Abstract
Legal privacy scholarship has typically emphasized the various ways in which plaintiffs fail when bringing legal actions against entities when their personal information is lost or stolen. However, this scholarship is based on a limited set of published judicial opinions about large-scale data breaches. Little is actually known about the characteristics and disposition of a representative set of data breach lawsuits. Using a unique sample of manually-collected data from PACER, we analyze the court dockets of over 200 federal data breach lawsuits from 1998 to 2011. We use discrete outcome regressions to better understand which breaches are being litigated and which lawsuits are being settled. Our results generally (though not strictly) support theoretical notions of litigation. We find that while breach characteristics (size, cause and types of information compromised) are positively correlated with probability of filing a lawsuit, they contribute less when predicting the outcome of the suit. Instead, the probability of settlement is mostly driven by typical legal procedural matters such as actual harm and class certification. © (2011) by the AIS/ICIS Administrative Office, All rights reserved.
Highlights
The surge in popularity of social media, e-commerce, and mobile services is proof of the benefits consumers are enjoying from information and communication technologies
Our analysis reveals that federal data breach lawsuits typically exhibit a number of significant characteristics
Our analysis suggests that defendants settle 30% more often when plaintiffs allege financial loss from a data breach, or when faced with a certified class action suit
Summary
The surge in popularity of social media, e-commerce, and mobile services is proof of the benefits consumers are enjoying from information and communication technologies These same technologies can create harm when personal consumer information is lost or stolen, causing emotional distress or monetary damage from fraud and identity theft. Given that as few as 15% of all federal lawsuits produce reported opinions (Hoffman et al, 2007), any conclusions reached from examining particular, high-profile cases are likely unrepresentative of the full population of data breach lawsuits It remains still unclear what characteristics these lawsuits possess, and how “successful” they have been. We believe that answering these questions will help inform firms, consumers, and policy makers regarding the risks associated with the collection and use of personal information, and the characteristics and outcomes of federal data breach litigation.
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