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LinkedIn wins dismissal of lawsuit seeking damages for massive password breach

Lucian Constantin | March 7, 2013
Professional social networking service LinkedIn won the dismissal of a lawsuit seeking damages on behalf of premium users who had their log-in passwords exposed as a result of a security breach of the company's servers last year.

"When signing up for and purchasing a 'premium' account, Plaintiffs and the members of the Class relied on LinkedIn's representation that it uses 'industry standard protocols and technology' to preserve the integrity and security of their personal information in agreeing to create an account and provide their PII to the company," the complaint said

The complaint also argued that the monthly fees paid by the plaintiffs, or a portion of them, were used by LinkedIn to pay the administrative costs of data management and security and therefore comply with its promise of using industry standard security protocols and technology.

On Tuesday, the court granted LinkedIn's motion to dismiss the complaint on the basis that the company's User Agreement and Privacy Policy is the same for free accounts as it is for premium accounts.

"Any alleged promise LinkedIn made to paying premium account holders regarding security protocols was also made to non-paying members," the judge said in his order to dismiss the lawsuit. "Thus, when a member purchases a premium account upgrade, the bargain is not for a particular level of security, but actually for the advanced networking tools and capabilities to facilitate enhanced usage of LinkedIn's services. The FAC [First Amended Consolidated Complaint] does not sufficiently demonstrate that included in Plaintiffs' bargain for premium membership was the promise of a particular (or greater) level of security that was not part of the free membership."

Furthermore, the judge said, the plaintiffs don't even allege that they actually read the Privacy Policy, which would be required to support a claim of misrepresentation on behalf of LinkedIn.

In oral arguments, the plaintiffs' counsel asserted that the lawsuit is primarily based on an alleged breach of contract, but for such a claim to stand, the defendants needed to specify damages resulting from this alleged breach of contract. The injury claimed by the plaintiffs occurred before the alleged breach of contract, at the time when the parties first entered into the contract, the judge said. Therefore the economic loss they claim cannot be the "resulting damages" from an alleged breach of contract, he said.

In cases where the alleged wrong stemmed from allegations of insufficient performance of a product's functions, courts have ruled that plaintiffs need to allege "something more" than just overpaying for a defective product, the judge said. "Because Plaintiffs take issue with the way in which LinkedIn performed the security services, they must allege 'something more' than pure economic harm. This 'something more' could be a harm that occurred as a result of the deficient security services and security breach, such as, for example, theft of their personally identifiable information."

 

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