Steven v. Carlos Lopez & Associates, LLC
- Jesse Furman
- 1:18-cv-06500
- U.S. District Court · Southern District of New York
- 9
In Steven v. Carlos Lopez & Associates, LLC, Judge Furman denied settlement approval and dismissed the case after finding no named plaintiff had standing.
The named plaintiffs and the proposed class members whose information was included in the email; the proposed settlement was not approved, and the case was dismissed.
What happened
In Steven v. Carlos Lopez & Associates, LLC, information about approximately 130 current and former employees was accidentally emailed to about 65 current employees of Carlos Lopez & Associates. Several employees sued on behalf of a proposed class, claiming negligence and violations of state laws.
The parties reached a class settlement before the plaintiffs opposed the defendants’ motion to dismiss. The court nevertheless had to determine whether the plaintiffs had standing—the required personal injury for a federal court to hear a case. It found no evidence that the information had been accessed, shared outside the company, or misused.
Judge Furman ruled that the alleged risk of future identity theft was too speculative because the disclosure resulted from an accidental internal email, not an intentional theft. He denied the motion to approve the settlement and dismissed the case for lack of subject-matter jurisdiction.
The detailed version
- Steven v. Carlos Lopez & Associates, LLC · No. 1:18-cv-06500
- Jesse Furman
- Nov. 22, 2019
Background
An employee of Carlos Lopez & Associates, LLC, a provider of mental and behavioral health services, accidentally sent an email containing personal information about approximately 130 current and former employees to a distribution list of about 65 current employees. The opinion states that there was no evidence the information was shared outside the company or misused.
Several people whose information was included sued on behalf of a proposed class. They asserted negligence and violations of several states’ laws. The defendants moved to dismiss, including on the ground that the plaintiffs lacked standing under Article III of the Constitution. Before the plaintiffs filed opposition to that motion, the parties reached a class-wide settlement. The plaintiffs then moved for approval of the settlement and an award of attorney’s fees.
Standing Analysis
A federal court may approve a proposed class settlement only if it has jurisdiction over the dispute. The court therefore had to independently determine whether at least one named plaintiff had standing. Standing requires an injury in fact—an actual or imminent, concrete, and particularized injury.
The plaintiffs primarily relied on an increased risk of future identity theft. The court compared this case with cases in which personal information had been intentionally stolen by hackers or other criminals, sometimes followed by fraudulent charges or other actual misuse. In those circumstances, courts had found a sufficiently substantial risk of harm.
The court found this case materially different. The information was disclosed through an errant email sent within the company, and the plaintiffs did not allege or present evidence that anyone had viewed, downloaded, copied, or shared the information, or that any identity had been stolen. The court concluded that the proposed future harm depended on an unsupported chain of possibilities: an employee might misuse the information or give it to someone else who might misuse it.
The plaintiffs also alleged that they spent time and money monitoring or changing financial information and accounts. The court rejected that theory because the alleged expenses were self-imposed responses to a speculative future injury and could not create standing when the underlying risk was insufficient.
Disposition
The court concluded that no named plaintiff had Article III standing and that it was therefore powerless to approve the proposed class settlement. The plaintiffs’ motion for settlement approval was DENIED, and the case was DISMISSED under Federal Rule of Civil Procedure 12(h)(3) for lack of subject-matter jurisdiction. The clerk was directed to terminate the specified docket entries and close the case. Judge Jesse M. Furman ordered the result on November 22, 2019.
Read the full 9-page opinion on CourtListener, the free public archive maintained by the Free Law Project.