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Causation and Harm In Data Breach Litigation
Data breaches can have substantial adverse impacts on firms, not only in the form of negative publicity or harm to a company's brand and revenues, but through litigation that may result. A key point of contention in data breach litigation has been whether plaintiffs have met the injury-in-fact standing requirement of Article III of the Constitution. Demonstrating that a data breach has resulted in an injury-in-fact can be difficult, because it is not always clear what has happened or will happen with the stolen data.
For example, suppose hackers gained access to consumers' personal information but the information has not yet been misused. In that case, the breach will not have resulted in actual economic harm to the consumers even though risk for future harm from the breach may remain. As a result of this dynamic, plaintiffs in data breach litigation typically allege harm in terms of something that could happen (i.e., an increased risk of future injury) rather than something that did happen.
The determination of standing under Article III also hinges on whether the present or future alleged harm was caused by the data breach in question, as opposed to another independent event or factor. Because of the conjectural nature of harm in many data breach litigations, the inference of causation can be complex. For litigators on both sides of data breach cases, the framework for assessing causal relationships in product liability litigation for pharmaceuticals and medical devices may provide helpful guidance. In this framework, assessment of a causal relationship occurs through two levels of inquiry:
- General Causation: Whether exposure to a product is plausibly related to the adverse outcome being alleged; and
- Specific Causation: Whether a specific plaintiff's exposure can be shown to have been the cause of a particular adverse outcome as opposed to any other risk factor.
For a causal relationship to be established, the answer to both of these inquiries must be “yes.” For example, in the multidistrict litigation involving the cholesterol drug Lipitor, plaintiffs alleged that Pfizer had failed to adequately warn users that exposure to certain doses of the drug was causally associated with a previously undisclosed increased risk of type 2 diabetes. In one ruling, a district court found that plaintiffs did not establish a general causal link between exposure to the drug at one of the specified dosages and the onset of diabetes. Additionally, the court found that plaintiffs failed to establish that the onset of diabetes was specifically caused by Lipitor exposure (at any dosage) as opposed to some other risk factor.
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