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Georgia Supreme Court Clarifies Liability for Data Breach

In 2016, plaintiffs alleged an anonymous hacker stole personally identifiable information of at least 200,000 patients from an orthopedic clinic.  The hacker demanded a ransom, which the clinic refused to pay.  The clinic notified the plaintiffs of the breach in August 2016.  Plaintiffs filed a class-action lawsuit against the clinic and asserted claims for negligence, breach of implied contract, and unjust enrichment.  They sought damages based on costs related to credit monitoring and identitytheft protection, as well as attorney fees.  The clinic filed a motion to dismiss, which the trial court granted on June 26, 2017.  The Court of Appeals upheld this decision on June 27, 2018.  On December 23, 2019, the Supreme Court of Georgia overturned the opinion of the Court of Appeals.  It concluded that the trial court erred in dismissing the plaintiffs negligence claims due to failure to plead a legally cognizable injury.  Because the error may have affected the Court of Appeals’ other holdings, the Court vacated those as well and remanded the case. 

The Supreme Court cited the relevant allegations in the plaintiffs’ complaint 

Here,  the  plaintiffs  alleged  that  (1)  a  thief  stole  a  large  amount of  personal  data  by  hacking  into  a  business’s  computer databases  and  demanded  a  ransom  for  the  data’s  return,  (2) the  thief  offered  at  least  some  of  the  data  for  sale,  and  (3) all  class  members  now  face  the  “imminent  and  substantial risk”  of  identity  theft  given  criminals’  ability  to  use  the  stolen data  to  assume  the  class  members’  identities  and  fraudulently obtain  credit  cards,  issue  fraudulent  checks,  file  tax  refund returns,  liquidate  bank  accounts,  and  open  new  accounts  in their  names.   

Based on these allegations, the Supreme Court concluded that the trial court should not have dismissed the plaintiffs’ case on the clinic’s motion to dismiss.   

Collins v. Athens Orthopedic Clinic, P.A., — Ga. –, 2019 WL 7046786 (Dec. 23, 2019).