Plaintiffs in Playstation Data Security Class Action Back to the Drawing Board

Cross-posted at Forbes.com’s WLF contributor site

One of the hallmarks of frivolous litigation is a class composed of arguably uninjured plaintiffs who often receive little in the way of remuneration for the asserted wrong.  That remuneration is reserved for the lawyers, and the class is thus relegated to receiving coupons or promises to refrain from future behavior.  Where the plaintiffs have not endured any real harm, litigation merely burdens the docket while enriching plaintiffs’ lawyers.  However, a recent opinion in the United States District Court for the Southern District of California may bode well for defendants who encounter this type of litigation, particularly in data breach cases.

In an order for In re: Sony Gaming Networks, the district court granted leave for plaintiffs to amend their complaint after determining that they had not satisfied the burden of pleading a cognizable injury.  This opinion adds to case-law saying the same; in 2011, another California court dismissed some of the claims against Google for its data collection under the Google Street View program due to the plaintiffs’ lack of monetary damages.

In In re: Sony Gaming Networks, the plaintiffs filed suit after a security breach compromised the plaintiffs’ personal data stored through the Playstation network.  Sony offered reparation in the form of free identity theft protection services, free downloads, and other complimentary online services–reparations that fit the harm.  Believing that this wasn’t enough, numerous plaintiffs filed suit based on their purported fear of future identity theft and their loss of use and value of their Playstation (following the security breach, Sony’s temporarily suspended some of its services) (the agony!).  Notably, only two of the named plaintiffs alleged they had experienced an actual loss due to the data breach.  Even then, neither could show that they were required to pay out-of-pocket for the fraudulent charges.

As a constitutional matter, the court determined that threat of future harm is a “cognizable loss sufficient to satisfy Article III standing.”  Nonetheless, the court determined that the plaintiffs’ claims could not stand under state common law, as California negligence law requires “appreciable, nonspeculative, present harm” as “an essential element of negligence.”  Thus, the plaintiffs’ fear of future identity theft or fraud was not sufficient to provide standing.  Additionally, plaintiffs’ assertion that their reduced access to Sony services and the postponement of online services devalued their consoles failed because the plaintiffs could not prove that Sony had a legal duty to provide these services in the first place.  Finally, as a statutory matter, California’s Unfair Competition Law, False Advertising Law, and Consumers Legal Remedy Act require actual economic loss as an element of a plaintiff’s claim.

Whether or not this trend will continue depends on the elements of the law under which lawsuits are brought.  Nonetheless, the doctrine of standing exists to protect the proper role of courts and deter frivolous law suits.  When judges police standing, they ensure that only cases deserving of the time and resources of the court will be filed.

2 thoughts on “Plaintiffs in Playstation Data Security Class Action Back to the Drawing Board

  1. Pingback: Plaintiffs in Playstation Data Security Class Action … – The Legal Pulse « nitymuruleg

  2. Pingback: Encouraging Trend: Judges Can’t “Stand” Online Privacy Class Actions | The Legal Pulse

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