Privacy & Information Security Law Blog : Privacy Lawyer & Attorney : Hunton & Williams Law Firm : Personal Data, Information Security

On August 10, 2010, Illinois Governor Pat Quinn signed the Employee Credit Privacy Act, which prohibits most Illinois employers from inquiring about an applicant’s or employee’s credit history or using an individual’s credit history as a basis for an employment decision.  The definition of “employer” under the Act exempts banks, insurance companies, law enforcement agencies, debt collectors and state and local government agencies that require the use of credit history.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Rite Aid has agreed to pay $1 million and implement remedial measures to resolve Department of Health and Human Services (“HHS”) and Federal Trade Commission allegations that it failed to protect customers’ sensitive health information.  The FTC began its investigation following news reports about Rite Aid pharmacies using open dumpsters to discard trash that contained consumers’ personal information such as pharmacy labels and job applications.  The FTC took issue with this practice in light of the pharmacy’s alleged claims that “Rite Aid takes its responsibility for maintaining your protected health information in confidence very seriously . . . Although you have the right not to disclose your medical history, Rite Aid would like to assure you that we respect and protect your privacy.”  At the same time, HHS began investigating the pharmacies’ disposal of health information protected by the Health Insurance Portability and Accountability Act.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

On July 19, 2010, Representative Bobby Rush (D-Ill.) introduced a bill "to foster transparency about the commercial use of personal information" and "provide consumers with meaningful choice about the collection, use and disclosure of such information."  The bill, cleverly nicknamed the "BEST PRACTICES Act", presumably intends to set the standards for the use of consumer personal information by marketers.  A similar bill was introduced by Representatives Boucher and Stearns in early May.  Although both proposals would require opt-out consent for online behavioral advertising and express, affirmative consent for the collection or sharing of sensitive information, Rush's bill has a broader definition of "sensitive information" and includes several other key differences.  Perhaps most notably, unlike the earlier draft legislation, Rush's bill features a private right of action that would allow individuals to sue companies that violate the law for up to $1,000 in actual damages, plus punitive damages and costs and attorney's fees.  The bill contains a safe harbor from the private right of action for companies that participate in, and comply with, a self-regulatory "Choice Program" approved by the FTC.  In addition, the bill excludes from its definition of "covered information" any information collected from or about an employee by an employer "that directly relates to the employee-employer relationship."  A hearing on the proposed bill will be held on Thursday July 22, 2010.

Read the text of the bill. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Twitter has agreed to settle Federal Trade Commission charges that it deceived consumers and put their privacy at risk by failing to safeguard their personal information.  The charges stem from alleged lapses in the company’s data security that permitted hackers to access tweets that users had designated as private and to issue phony tweets from the accounts of some users, including then-President-elect Barack Obama.  According to the FTC’s complaint (main document, exhibits), these attacks on Twitter’s system were possible due to a failure to implement reasonable safeguards, including:

• requiring employees to use hard-to-guess administrative passwords that are not used for other programs, websites or networks;
• prohibiting employees from storing administrative passwords in plain text within their personal email accounts;
• suspending or disabling administrative passwords after a reasonable number of unsuccessful login attempts;
• providing an administrative login webpage that is made known only to authorized persons and is separate from the login page for users;
• enforcing periodic changes of administrative passwords by, for example, setting them to expire every 90 days;
• restricting access to administrative controls to employees whose jobs required it; and
• imposing other reasonable restrictions on administrative access, such as by restricting access to specified IP addresses.

The proposed settlement agreement contains a consent order requiring Twitter to implement data security safeguards and submit to periodic independent security audits.  The FTC’s press release contains more details.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Breaking -- The Supreme Court has issued its decision in City of Ontario, California v. Quon, ruling unanimously that the police department did not violate an officer's Fourth Amendment rights when supervisors reviewed text messages transmitted using a work-issued pager.  In reaching this decision, the Court did not resolve whether the officer had a reasonable expectation of privacy, rather the Court based its decision on a determination that the search itself was reasonable.

Read our previous coverage of this case.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In the wake of recent amendments to the German Federal Data Protection Act, the German Federal Ministry of the Interior (the Bundesinnenministerium des Innern) is working on a draft law on special rules for employee data protection.  The draft law is intended to provide clarification on some issues that were not addressed fully in the amendments that entered into force on September 1, 2009.  The Ministry’s overarching considerations are set forth in a key issues paper that was published April 1, 2010.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

On March 30, 2010, the New Jersey Supreme Court ruled for the former employee in Stengart v. Loving Care Agency, Inc. on the employee’s claim that state common privacy law protected certain of her emails from review by the employer.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

On February 19, 2010, the Court of Appeals of Versailles (the “Court”) upheld the unlimited seizure and review of a company’s emails by several agents of the French Competition Authority (Autorité de la Concurrence).  The agents had been authorized by a lower court judge to inspect the emails pursuant to an investigation into an alleged abuse of dominant position in the pharmaceutical market.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

On February 24, 2010, the French Senate’s Committee of Laws published an amended bill on the right to privacy in the digital age (“Proposition de loi visant à garantir le droit à la vie privée à l’heure du numérique”) (the “Bill”).  Following the initial draft presented by Senators Yves Détraigne and Anne-Marie Escoffier, this revised version is based on a second Senate Report in which concrete proposals are made to amend the Data Protection Act.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

On February 22, 2010, the Federal Trade Commission issued a news release indicating that it had notified almost 100 organizations that personal data about their customers, students or employees had been shared from their computer networks on peer-to-peer (“P2P”) file sharing sites, thereby exposing the data of affected individuals to possible identity theft and fraud.  In its letters, the FTC urged recipient entities to review their internal security procedures and the security procedures of their third party service providers.  The letters also recommended that the companies identify affected individuals and consider whether to notify them of the possible risks to their personal information pursuant to applicable state and federal data security breach notification laws.  Samples of the FTC’s letters were published with the news release and are available on the FTC’s website.

In addition, to help companies manage security risks related to P2P networks, the FTC published a Guide for Businesses on Peer-to-Peer file sharing and provided a link to a P2P Security Guide for consumers. 

Hunton & Williams partner, Lisa J. Sotto, discussed the FTC’s release in USA Today's Technology Live Blog.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The U.S. Supreme Court has set oral argument for April 19, 2010, to review the Ninth Circuit’s 2008 decision on employee privacy in Quon v. Arch Wireless Operating Co.  Although Quon concerns the scope of privacy rights afforded to public employees under the Fourth Amendment, the case also has forced private employers to renew their focus on ensuring robust and consistent enforcement of employee monitoring policies.  Unlike government employers, private employers are not subject to the Fourth Amendment’s prohibition against unreasonable searches and seizures; instead, they must comply with federal wiretap statutes and state law.  In practice, however, the “reasonable expectation of privacy” test courts apply to state common law privacy claims that govern private employers is virtually identical to the Fourth Amendment test.  Accordingly, the Supreme Court’s review of the Constitutional test likely will affect how courts view privacy claims brought against private employers.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Cloud computing raises complex legal issues related to privacy and information security.  As legislators and regulators around the world grapple with the privacy and data security implications of cloud computing, companies seeking to implement cloud-based solutions should closely monitor this rapidly evolving legal landscape for developments.  In an article published on February 3, 2010, Lisa Sotto, Bridget Treacy and Melinda McLellan explore U.S. and EU legal requirements applicable to data stored by cloud providers, and highlight some of the risks associated with the use of cloud computing.

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link

On January 25, 2010, the Financial Industry Regulatory Authority (“FINRA”) issued Regulatory Notice 10-06, Guidance on Blogs and Social Networking Web Sites (the “Guidance”) for securities firms, investment advisors and brokers.  FINRA, which is the largest non-governmental financial regulator, previously had issued guidance on other issues pertaining to interactive web sites, such as participation by securities firms and their employees in Internet chat rooms discussing stocks or investments.  The goals of the Guidance are to “ensure that—as the use of social media sites increases over time—investors are protected from false or misleading claims and representations” as well as “to interpret [the] rules in a flexible manner to allow firms to communicate with clients and investors using” blogs and social networking.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

On January 11, 2010, the data protection authority of the German federal state of Baden-Wurtemberg issued a press release stating that it had fined the Müller Group €137,500 for illegal retention of health-related data and failure to appoint a Data Protection Officer.

In April 2009, the German press reported that the Müller Group, a drugstore chain comprised of twelve entities and employing some 20,000 workers, was illegally collecting health data from its employees.  Specifically, employees returning from sick leave were required to complete a form and provide the reason for their sicknesses.  After conducting an investigation, the DPA confirmed these allegations.  Since 2006, the Müller Group entities had systematically requested employees returning from sick leave to identify the reasons for their sicknesses on a form that was then sent to the Group’s central Human Resources department to be scanned.  As of April 2009, approximately 24,000 records containing data on employee illnesses were being stored in Müller’s centralized HR files.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The U.S. Supreme Court announced Monday that it will review the Ninth Circuit’s 2008 decision on employee privacy in Quon v. Arch Wireless Operating Co.  In Quon, the Ninth Circuit considered whether the Ontario, California police department and the City of Ontario violated a police officer’s privacy rights by reviewing private text messages the officer sent using a two-way pager issued by the police department.  The police officer had on several occasions exceeded the limit on the text messages provided by the department-paid plan.  Each time, the officer paid for the overage without anyone reviewing his text messages.  When the officer again exceeded the limit, his supervisor requested from the service provider and subsequently reviewed transcripts of the officer’s messages to determine if the messages were work-related.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

On Friday, October 23, 2009, the German Railways Operator Deutsche Bahn AG announced that they would pay a fine of over €1.1 million that was imposed on October 16, 2009 by the Berlin data protection authority.  This fine is the highest ever imposed by a German data protection authority.  The imposition of this fine follows a major data protection scandal that reportedly broke out within the company.  From 2002 to 2005, Deutsche Bahn had screened a large quantity of employee data and compared it to supplier data in an effort to combat corruption, but without specific suspicions related to individual employees.  In addition, the regulator considered activities by the company's security department from 2006 to 2007, which included monitoring the email communications of all employees who used external email accounts at work.  The purpose of this monitoring was to identify communication with journalists and employees of members of the federal parliament to detect which employees may have disclosed company information.  At the time it broke, the scandal cost the CEO and several top managers their jobs.  Thereafter, a major restructuring was undertaken within the company.  In addition to the changes in top management, a separate position was created at the CEO level for compliance, data protection and legal affairs.  Furthermore, it was agreed with the works council, that the company will develop new guidelines for HR data protection by the end of November.  More information is available from the Berlin data protection authority's press release (in German).

• Email This
• Print
• Comments
• Trackbacks
• Share Link

On August 19, 2009, the state DPA in North Rhine-Westphalia fined a subsidiary of the discount supermarket chain Lidl €36,000 (approximately $51,000) for illegally keeping records of employee health data. 

The case was triggered by a report in the German news magazine Der Spiegel.  A Bochum resident found papers and forms containing Lidl employees' health data in a trash bin at a car wash and forwarded them to the magazine.  Subsequent investigations revealed that at least four Lidl branches in North Rhine-Westphalia were using a form to record data about employees' medical conditions, partly without their knowledge.  This activity was found to violate data protection law in many cases. 

Click here for a press release issued by the German Data Protection Authority (in German).

• Email This
• Print
• Comments
• Trackbacks
• Share Link

On July 3, 2009, the German Federal Parliament passed comprehensive amendments to the Federal Data Protection Act (the "Federal Act"). These amendments also passed the Federal Council on July 10, 2009, and the revised law will enter into force on September 1, 2009. The new amendments cover a range of data protection-related issues, including marketing, security breach notification, service provider contracts and protections for employee data. They also include new powers for data protection authorities and provide for increased fines for violations of data protection law provisions.  To read more, click here.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The mere increased risk of identity theft following a data breach is sufficient to give the data subjects standing to bring a lawsuit in federal court but, absent actual identity theft or other actual harm, claims against the data owner and its service provider for negligence and breach of contract cannot survive, a federal judge ruled this month.  Ruiz v. Gap, Inc., et al., No. 07-5739 SC (N.D. Cal. April 6, 2009).

Plaintiff Joel Ruiz brought a putative class action against Gap, Inc. and its service provider Vangent, Inc. after a thief stole a laptop computer from Vangent containing unencrypted Social Security numbers and other personal information of Ruiz and approximately 750,000 other Gap job applicants.  Shortly after the theft, Gap notified Ruiz and the other applicants of the breach and offered them 12 months of free credit monitoring and fraud assistance.  Ruiz sought damages under various theories, including negligence (failure to exercise due care to protect the data) and breach of contract (breach of the security provisions of Gap’s contract with Vangent, under the theory that Ruiz was a third-party beneficiary of the contract).

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link

The Information Commissioner’s Office (the “ICO”) has conducted a dawn raid on a business which operated a covert database containing details of 3,213 workers in the construction industry (the “Database”). Subscribers included over 40 construction companies, publicly named by the ICO, who used the database to vet prospective employees, without their knowledge or consent.

• Email This
• Print
• Comments
• Trackbacks
• Share Link