The Rising Bar: Why "No Harm, No Foul" Is Becoming the New Reality in Data Breach Litigation
Executive Summary
Courts across the United States are fundamentally reshaping data breach litigation by demanding concrete proof of harm from victims. Following the Supreme Court's landmark TransUnion decision, judges are increasingly dismissing cases where plaintiffs cannot demonstrate tangible, traceable injuries from exposed personal data. This shift represents a significant victory for businesses facing breach-related lawsuits, but raises important questions about accountability in our digital age.
The New Legal Landscape
The TransUnion Effect
The 2021 Supreme Court decision in TransUnion LLC v. Ramirez has become the cornerstone of modern data breach litigation. The Court established a clear principle: the risk of future harm stemming from disclosure of a data-breach plaintiff's personal information does not alone support standing to sue for damages. Instead, plaintiffs must identify an actual, concrete injury.
This ruling has created a ripple effect throughout the federal court system. Throughout 2024, federal courts continued to grapple with what types of concrete harm are sufficient to confer standing for damages claims, with varying interpretations across different circuits.
The Greenstein Standard
The leading data-breach standing case in 2024 was the Ninth Circuit's decision in Greenstein v. Noblr, which established an even higher bar for plaintiffs. The court held that a general notice to a plaintiff that their personal information may have been exposed, without confirmation that the specific plaintiff's information had been stolen, was not sufficient to establish a risk of future harm.
What Constitutes "Harm" Today?
Theories That Work
Courts have identified several theories of harm that may establish standing:
1. Actual Misuse with Traceability
Most courts have held that a plaintiff has standing if (i) the harm is imminent, and (ii) they allege that they spent money and/or time to mitigate the data breach. However, plaintiffs must show a clear connection between the specific breach and any fraudulent activity.
2. Mitigation Costs Plus Confirmed Access
The Court did, however, leave open the possibility that mitigation costs could constitute the requisite concrete injury in conjunction with an appropriately pled risk of future harm, such as confirmation that a plaintiff's personal information was in fact accessed during a data breach.
3. Public Disclosure of Private Facts
Many courts have held that this theory supports standing because it bears a close relationship to the harm associated with the tort of public disclosure of private facts.
Theories That Fail
1. Mere Risk of Future Harm
The courts have been clear: the mere risk of future harm, standing alone, cannot qualify as a concrete harm.
2. General Anxiety or Emotional Distress Alone
Most courts have held that this theory of harm may establish standing when coupled with sufficient allegations that the plaintiff is at risk of future harm, but not on its own.
3. Unconfirmed Exposure
Simply receiving a breach notification is insufficient without confirmation that the specific plaintiff's data was actually accessed or stolen.
Privacy Blog Team
The Traceability Challenge
One of the most significant hurdles for plaintiffs is the requirement to trace injuries directly to a specific breach. These cases highlight a growing national trend of courts dismissing data breach claims due to a lack of standing because plaintiffs, despite alleging fraud or misuse, fail to allege a connection between the data incident and the alleged harm.
This becomes particularly challenging in an era where:
- Multiple breaches affect the same individuals
- Stolen data is traded on the dark web
- Time delays between breach and misuse can span years
- Similar personal information may have been exposed in multiple incidents
Circuit Split and Evolving Standards
The federal circuits remain divided on these issues. An apparent circuit split between the Tenth and Eleventh Circuits deepened when the Third Circuit weighed in on the proper methodology for determining harm.
The Third Circuit introduced a three non-exhaustive factors for determining when an alleged risk of future harm is sufficiently imminent:
- Intentional access to the data by the threat actor
- Misuse of the data
- Access to types of data that could be used for identity theft or fraud
Impact on Litigation Strategy
For Defendants
- Early dismissal opportunities through standing challenges
- Reduced settlement pressure when concrete harm is absent
- Strong precedent for challenging speculative damages
For Plaintiffs
- Need for documented proof of actual misuse
- Importance of preserving evidence of mitigation costs
- Requirements for temporal connection between breach and harm
The Business Perspective
This evolving legal landscape has significant implications for organizations:
Reduced Litigation Risk: Companies facing breaches may see fewer successful lawsuits if affected individuals cannot prove concrete harm.
Continued Security Obligations: Legal requirements for data protection remain unchanged, even if litigation risk decreases.
Settlement Dynamics: The higher bar for standing may lead to lower settlement values in cases that do proceed.
Privacy Posture
Recent Developments and Trends
In 2017, the number of data breach class actions was under two hundred, but a few years later, in 2024, the number of cases filed for data breach class actions was just short of fifteen hundred. Despite this increase in filings, dismissal rates have risen as courts apply stricter standing requirements.
The posting of financial and personal information on the dark web establishes both a present injury and a substantial risk of future injury, providing one pathway for plaintiffs to establish standing in the post-TransUnion era.
Looking Forward
The legal landscape continues to evolve, with several key trends emerging:
- State Court Alternative: Some plaintiffs are turning to state courts with potentially more favorable standing requirements
- Legislative Response: Proposals for federal data breach legislation that might clarify standing issues
- Dark Web Monitoring: Increased importance of proving data appearance on criminal marketplaces
- Documentation Requirements: Growing emphasis on detailed record-keeping of any breach-related expenses or incidents
Practical Takeaways
For Breach Victims
- Document all mitigation efforts and costs immediately
- Monitor for actual misuse, not just the possibility
- Maintain records linking any fraud to specific breach timing
- Consider state court options where federal standing may be lacking
For Organizations
- Breach response remains critical for regulatory compliance
- Insurance coverage should account for changing litigation landscape
- Notification practices should be precise about what data was actually accessed
- Security investments remain essential despite reduced litigation risk
CISO Marketplace
Conclusion
The "no harm, no foul" approach represents a fundamental shift in how courts view data breach litigation. While this provides relief for organizations facing an ever-growing threat landscape, it also raises questions about accountability when personal data is compromised but not immediately misused.
As the WSJ aptly noted, this "high bar is getting more cases tossed out of court." For breach victims, the message is clear: theoretical risk is no longer enough. In the post-TransUnion world, concrete harm isn't just important—it's essential.
The pendulum may continue to swing as legislators, courts, and society grapple with balancing corporate accountability and litigation efficiency in our increasingly digital world. What remains certain is that the days of easy data breach lawsuits are over, replaced by a more rigorous standard that demands proof of real-world consequences.
This blog post is for informational purposes only and does not constitute legal advice. Organizations and individuals dealing with data breach situations should consult with qualified legal counsel.
David StaussAbout This Analysis
This analysis synthesizes recent federal court decisions, circuit court rulings, and emerging trends in data breach litigation. For organizations navigating breach response or individuals assessing their legal options, understanding these evolving standards is crucial for informed decision-making in 2025 and beyond.
