Illinois Supreme Court Upholds Biometric Information Privacy Act: Will Rosenbach Become the Majority Rule On “Minority Report” Issue?


By: Robert Arnold and Celeste King

Biometric data refers to a physical characteristic that allows the establishment and verification of a person’s identity.  The most common forms of biometric data are fingerprints, retinal and face recognition scans and voice recognition.  Unlike a password, biometric data is intrinsically unique to an individual.  Companies collect the data, extract it and store it, and from that point forward are able to compare it with any future scan to verify the individual’s identity.  But, the two fundamental weaknesses of all identity privacy techniques likewise apply to biometric data: (1) must the entity collecting the data explain the purpose and use of the biometric data, and (2) what if your biometric data is misappropriated?

To deal with these issues, three states have thus far passed biometric privacy statutes – Illinois, Texas and Washington – with more states in the process of enacting similar laws.  As the first law of its kind passed in the nation, the Illinois Biometric Information Privacy Act (“BIPA”) (740 ILCS 14/1 et seq. (West 2016)), restricts how private entities may collect, retain, disclose and destroy biometric identifiers.  Specifically, BIPA requires entities collecting biometric data to provide written notice and obtain consent from individuals providing the data.  BIPA is distinguished from other biometric laws because it allows a person “aggrieved by violation of the Act” to sue for statutory or actual damages, attorney fees and injunctive relief.

In January 2019, BIPA was the subject of a groundbreaking decision on whether violations of the Act were actionable in the absence of “actual harm.”  In Rosenbach v. Six Flags Entertainment Corporation, 2019 Il 123186 (Jan. 25, 2019), the Illinois Supreme Court said they were.  The Court reversed the appellate court and held that a plaintiff may seek statutory damages under BIPA even without alleging actual injury or any adverse effect beyond a technical violation of the Act.

The defendant Six Flags uses a fingerprinting process for repeat-entry pass holders.  The system scans biometric data, then records and stores it so Six Flags can quickly verify customers’ identities.  Rosenbach’s son obtained a season pass, which required him to have his thumbprint scanned.  Neither Rosenbach, a minor, nor his parent were notified in advance that biometric data was necessary to obtain a pass.  Six Flags also did not publish information about where and how the data were stored, for how long, whether it was used for other purposes, or how it was destroyed.  Finally, plaintiff had not consented to providing biometric data and did not sign any waivers.

The 3-count complaint alleged that Six Flags violated BIPA because it failed to follow the statutory protocols requiring informed consent and written waivers.  The complaint also sought injunctive relief and a common law claim for unjust enrichment.  In the trial court, Six Flags successfully moved to dismiss the complaint on grounds that plaintiffs suffered no actual or threatened injury and therefore lacked standing to sue.  The Illinois Appellate Court affirmed the dismissal and the Illinois Supreme Court granted leave to appeal.

In reversing the dismissal, the Court took an expansive view of BIPA based exclusively on principles of statutory construction.  The Court described Six Flags’ position that the statute requires proof of actual injury as “untenable” because no such requirement was expressly stated in the statute.  The Court also rejected the argument that “aggrieved” could only mean actual injury because in the Court’s view the term “aggrieved” can also include infringement of a legal right.  The Court also referred to legislative comments in which the General Assembly described the ramifications of biometrics as concerning and unknown.  The Court reasoned that the broad statutory language was a result of the General Assembly’s assessment of the broad risks of biometrics, the desire to remedy such risks, and the difficulty of providing meaningful recourse once data has been compromised.

Rosenbach is notable as the first decision of its kind in the biometrics arena, and its approval of the potential of statutory damages and attorney fees without proof of actual injury will inspire increased class action filings.  Its broader impact may be limited, however, by the fact that Rosenbach involves an Illinois court interpreting an Illinois statute.  As other states enact comparable statutes, whether the Rosenbach rationale will be adopted by courts interpreting such statues remains to be seen.  That said, Rosenbach is consistent with other decisions that have weakened the standing requirement in privacy cases, especially decisions applying Illinois and California law.  (See e.g., Remijas v. Neiman Marcus Group, LLC, 794 F. 3d 688 (7th Cir. 2015); Krottner v. Starbucks Corp., 628 F.3d 1139 (9th Cir. 2010).

Also, Rosenbach was decided on the pleadings, and the Court’s holding was merely that failure to allege actual harm did not warrant dismissal.  Whether class action plaintiffs will be able to establish class certification, liability and damages under BIPA are all issues for another day. 

Illinois Appellate Court Issues Favorable Ruling on Anti-Concurrent Cause Language

Bozek v. Erie Insurance Group

2015 IL App (2d) 150155

By: David E. Walker, Robert P. Arnold and Kristine M. Sorenson

On December 17, 2015 the Illinois Second District Appellate Court handed down a ruling applying Anti-Concurrent Causation (ACC) language in a first-party property policy to preclude coverage as a matter of law.  The decision is the first published Illinois appellate court ruling that squarely addresses application of ACC language, and the Court’s decision heavily favors the insurance industry.

The case of Bozek v. Erie Insurance Group, 2015 IL App (2d) 150155, involved damage to the insureds’ empty swimming pool following several days of heavy rains.  The rains created substantial hydrostatic pressure in the soils.  Pressure relief valves in the pool system, designed to counteract the uplift forces caused by the pressure, failed to work properly.  As a result, the pool itself uplifted causing a total loss.  The hydrostatic pressure in the soils also caused damage to the concrete pad surrounding the pool.

The insureds tendered the loss to Erie Insurance, their homeowners insurer. Erie retained Engineering Systems, Inc. (ESI) who concluded “the pool lifted upward because the ground water pressure pushed the pool upward because the pressure relief did not function properly.”  Erie then denied coverage, citing exclusions barring coverage for:

  • loss by “pressure or weight of water or ice, whether driven by wind or not, to a … swimming pool”;
  • loss by mechanical breakdown; and,
  • loss “by water damage, meaning: water below the surface on the ground.  This includes water which exerts pressure on, or flows seeps or leaks through any part of a building or other structure, including sidewalks, driveways, foundations, pavements, patios, swimming pools or decks.”

Critically, all of the foregoing exclusions were prefaced by the following ACC language:  “We do not pay for loss resulting directly or indirectly from any of the following, even if other events or happenings contributed concurrently, or in sequence, to the loss”.

The insureds filed a declaratory judgment lawsuit in the Circuit Court of McHenry County, Illinois against Erie, and the parties ultimately filed cross motions for summary judgment.  The insureds conceded that loss caused by “pressure…of water” was excluded, but argued that Erie had not established that loss by failure of the pressure relief valves was an excluded “mechanical breakdown.”  As such, they argued that the failure of the valve (a covered event) preceded the increase in pressure (an excluded event).  In their view, the phrase “in sequence to” in the ACC provision meant “subsequent to,” such that the ACC language would preclude coverage only where the excluded cause precedes the covered cause.  The insureds argued that, because the excluded hydrostatic pressure came after the failure of the valve, the ACC language did not apply and the claim was covered.

Erie argued that “in sequence to” meant “one after the other” and that the ACC language did not specify in which order the excluded cause must occur.  Erie also argued that the ACC language precludes coverage where an excluded cause happened in any sequence within the causation chain.

The Circuit Court adopted Erie’s interpretation of the ACC language and rendered judgment in Erie’s favor.  The insureds appealed to the Second District Appellate Court.

The Appellate Court affirmed, finding that the ACC clause barred coverage as a matter of law where the uplift of the pool resulted from the “convergence of two causes”, at least one of which was excluded, that “contributed concurrently” to the loss.

In reaching its decision, the Appellate Court first discussed the history of causation decisions in the first party property context and the varying causation rules that U.S. jurisdictions have implemented.  It then noted that ACC clauses were employed in response to concurrent-causation controversies and were intended to avoid application of rules that coverage applies whenever a covered cause is an “efficient” or “dominant” cause of the loss.

The Appellate Court found that a concurrent cause or event exists when two perils converge at the same point in time and operating in conjunction.  The Court focused on the point in time when the cause contributes to the loss, not the point in time when the cause of loss comes into existence.  For purposes of the insureds’ claim, the Court concluded that, because uplifting of the pool took place due to “concurrent” interaction of the hydrostatic pressure and the failure of the relief valves, the loss was indeed excluded.

Lastly, after examining two Mississippi Supreme Court ACC cases arising out of Hurricane Katrina, the Appellate Court noted that the two causes at issue, hydrostatic pressure and relief valve failure, did not lead to two separate losses as in the Mississippi cases.  Rather, the sole loss in the insureds’ claim was the uplifting of the pool and damage to the pool’s concrete pad, both of which were caused by a convergence of the hydrostatic pressure and failure of the relief valve.  The Appellate Court concluded that adoption of the insureds’ argument would be an ongoing implementation of Illinois’ “efficient proximate cause” doctrine, which the ACC clause was designed to avoid.

In a last ditch effort, the insureds argued that ACC clauses violated Illinois public policy and were unenforceable.  The Appellate Court first noted that only a minority of U.S. courts had adopted that argument but ultimately declined to rule on the issue because the insureds had waived the argument by failing adequately to brief it.  The tenor of the Court’s discussion, however, suggested it was not inclined to endorse the public policy argument.

In summary, the Appellate Court’s decision is a well-reasoned, thorough discussion of the ACC clause and should serve as persuasive precedent to other courts applying Illinois law.  This decision now provides insurers with appellate court precedent in Illinois to support a broad application of ACC language where the evidence adduced during the adjustment of the loss establishes that the actual loss the Insured suffered was caused by the convergence of multiple causative events in any sequence, at least one of which is an excluded cause.

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WWM Wins Appeal in the West Virginia Supreme Court

Bob Arnold and Ryan Rodman of WWM recently won an appeal in West Virginia that involved novel insurance coverage issues in a compelling factual context.  The case arose out of the tragic death of Charleston WV police officer Jerry Jones, who was killed by a ricocheting bullet fired by another officer during a police pursuit.

In March 2011, Officer Jones’ Estate brought a declaratory judgment action in Kanawha County, West Virginia, seeking underinsured motorists (“UIM”) benefits from WWM’s client, an insurer of the City of Charleston.  The declaratory judgment alleged that Patrolman Jones was killed in the early morning hours of September 13, 2009, at the conclusion of a car chase.  Patrolman Jones and other officers had successfully surrounded an automobile driven by criminal suspect Brian Good.  When Mr. Good was instructed to exit his car he revved his engine as if threatening to advance toward the police cruisers.  After ordering Mr. Good to stop, several officers opened fire.  Patrolman Jones was struck by a stray bullet and died as a result of his injuries. Continue reading

WWM Wins Appeal in the United States Court of Appeals for the Third Circuit

WWM attorneys Robert Conlon and Robert Arnold won an appeal on behalf of WWM’s client, a professional liability insurance carrier, in the United States Court of Appeals for the Third Circuit.  The ruling affirmed the United States District Court for the District of New Jersey (USDCNJ) grant of summary judgment for WWM’s client.  WWM’s client declined coverage for a third-party claimant’s lawsuit for legal malpractice against one of the insured law firm’s attorneys on the basis that the lawsuit related back to another claim against the attorney made outside of the policy period and, thus, did not constitute a “Claim” made during the policy’s term of coverage. In response to the denial, the insured attorney and law firm filed a declaratory judgment action against WWM’s client in New Jersey state court alleging that the client breached the insurance contract by declining coverage for the claim. WWM successfully removed the matter to the USDCNJ and thereafter the insureds filed a motion for summary judgment. WWM’s client also filed a cross-motion for summary judgment. Continue reading

WWM Wins Major Pro Rata Allocation Ruling in Missouri Pollution Coverage Action

Bob Arnold, Peter Daniels and Garry Glass Secure Pro Rata Allocation in Missouri Pollution Coverage Action

Granting a motion filed by Walker Wilcox Matousek, Missouri Circuit Judge Thea Sherry has ruled that pollution losses should be allocated pro rata under Illinois and Missouri law. The case involved three separate lines of insurance issued to predecessors of policyholder, Mallinckrodt. Mallinckrodt sought insurance under all of these policies for environmental claims at over twenty different sites throughout the United States.

The court began its analysis with choice of law, observing that it was unnecessary to decide which state’s law applied if there was no actual conflict among the possible choices. The parties agreed that Missouri and Illinois were potentially applicable, so the court examined the laws of those states. Turning to Illinois first, the court focused on two cases: Outboard Marine Corp. v. Liberty Mutual Ins. Co., 283 Ill.App.3d 630 (2nd Dist. 1996) and Zurich v. Raymark Indus, Inc., 514 N.E.2d 150 (Ill. 1987). Continue reading