Target and State Attorneys General Resolve Investigation with Largest Multi-State Breach Settlement to Date

On May 23, 2017, various Attorneys General of 47 states and the District of Columbia announced that they had reached an $18.5 million settlement with Target regarding the states’ investigation of the company’s 2013 data breach. This represents the largest multi-state data breach settlement achieved to date. Continue Reading

New York AG Settles with Wireless Lock Maker Over Security Flaws

On May 22, 2017, New York Attorney General Eric T. Schneiderman announced that the AG’s office has reached a settlement (the “Settlement”) with Safetech Products LLC (“Safetech”) regarding the company’s sale of insecure Bluetooth-enabled wireless doors and padlocks. In a press release, Schneiderman indicated that this “marks the first time an Attorneys General’s Office has taken legal action against a wireless security company for failing to protect their [customers’] personal and private information.” Continue Reading

China Releases Revised Draft on Measures for Implementation of the New Cybersecurity Law

On May 19, 2017, the Cyberspace Administration of China (“CAC”) issued a revised draft (the “Revised Draft”) of its Measures for the Security Assessment of Outbound Transmission of Personal Information and Critical Data. The original draft was issued in April 2017, and similar to the original draft, the Revised Draft does not have the impact of law; it does, however, provide an indication of how the CAC’s views on the Cybersecurity Law have evolved since the publication of the original draft. The Revised Draft was issued after the CAC received comments on the original draft from numerous parties.

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OCR Fines Texas Health System For Alleged HIPAA Privacy Rule Violation

On May 10, 2017, the U.S. Department of Health and Human Services’ Office for Civil Rights (“OCR”) announced a $2.4 million civil monetary penalty against Memorial Hermann Health System (“MHHS”) for alleged violations of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) Privacy Rule.  Continue Reading

Global Ransomware Attacks Raise Key Legal Considerations

On May 12, 2017, a massive ransomware attack began affecting tens of thousands of computer systems in over 100 countries. The ransomware, known as “WannaCry,” leverages a Windows vulnerability and encrypts files on infected systems and demands payment for their release. If payment is not received within a specified time frame, the ransomware automatically deletes the files. A wide range of industries have been impacted by the attack, including businesses, hospitals, utilities and government entities around the world. Continue Reading

Chinese Hackers Fined for Hack of New York Law Firms

On May 5, 2017, the U.S. District Court for the Southern District of New York entered a default judgment in favor of the SEC against three Chinese defendants accused of hacking into the nonpublic networks of two New York-headquartered law firms and stealing confidential information regarding several publicly traded companies engaged in mergers and acquisitions. The defendants allegedly profited illegally by trading the stolen nonpublic information. After the defendants failed to answer the SEC’s complaint, the court entered a default judgment against them, imposing a fine of approximately $8.9 million against the defendants (three times the profits they gained by the unlawful trading, the maximum penalty allowable under the relevant section of the Securities Exchange Act of 1934).

President Trump Signs Executive Order on Cybersecurity

On May 11, 2017, President Trump signed an executive order (the “Order”) that seeks to improve the federal government’s cybersecurity posture and better protect the nation’s critical infrastructure from cyber attacks. The Order also seeks to establish policies for preventing foreign nations from using cyber attacks to target American citizens.

Read the full text of the Order.

Second Circuit Affirms Dismissal of Putative Data Breach Class Action for Lack of Article III Standing

On May 2, 2017, the United States Court of Appeals for the Second Circuit issued a summary order affirming dismissal of a putative data breach class action against Michaels Stores, Inc. (“Michaels”). The plaintiff’s injury theories were as follows: (1) the plaintiff’s credit card information was stolen and twice used to attempt fraudulent purchases; (2) the risk of future identity fraud and (3) lost time and money resolving the attempted fraudulent charges and monitoring credit. The plaintiff, however, quickly cancelled her card after learning of the unauthorized charges and did not allege that she was held responsible for any of those charges. Continue Reading

Securing a Successful Transaction through Focused Privacy and Data Security Due Diligence

Privacy and data security issues have become the subject of critical focus in corporate mergers, acquisitions, divestitures and related transactions. In 2016 and 2017, several large transactions, especially those involving telecommunications, entertainment and technology companies, have been impacted by either concerns about the collection and use of personal information or significant information security breaches. The FTC has sharpened its focus on the use of personal information as a factor in evaluating the competitive effects of a given corporate transaction, and the SEC is now closely scrutinizing privacy and data security representations made to investors in public filings connected to transactions. More broadly, privacy and data security problems that are not timely discovered before entering into an M&A transaction can become significant liabilities post-closing and also lead to litigation. Continue Reading

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