to educational institutions’ data are real, recurring and well-documented. The University of Maryland reported in 2014 that a computer system breach compromised more than 300,000 personal records for faculty, staff and students. A private cybersecurity firm reported that Chinese hackers targeted research databases at more than two dozen universities in the 2017-18 timeframe. In 2019, applicants to Grinnell College, Hamilton College and Oberlin College discovered their admissions files were subject to a ransomware attack. These instances are just a few recent examples of significant data breaches in the education sector.
Data privacy litigation and enforcement actions continue to roil the private sector, most recently with the FTC’s announcement of a $425 million settlement with Equifax in the wake of the Equifax data breach. Less discussed is the fact that data privacy and security remains a real threat in the public sector. As we recently reported, the 2019 Verizon Data Breach Investigations Report found that 16% of confirmed data breaches were in the public sector. Three recent developments highlight the breadth and scope of the threat, reflecting that federal agencies and government contractors remain vulnerable to cyberattacks and may be subject to liability for cybersecurity failures.
Two recent reports reflect that cyberattacks and resulting data breaches continue to threaten U.S. companies and public entities. The Hiscox Cyber Readiness Report (April 23, 2019), compiled from a survey of more than 1,000 U.S. cybersecurity professionals at private companies and public-sector entities with 50 to 1,000+ employees, found that 53% of firms reported at least one cyberattack – up from 38% in 2018. Interestingly, only 11% of U.S. firms qualified as experts based on their cybersecurity preparedness and responses – down from 26% in last year’s survey; 16% of firms ranked as intermediate, and the remaining 73% ranked as novice. These statistics reflect a continuing need for public- and private-sector emphasis on cybersecurity preparedness and incident response.
In the wake of data breaches, companies may find themselves targets of class actions by customers or employees whose personal information was compromised in the breach. The exposure is considerable, with an estimated 765 million people impacted by data breaches between April and June of 2018. As we previously reported, some courts have allowed consumer and employee data breach cases to proceed despite threshold challenges – leading to multi-million-dollar settlements. And in Dittman, Pennsylvania’s Supreme Court recently held that an employer owed an affirmative duty to exercise reasonable care to protect employees’ personal nonpublic data from data breaches.
The Supreme Court recently declined to review the Ninth Circuit’s decision in Zappos.com, Inc. v. Stevens, a class action suit resulting from a 2012 data breach of the online retailer. As a result, there remains a split in the courts as to whether a breach of data confers Article III standing on potential plaintiffs, even if no actual injury occurred.