Kelley Drye Wins Precedent-Setting Dismissal Of Alleged Consumer Privacy Breach Claims

Sunday, February 1, 2009 - 00:00

Is the mere fear of a possibility that personal information may be at an increased risk of improper use enough for a person to have a claim for emotional or consequential damages? On January 7, 2009, in Pinero v. Jackson Hewitt Tax Service, Inc., the U.S. District Court of the Eastern District of Louisiana ruled "No." Kelley Drye & Warren LLP partner Donna L. Wilson represented the defendant in this precedent-setting case.

Chief Judge Sarah S. Vance of the Eastern District of Louisiana granted Kelley Drye's motion to dismiss various statutory and tort claims, including negligence, breach of contract, and violations of both Louisiana and federal statutes, against a national franchisor of income tax preparation services and its local independent franchisee. Plaintiff Vicky Pinero's lawsuit alleged that the local independent franchisee's alleged failure to properly dispose of certain documents allegedly containing personal information damaged her by creating an increased risk of identity theft. Plaintiff neither contended that her documents fell into the hands of a wrong-doer, nor that she had suffered any actual identity theft.

The Court's opinion is notable for requiring, in the context of fraud, statutory, and contract-based claims, that a plaintiff allege concrete damages, rather than merely the speculative fear of future identity theft. The overwhelming majority of cases to date that have considered this issue have focused on negligence-based claims. Accordingly, this decision is one of the strongest statements yet that a plaintiff's alleged fear of identity theft cannot form the basis for a damages claim under virtually any legal theory.

Benjamin D. Feder has joined the firm as Special Counsel in the Bankruptcy and Restructuring Practice Group. He represents debtors, bondholders, creditors' committees and other parties in all phases of Chapter 11 and other cases under the Bankruptcy Code, U.S. and international workouts, and out of court restructurings.