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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.
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