Sony Breach May Inspire Slew of Privacy, Employment Claims

December 12, 2014 – In The News

Scott L. Vernick was quoted in the Law360 article, “Sony Breach May Inspire Slew of Privacy, Employment Claims.” Full text can be found in the December 12, 2014, issue, but a synopsis is below.

In the wake of its recent breach, Sony Corp. is likely to face not only claims over its security safeguards, but employment, breach of contract and health privacy allegations as well after personal data of thousands of employees and celebrities was compromised.

While Sony will not have to contend with the types of claims over the theft of payment card data that have traditionally been brought by consumers and banks following large breaches, the limits of the company’s potential exposure likely ends there.

“Banks won't be interested in this, since it's not a credit card breach, so Sony won't have that issue,” said Scott L. Vernick, a noted privacy attorney. “But what makes the breach particularly distinct is that there is a large amount of proprietary, financial and health information that has been compromised or publicly leaked that could give rise to a wide variety of claims” from employees, business partners and state and federal regulators.

In recent years, the Federal Trade Commission (FTC) and state attorneys general have been quick to launch investigations into large data breaches, and attorneys believe the regulators will not hesitate to do the same for the Sony breach.

While the FTC’s authority to regulate data security is currently being challenged in separate lawsuits, the commission has maintained its firm stance that it has the authority under Section 5 of the FTC Act to lead the way on data security enforcement, and state attorneys general are not far behind, Vernick said.

“This is the worst state for this to happen, given the California attorney general's tremendously aggressive position on this subject,” he said.

A 2011 breach that saw hackers break into Sony’s PlayStation Network and obtain user data for as many as 31 million users, including credit and debit card information, is likely to work against the company as well, attorneys said.

“Given Sony's history, regulators may say that this is beginning to look like a bad habit,” Vernick said.

Additionally, celebrities who were criticized in Sony employee emails that were leaked could choose to go after the company for defamation.

“It may not give rise to libel claims, but one would guess that Angelina Jolie and Adam Sandler are probably not too happy right now, so it's a point of exposure for Sony,” Vernick said.