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In a decision that will outrage many, the Seventh Circuit has affirmed a lower court decision to dismiss the case Silha v. ACT, Inc. for lack of standing. The court ruled that the sale of students' personal information alone is not an injury by itself.
The case involves plaintiff students who had registered to that the ACT and SAT which were administered by the defendants and for which plaintiffs paid a fee. In a routine that is familiar to all students, plaintiffs divulged personally-identifiable information (PII) to the defendants which included their race, gender, contact information, and names.
The plaintiffs were given the choice to participate in an information exchange program in which their PII would be shared with third parties. They did not have to participate in the program. But the students alleged in their complaint that ACT actually sold and or licensed the collected PII and had been unjustly enriched as a result. They also sued on breach of contract and invasion of privacy theories, as well as violations of the Illinois Consumer Fraud and Deceptive Business Practices Act.
Reminding all practitioners of all the required elements of a valid suit, the panel affirmed the district court's dismissal under FRCP 12(b)(1) because it found that plaintiffs had not articulated a plausible harm by having their PII sold. Applying Twombly/IqbaI sufficiency standards, the court found that the factual allegations fell short of a plausible cause of action. Injury "cannot be based solely on defendant's gain; it must be based on plaintiff's loss," the panel wrote.
The Seventh Circuit went on to opine that student authorization to share their PII actually hurt them in their case because they were in the exact same position they would otherwise be in had ACT not shared or charged a fee for the PII. In other words, no harm was done. Thus, what the court was really getting at was that an invasion of privacy tort was not supported by the facts.
The Seventh Circuit noted a possibility of plaintiff injury in that students might have negotiated a piece of the profits had they known that their information would be sold. But the court was not convinced that this theory was properly pled. And even if this theory might be alleged in future lawsuits against ACT and like defendants, the unique nature of each students' PII would make class certification very difficult.
The circuit decision, however, does not close the chapter on the sale of PII, however...Not at all. Practitioners can bet that once actual injury occurs that satisfies the courts, standing will be the least of defendants' "defenses."
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