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US Supreme Court Rules on Data Breach Class Action Suit

Published by Craig Petronella on

The United States Supreme Court ruled last week that class action lawsuits cannot be filed against companies unless an agreement clearly authorizes that type of proceeding. It’s the latest in a line of Supreme Court decisions that have backed arbitration and helped companies avoid the prospect of costly class actions filed by workers and consumers says KnowBe4.

The ruling comes from a case involving Lamps Plus Inc where in 2016 a phished employee sent out confidential employee W-2 data on 1300 fellow employees. One of the employees said a fraudulent 2015 federal income tax return was filed in his name and sued in California federal court.  He also sought class-action status on behalf of his fellow workers.

Class action lawsuits offer a final and permanent settlement, but they can be massive and expensive. The alternative of no class-action lawsuits opens the door for companies to face multiple individual suits instead of a single suit.  These multiple suits mean multiple attorney/arbitration fees, which you as the employer are often contractually obligated to pay in full.

The best way to entirely avoid this type of situation? Preventing the issue with security awareness training.  Only 45% of companies in 2018 offered formal security awareness training for their employees. Don’t be one of the 55% potentially facing litigation.

Categories: Cybersecurity