The Matrix

European Commission Adopts New Standard Contractual Clauses for Data Transfers from the EU

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Today, the European Commission (“EC”) adopted new standard contractual clauses (“SCCs”) reflecting new requirements under the European Union’s General Data Protection Regulation (“GDPR”).  The SCCs are intended to provide standardized templates for companies to utilize to comply with the GDPR’s data protection requirements.  More

Cyber Insurance 101

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As cybersecurity incidents increase in frequency and scope, cyber insurance policies are an important tool for companies to mitigate loss from such incidents.  Recent surveys of small and medium businesses reveal, however, that many respondents do not carry cyber insurance.[1] And for those that do, the cost of such coverage is rising.  For companies considering purchasing or renewing a cyber policy in light of new or increasing risk, this article provides a brief primer on the types of coverages that cyber policies offer, potential add-ons to coverage, common conditions and exclusions, and other cyber insurance-related questions.  More

NYDFS Provides Best Practices for Third-Party Risk Management

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In late 2020, a sophisticated adversary used the SolarWinds Orion Platform to plant covert backdoors in the networks of thousands of companies and government agencies.  The attack confirms the importance of vigorous third-party risk management.  Last month, the New York State Department of Financial Services (“NYDFS”) issued a report on the SolarWinds attack and provided the following steps that companies can take to reduce supply chain risk:   More

Recent State Biometric Privacy Bills Put Spotlight On Federal Regulation

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New York And Maryland Propose BIPA-Like Biometric Privacy Bills
New York Assembly Bill 27—introduced on January 6, 2021—seeks to amend the New York general business law in relation to biometric privacy.  Similarly, Maryland House Bill 218—introduced on January 13, 2021—proposes biometric privacy regulations on private entities in Maryland. More

U.S. Supreme Court Curtails FTC’s Authority to Obtain Restitution and Disgorgement

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Yesterday, the U.S. Supreme Court, in AMG Capital Management, LLC v. FTC, sharply curtailed the ability of the Federal Trade Commission to obtain restitution and disgorgement in enforcement actions. In a 9-0 decision, the court found that Section 13(b) of the FTC Act, which authorizes the FTC to seek permanent injunctions in federal court, did not also authorize the Commission to obtain court-ordered monetary relief.  More

(Don’t) Send in the Drones

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The Michigan Court of Appeals issued a recent opinion in Long Lake Township v. Maxon, considering the question of whether a private landowner had a reasonable expectation of privacy that would preclude the government from flying a drone over their property.  The Court concluded that there was an expectation of privacy, and distinguished expectations of privacy from drones from those expected of plane or helicopter surveillance.  (A dissent argues that U.S. Supreme Court precedent on the Fourth Amendment mandated the opposite result.) More

Utah Becomes Second State to Adopt a Safe Harbor for Compliance with a Written Cybersecurity Program

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With the passage of the Cybersecurity Affirmative Defense Act, Utah became the second state – after Ohio’s Data Protection Act in 2018 – to create an affirmative defense to certain causes of action stemming from a data breach.  The law provides an affirmative defense under Utah law and in Utah courts to certain tort claims arising out of a data breach if the company demonstrates that it created, maintained, and reasonably complied with a written cybersecurity program.   More

Requirements for Businesses under Virginia’s New Consumer Data Protection Act

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With Governor Ralph Northam’s signature yesterday, the Consumer Data Protection Act (“CDPA”) became law, making Virginia the second state after California to enact a comprehensive privacy law (with apologies to Nevada, which also has passed more modest privacy legislation). Although similar in many respects to the California Consumer Privacy Act (“CCPA”), which was recently updated by the Consumer Privacy Rights Act (“CPRA”), the law contains terminology more consistent with the European Union’s General Data Protection Regulation (“GDPR”).  More

Putting M.D. Anderson in Context: Unpacking the 5th Circuit Dismissal of HIPAA Penalties

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On January 14, 2021, the U.S. Court of Appeals for the Fifth Circuit issued its opinion vacating the $4.3 million penalty that the U.S. Department of Health and Human Services (“HHS”) had levied against the University of Texas M.D. Anderson Cancer Center (“M.D. Anderson”) for violations of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) and the Health Information Technology for Economic and Clinical Health Act of 2009 (the “HITECH Act”).  Eye-popping penalty amounts for HIPAA and HITECH Act violations have picked up steam in recent years. However, the M.D. Anderson case is among the first such settlement to be litigated. The Fifth Circuit decision contains some critical takeaways as to key requirements under HIPAA and the enforcement actions available to HHS, and should be of particular interest to healthcare providers and also insurers writing cybersecurity policies. More

Eleventh Circuit Joins Courts That Have Declined to Find Standing Based on Alleged Substantial Risk of Identity Theft Resulting From a Data Breach

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In Tsao v. Captiva MVP Restaurant Partners, LLC, the Eleventh Circuit joined the federal appellate courts holding that a consumer’s exposure to a substantial risk of future identity theft, and efforts to mitigate the risk of future identity theft, are not sufficient to confer Article III standing. The decision highlights federal court’s struggle with the standing requirements in a data breach case, and possibly raises the likelihood that the U.S. Supreme Court will address the issue. More

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