MEMORANDUM OPINION
AMY BERMAN JACKSON, United States District Judge.
INTRODUCTION
In June of 2015, millions of unsuspecting federal employees sat down at their computers, opened up their email, and received some very disconcerting news.
Over time, OPM revealed that data breaches at the agency and at one of its contractors affected more than twenty-one million people, and that the stolen information included such sensitive data as names, birthdates, current and former addresses, and Social Security numbers. After those announcements, a number of plaintiffs filed separate lawsuits in courts across the country, and they were consolidated into two complaints in the multidistrict action assigned to this Court.
The first complaint is a class action lawsuit filed by thirty-eight individuals and a union, the American Federation of Government Employees ("AFGE"). See Consolidated Amended Complaint [Dkt. #63] ("CAC"). Plaintiffs allege that the breaches resulted from gross negligence on the part of officials entrusted with the responsibility of protecting the private details that job seekers submit to OPM in connection with the background investigations they are required to undergo. They have sued on behalf of the 21.5 million current and former federal employees, job applicants, contractors, and relatives whose information was compromised, and they seek statutory damages under the Privacy Act, contract damages under the Little Tucker Act, and declaratory and injunctive relief under the Administrative Procedure Act. These plaintiffs have also sued KeyPoint Government Solutions, a government contractor that performed background investigations for OPM. KeyPoint's computer systems were also breached, and plaintiffs seek damages from the company under multiple federal and state statutory and common law theories. Defendants have moved to dismiss the entire case on the grounds that plaintiffs lack standing to bring it, the claims are barred by sovereign immunity, and the factual allegations are not sufficient to state valid claims under any of the statutes or common law theories plaintiffs have invoked.
The second complaint before the Court was filed by three individuals and the National Treasury Employees Union ("NTEU"). Am. Compl. [Dkt. #75] ("NTEU Compl."). These plaintiffs sued the OPM Acting Director only, and they claim that their constitutional right to informational privacy was violated. Defendant has moved to dismiss that case as well, on both standing grounds and the basis that the plaintiffs have failed to allege a constitutional violation that is recognized by the courts.
The OPM breaches have been the subject of considerable public interest and multiple Congressional hearings and reports. The fact that the breaches occurred is not disputed, and the identities of the individuals whose information was compromised
This opinion will not get into the merits of those contentions. At this stage of the proceedings, the Court is required to accept all of plaintiffs' factual assertions as true, and nothing that follows should be read as any indication of the Court's view of the strength of plaintiffs' troubling allegations.
Before the parties can explore the facts, though, the Court is required to answer a foundational question: whether plaintiffs have set forth a cause of action that a court has the power to hear. The judiciary does not operate as a freestanding advisory board that can opine about the conduct of the executive branch as a general matter or oversee how it manages its internal operations. The Court's authority is derived from Article III of the U.S. Constitution, and a federal court may only consider live cases or controversies based on events that caused actual injuries or created real threats of imminent harm to the particular individuals who brought the case. In other words, before a court may proceed to the merits of any claim, the plaintiffs must demonstrate that they have constitutional "standing" to sue. Also, a court may not entertain an action against the United States if the government has not expressly waived its sovereign immunity, that is, unless it has given its consent to be sued in that particular situation. And once a plaintiff overcomes those hurdles, he or she must state a valid legal claim.
This case implicates the constitutional limits on the Court's jurisdiction imposed by both the standing doctrine and the doctrine of sovereign immunity, and it involves unique factual circumstances. Neither the Supreme Court nor the U.S. Court of Appeals for the D.C. Circuit has held that the fact that a person's data was taken is enough by itself to create standing to sue; a plaintiff who claims an actual injury must be able to connect it to the defendant's actions, and a person who is pointing to a threat of future harm must show that the harm is certainly impending or that the risk is substantial. The fact that this is not just a data breach case, but that it is a data breach arising out of a particular sort of cyberattack against the United States, differentiates it from the majority of the legal precedent that arises in the context of retail establishments or other financial entities. Courts in those cases often make certain assumptions about the likelihood of future harm in order to find that the elements needed to initiate a case have been satisfied. Here, the usual assumptions about why the information was stolen and what is likely to be done with it in the future do not apply and cannot fill the gap. As for those plaintiffs who allege that they have already experienced an actual misuse of their credit card numbers or personal information, they cannot tie those disparate incidents to this breach. It may well be that the Supreme Court or the D.C. Circuit will someday announce that given the potential for harm inherent in any cyberattack, breach victims automatically have standing even if the harm has yet to materialize, and even if the purpose behind the breach and the nature of any future harm have yet to be discerned. But that has not happened yet, and the Court is not empowered to expand
Even if the Court were inclined to anticipate that this is where the law is heading, the problem runs deeper than standing. The right to bring a claim for damages under the Privacy Act is expressly limited to those who can demonstrate that they have suffered actual economic harm as a result of the government's statutory violation. The law is clear that the statute does not create a cause of action for those who have been merely aggrieved by, or are even actively worried about, the fact that their information has been taken. Neither the Administrative Procedure Act nor the Little Tucker Act supplies a cause of action against the government to enforce its information security obligations, and no court has expressly recognized a right to data security arising under the Constitution.
Therefore, defendants' motions to dismiss will be granted, and both cases will be dismissed in their entirety. The Court finds, applying the case law it is required to follow, that neither set of plaintiffs has pled sufficient facts to demonstrate that they have standing. Moreover, even if they had the right to enter the courthouse, they did not bring a claim with them that the Court can hear. Plaintiffs have failed to overcome the arguments that the federal defendants are immune from suit under the Privacy Act and the Administrative Procedure Act, and that KeyPoint is shielded by government contractor immunity, so the Court lacks subject matter jurisdiction to hear those claims. Moreover, the Court finds that plaintiffs have failed to state claims upon which relief can be granted. Plaintiffs seek damages for improper disclosure of information and for a failure to maintain adequate safeguards under the Privacy Act, but they have not alleged that private information was "disclosed," as opposed to stolen, and they have not alleged facts to show that their claimed injuries were the result of the agency's failures. Plaintiffs have not stated a claim for breach of contract under the Little Tucker Act since they have not shown that OPM entered into a contract with them or that any contract was breached, and they have not alleged any violation of the United States Constitution.
TABLE OF CONTENTS
FACTUAL BACKGROUND ... 11
I. The Data Breaches ... 11
II. The Targeted Systems and Compromised
Information ... 12
III. OPM's Knowledge of the Deficiencies
and Response to the Breaches ... 12
IV. Plaintiffs' Alleged Harm ... 13
A. Actual Identity Theft or Credit
Card Fraud ... 14
B. Risk of Future Identity Theft and
Other Harm Associated with that
Risk ... 14
PROCEDURAL HISTORY ... 14
STANDARD OF REVIEW ... 15
I. Lack of Subject Matter Jurisdiction ... 16
II. Failure to State a Claim ... 16
ANALYSIS ... 17
I. Plaintiffs Do Not Have Standing ... 17
A. Legal Framework ... 18
1. Individual Standing ... 18
2. Organizational Standing ... 19
B. Plaintiffs have Failed to Show that
They have Article III Standing ... 19
1. Injury in Fact ... 19
a. Theft of Private Information
Without More ... 19
FACTUAL BACKGROUND
Defendant OPM is a federal agency that handles portions of the federal employee recruitment process. CAC ¶ 52; NTEU Compl. ¶¶ 10-11.
I. The Data Breaches
The CAC plaintiffs allege that four breaches occurred in 2013 and 2014.
II. The Targeted Systems and Compromised Information
The CAC plaintiffs allege that the nature and scope of the data breaches "indicate that the intrusion was sophisticated, malicious, and carried out to obtain sensitive data for improper use." CAC ¶¶ 117, 128, 132. Both complaints allege that the cyberattacks removed data from OPM computer systems and databases, including OPM's Electronic Official Personnel Folder system and the Central Verification System. See CAC ¶¶ 64-65, 74, 130; NTEU Compl. ¶¶ 10-12 (describing relevant OPM systems).
The Electronic Official Personnel Folder system stores personnel files of federal employees. CAC ¶¶ 74, 130. These files include "birth certificates, job performance reports, resumes, school transcripts, military service records, employment history and benefits, and job applications that contain Social Security numbers and birthdates." CAC ¶ 74; NTEU Compl. ¶ 10.
The Central Verification System "contains most background and security clearance check information," including information from the three forms — Standard Form ("SF") 85, SF 85P, and SF 86 — that applicants for federal positions and security clearances must complete.
III. OPM's Knowledge of the Deficiencies and Response to the Breaches
Both plaintiff groups allege that OPM "knew for several years" before the
After learning of the breaches, OPM issued a series of announcements to the public and affected individuals. With each revelation, the reported scope of the breach and the number of people affected increased.
On April 27, 2015, OPM notified "more than 48,000 federal employees that their personal information might have been exposed in the KeyPoint Breach." CAC ¶ 120. On June 4, 2015, it announced that it had experienced a data breach that "resulted in the exposure and theft of the [government investigation information] of approximately 4.2 million current, former, and prospective federal employees and contractors." CAC ¶ 138. On June 12, 2015, OPM acknowledged that the scope of breach was broader than previously disclosed and that "as many as 14 million current, former, and prospective federal employees and contractors" were affected. CAC ¶ 139. On July 9, 2015, OPM announced that the information "of approximately 21.5 million people had been exposed and stolen in the May 2014 breach," including the theft of 1.1 million fingerprints. CAC ¶ 140. Of the 21.5 million people affected, 19.7 million had undergone background checks. The other 1.8 million records concerned "mostly job applicants' spouses, children, and other cohabitants." CAC ¶ 140. On September 23, 2015, OPM announced that not 1.1 million, but approximately 5.6 million, fingerprints had been stolen. CAC ¶ 141.
The agency notified each individual whose private information had been compromised and offered free identity theft protection services at "a combined cost of approximately $154 million ... for either 18 months or three years, depending on the amount and sensitivity of the compromised [information]." CAC ¶¶ 148, 150.
IV. Plaintiffs' Alleged Harm
The CAC plaintiffs allege that each of the thirty-eight named plaintiffs submitted sensitive personal information to the federal government that was compromised in the breaches. See CAC ¶¶ 10, 13-50; see also CAC ¶ 1. The NTEU plaintiffs allege that the three named plaintiffs and an unknown number of NTEU members were "identified by OPM as having been affected by the breaches." NTEU Compl. ¶ 59. Plaintiffs assert that the data breaches occurred as a result of defendants' failure to secure their systems, CAC ¶ 1, and that all of the putative class members are subject to a continuing risk of additional exposure since that failure is ongoing. CAC ¶ 7. The complaints allege that plaintiffs have sustained and will continue to sustain "economic loss and other harm," CAC ¶ 163; that they have suffered "stress," CAC ¶¶ 13, 18, 19, 22-25, 28, 30-31, 35, 37, 42-44,
The complaints contain a range of allegations concerning the nature of the particular harm suffered by class members.
A. Actual Identity Theft or Credit Card Fraud
A number of plaintiffs allege that they have experienced actual identity theft or credit card fraud.
B. Risk of Future Identity Theft and Other Harm Associated with that Risk
Both sets of plaintiffs claim that they have suffered harm as result of the breaches because they face an increased risk of identity theft in the future. CAC ¶¶ 7, 210; NTEU Compl. ¶ 92. Nearly all of the named CAC plaintiffs — thirty-four out of thirty-eight — allege that after learning about the breaches, they devoted some time and effort to preventing future identity theft. See, e.g., CAC ¶¶ 13-22, 25-34, 36-44, 46-50 (alleging that exposure to the breach caused plaintiffs to review their financial accounts or credit reports with greater frequency, or that they placed freezes on their credit). Of those plaintiffs, seven allege that they spent money to purchased credit monitoring and protection services or incurred other expenses to prevent future identity theft. See, e.g., CAC ¶¶ 17, 21, 25, 34, 41. And numerous plaintiffs allege that they "suffer stress" due to their concerns about future identity theft or a sense of vulnerability to some other harm. See CAC ¶¶ 18-19, 22-25, 28, 35, 37, 43-44 (expressing concerns for their safety or the safety of their family members); CAC ¶¶ 18-30, 43, 46 (expressing concern about an inability to obtain a security clearance in the future); CAC ¶¶ 19, 23-24, 42-44 (expressing fear about future identity theft); CAC ¶¶ 19, 31, 50 (alleging "stress resulting from concerns that her exposure to the Data Breaches will adversely affect her minor children's future"); see also NTEU Compl. ¶ 94 (expressing anxiety over the effect the data breaches will have on them, their families, friends, and other associates).
PROCEDURAL HISTORY
A number of lawsuits were filed around the country after the data breaches at OPM and KeyPoint were announced. The United States Judicial Panel on Multidistrict Litigation transferred all actions that were pending elsewhere to this Court for coordinated or consolidated proceedings pursuant to 28 U.S.C. § 1407 [Dkt. #1],
The plaintiffs in the Consolidated Amended Complaint
OPM and KeyPoint each filed motions to dismiss the CAC, arguing that the Court lacks subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) because plaintiffs do not have standing and defendants are shielded by sovereign immunity, and that plaintiffs failed to state a claim under Rule 12(b)(6). See KeyPoint's Mot. to Dismiss CAC & Mem. of Law in Supp. [Dkt. #70] ("KeyPoint Mem."), Fed. Def.'s Mot. to Dismiss CAC and Mem. of P. & A. in Supp. [Dkt. #72] ("OPM's Mem."); Pls.' Consol. Opp. to Defs.' Mots. To Dismiss [Dkt. #82] ("CAC Pls.' Opp."); KeyPoint's Reply [Dkt. #86]; Fed. Def.'s Reply [Dkt. #87].
The NTEU plaintiffs assert a single claim against the Acting Director of OPM, alleging that the agency violated their constitutional right to informational privacy. NTEU Compl. ¶¶ 95-98. They seek declaratory and injunctive relief. NTEU Compl. at 34-35 (Request for Relief).
OPM has moved to dismiss the NTEU complaint for lack of standing and for failure to state a claim.
The Court heard oral argument on the motions, and the motions are fully briefed.
STANDARD OF REVIEW
In evaluating a motion to dismiss under either Rule 12(b)(1) or 12(b)(6), the Court must "treat the complaint's factual allegations as true ... and must grant plaintiff `the benefit of all inferences that can be derived from the facts alleged.'" Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C. Cir. 2000) (internal citations omitted), quoting Schuler v. United
I. Lack of Subject Matter Jurisdiction
Under Rule 12(b)(1), the plaintiff bears the burden of establishing jurisdiction by a preponderance of the evidence. See Lujan v. Defs. of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992); Shekoyan v. Sibley Int'l Corp., 217 F.Supp.2d 59, 63 (D.D.C. 2002). Federal courts are courts of limited jurisdiction and the law presumes that "a cause lies outside this limited jurisdiction." Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994); see also Gen. Motors Corp. v. EPA, 363 F.3d 442, 448 (D.C. Cir. 2004) ("As a court of limited jurisdiction, we begin, and end, with an examination of our jurisdiction."). "[B]ecause subject-matter jurisdiction is `an Art[icle] III as well as a statutory requirement ... no action of the parties can confer subject-matter jurisdiction upon a federal court.'" Akinseye v. District of Columbia, 339 F.3d 970, 971 (D.C. Cir. 2003), quoting Ins. Corp. of Ir., Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982).
When considering a motion to dismiss for lack of jurisdiction, unlike when deciding a motion to dismiss under Rule 12(b)(6), the court "is not limited to the allegations of the complaint." Hohri v. United States, 782 F.2d 227, 241 (D.C. Cir. 1986), vacated on other grounds, 482 U.S. 64, 107 S.Ct. 2246, 96 L.Ed.2d 51 (1987). Rather, "a court may consider such materials outside the pleadings as it deems appropriate to resolve the question [of] whether it has jurisdiction to hear the case." Scolaro v. D.C. Bd. of Elections & Ethics, 104 F.Supp.2d 18, 22 (D.D.C. 2000), citing Herbert v. Nat'l Acad. of Scis., 974 F.2d 192, 197 (D.C. Cir. 1992); see also Jerome Stevens Pharm., Inc. v. FDA, 402 F.3d 1249, 1253 (D.C. Cir. 2005).
Furthermore, when a government agency is the defendant, additional jurisdictional considerations apply. The United States is not amenable to suit in the federal courts absent an express waiver of sovereign immunity. Anderson v. Carter, 802 F.3d 4, 8 (D.C. Cir. 2015), citing United States v. Mitchell, 463 U.S. 206, 212, 103 S.Ct. 2961, 77 L.Ed.2d 580 (1983). Sovereign immunity is "jurisdictional in nature." Perry Capital LLC v. Mnuchin, 864 F.3d 591, 619 (D.C. Cir. 2017), quoting FDIC v. Meyer, 510 U.S. 471, 475, 114 S.Ct. 996, 127 L.Ed.2d 308 (1994). When it has not been waived, sovereign immunity shields the federal government, its agencies, and federal officials acting in their official capacities from suit. Meyer, 510 U.S. at 475, 114 S.Ct. 996 (the federal government and its agencies); Kentucky v. Graham, 473 U.S. 159, 166-67, 105 S.Ct. 3099, 87 L.Ed.2d 114 (1985) (federal officials in their official capacities).
II. Failure to State a Claim
"To survive a [Rule 12(b)(6)] motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to `state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). In Iqbal, the Supreme Court reiterated the two principles underlying
A claim is facially plausible when the pleaded factual content "allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 678, 129 S.Ct. 1937, citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955. "The plausibility standard is not akin to a `probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id., quoting Twombly, 550 U.S. at 556, 127 S.Ct. 1955. A pleading must offer more than "labels and conclusions" or a "formulaic recitation of the elements of a cause of action," id., quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955, and "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Id., citing Twombly, 550 U.S. at 555, 127 S.Ct. 1955.
When considering a motion to dismiss under Rule 12(b)(6), the Court is bound to construe a complaint liberally in the plaintiff's favor, and it should grant the plaintiff "the benefit of all inferences that can be derived from the facts alleged." Kowal v. MCI Commc'ns Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994). Nevertheless, the Court need not accept inferences drawn by the plaintiff if those inferences are unsupported by facts alleged in the complaint, nor must the Court accept plaintiff's legal conclusions. See id.; see also Browning, 292 F.3d at 242. In ruling upon a motion to dismiss for failure to state a claim, a court may ordinarily consider only "the facts alleged in the complaint, documents attached as exhibits or incorporated by reference in the complaint, and matters about which the Court may take judicial notice." Gustave-Schmidt v. Chao, 226 F.Supp.2d 191, 196 (D.D.C. 2002), citing EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624-25 (D.C. Cir. 1997).
ANALYSIS
Defendants seek to dismiss both complaints for lack of subject matter jurisdiction on the grounds that plaintiffs lack standing and that there has not been a valid waiver of sovereign immunity, and they have also moved to dismiss for failure to state a claim. Courts must determine whether they have jurisdiction to hear a case before considering whether plaintiffs have failed to state a claim. Hancock v. Urban Outfitters, 830 F.3d 511, 513 (D.C. Cir. 2016) ("Federal courts cannot address the merits of a case until jurisdiction — the power to decide — is established.") Accordingly, the Court will address the issue of plaintiffs' standing first.
I. Plaintiffs Do Not Have Standing.
"To state a case or controversy under Article III, a plaintiff must establish standing." Ariz. Christian Sch. Tuition Org. v. Winn, 563 U.S. 125, 133, 131 S.Ct. 1436, 179 L.Ed.2d 523 (2011), citing Allen v. Wright, 468 U.S. 737, 751, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984); see also Lujan, 504 U.S. at 560, 112 S.Ct. 2130. Standing is a necessary predicate to any exercise of federal jurisdiction; if it is lacking, then the dispute is not a proper case or controversy under Article III, and federal courts have no subject matter jurisdiction to decide the case. Dominguez v. UAL Corp., 666 F.3d 1359, 1361 (D.C. Cir. 2012). Plaintiffs must demonstrate standing for each claim they assert. DaimlerChrysler Corp. v. Cuno, 547 U.S. 332, 352, 126 S.Ct. 1854, 164 L.Ed.2d 589 (2006) (holding that "our standing cases confirm that a plaintiff
The party invoking federal jurisdiction bears the burden of establishing standing. Lujan, 504 U.S. at 561, 112 S.Ct. 2130. When reviewing the standing question, the Court must be "careful not to decide the questions on the merits for or against the plaintiff, and must therefore assume that on the merits the plaintiffs would be successful in their claims." In re Navy Chaplaincy, 534 F.3d 756, 760 (D.C. Cir. 2008), quoting City of Waukesha v. EPA, 320 F.3d 228, 235 (D.C. Cir. 2003).
A. Legal Framework
To establish constitutional standing, plaintiffs must show that (1) they have suffered an "injury in fact," (2) the injury is "fairly ... trace[able] to the challenged action of the defendant," and (3) it is "`likely,' as opposed to merely `speculative,' that the injury will be `redressed by a favorable decision.'" Lujan, 504 U.S. at 560-61, 112 S.Ct. 2130 (citations omitted); see also Friends of the Earth, Inc., 528 U.S. at 180-81, 120 S.Ct. 693.
1. Individual Standing
Individual plaintiffs must satisfy all three of the Lujan elements. To allege the first element, injury in fact, plaintiffs must demonstrate that they "suffered `an invasion of a legally protected interest' that is `concrete and particularized' and `actual or imminent, not conjectural or hypothetical.'" Spokeo, Inc. v. Robins, ___ U.S. ___, 136 S.Ct. 1540, 1548, 194 L.Ed.2d 635 (2016), quoting Lujan, 504 U.S. at 560, 112 S.Ct. 2130.
To be "concrete," the injury "must actually exist," meaning that it is real, and not abstract, although concreteness is "not ... necessarily synonymous with `tangible.'" Id. at 1548-49. And to be "particularized," the injury must affect a plaintiff "in a personal and individual way." Id. at 1548, quoting Lujan, 504 U.S. at 560 n.1, 112 S.Ct. 2130.
Further, the injury must be "actual," or it must be "imminent" — that is, the "threatened injury must be certainly impending to constitute injury in fact." Clapper v. Amnesty Int'l USA, 568 U.S. 398, 410, 133 S.Ct. 1138, 185 L.Ed.2d 264 (2013); see also Pub. Citizen, Inc. v. Nat'l Highway Traffic Safety Admin., 489 F.3d 1279, 1293 (D.C. Cir. 2007) (the injury must be "certainly impending and immediate — not remote, speculative, conjectural, or hypothetical"). Or, as the D.C. Circuit has recently pointed out, the Supreme Court has "also noted that in some cases it has `found standing based on a substantial risk that the harm will occur.'" Attias v. CareFirst, Inc., 865 F.3d 620, 626 (D.C. Cir. 2017), quoting Clapper, 568 U.S. at 414 n.5, 133 S.Ct. 1138.
To establish the second element, and show that an injury is "fairly traceable" to a defendant's action, a plaintiff must allege a causal connection between
Finally, to be "redressable," the alleged injury must be one that a court order in favor of the plaintiff would be "likely" to address the harm. Lujan, 504 U.S. at 560-61, 112 S.Ct. 2130.
2. Organizational Standing
The standing requirements that apply to individuals also apply to organizations, such as the two unions that are plaintiffs: AFGE and NTEU. Nat'l Treasury Emps. Union v. United States, 101 F.3d 1423, 1427 (D.C. Cir. 1996), citing Havens Realty Corp. v. Coleman, 455 U.S. 363, 378, 102 S.Ct. 1114, 71 L.Ed.2d 214 (1982). Organizations may assert standing on their own behalf under certain circumstances, or they may seek representational standing on behalf of their members. Nat'l Ass'n of Home Builders v. EPA, 667 F.3d 6, 12 (D.C. Cir. 2011).
To assert organizational standing, an organization must allege "such a `personal stake' in the outcome of the controversy as to warrant the invocation of federal-court jurisdiction," and must show "concrete and demonstrable injury to the organization's activities — with [a] consequent drain on the organization's resources — constitut[ing] ... more than simply a setback to the organization's abstract social interests." Nat'l Taxpayers Union, Inc. v. United States, 68 F.3d 1428, 1433 (D.C. Cir. 1995) (alterations in original), quoting Havens Realty, 455 U.S. at 378-79, 102 S.Ct. 1114.
To assert representational standing on behalf of its members, an organization must show that "(a) its members would otherwise have standing to sue in their own right; (b) the interests it seeks to protect are germane to the organization's purpose; and (c) neither the claim asserted nor the relief requested requires the participation of individual members in the lawsuit." Nat'l Ass'n of Home Builders, 667 F.3d at 12, quoting Ass'n of Flight Attendants-CWA v. U.S. Dep't of Transp., 564 F.3d 462, 464 (D.C. Cir. 2009).
B. Plaintiffs have Failed to Show that They have Article III Standing
Plaintiffs allege that some of them have incurred actual out-of-pocket expenses, that others have expended time and effort, and that others have experienced emotional distress or may be subject to identity theft or some other harm in the future. Plaintiffs also contend that all of them have suffered the injury of the breach itself. The Court is not persuaded that the factual allegations in the complaints are sufficient to establish constitutional standing.
1. Injury in Fact
a. Theft of Private Information Without More
At oral argument, counsel for the CAC plaintiffs took to the lectern to advocate a new basis for standing that had not been set forth in any prior consolidated pleading: that the release or theft of private information — as opposed to any actual or even threatened misuse of that information
While one could make a compelling argument that this would be an appropriate principle to adopt in data breach cases given the volume, sensitivity, and vulnerability of computerized private information, the Court is not writing a law review article. Therefore, it cannot ignore the fact that neither the Supreme Court nor the D.C. Circuit has embraced this categorical approach to standing to date. In the absence of authority to support plaintiffs' proposal, it is not up to the Court to expand the constitutional limitations on its jurisdiction on its own initiative, particularly when considerations of sovereign immunity and separation of powers concerns are also involved. See Spokeo, 136 S.Ct. at 1547 (the standing doctrine developed "to ensure that federal courts do not exceed their authority as it has been traditionally understood"). Therefore, the Court believes that it is constrained to find that plaintiffs cannot predicate standing on the basis of the breach alone.
At the hearing, plaintiffs pointed to Doe v. Chao, 540 U.S. 614, 124 S.Ct. 1204, 157 L.Ed.2d 1122 (2004), as support for the notion that "the release itself is the injury." Hr'g Tr. at 32. But the case does not stand for that proposition. In Doe, the Supreme Court held that a plaintiff must suffer actual damages to bring a claim under Privacy Act. Id. at 616, 124 S.Ct. 1204. In the course of the opinion, the Court noted that the petitioner had argued against that interpretation; he pointed out that in subsection (g)(1) of the statute, Congress expressly granted any individual who suffered an "adverse effect" as a result of an agency's failure to comply with the Act the right to sue that agency without any further limitation. Id. at 624, 124 S.Ct. 1204. In responding to that argument, the Court stated:
Id. at 624-25, 124 S.Ct. 1204.
That discussion does not necessarily mean that anyone whose information was included in a data breach automatically "has injury enough to open the courthouse door;" the statutory reference to an adverse "effect" seems to imply that there is a need for individualized consequences beyond the mere fact that a release took place, and Doe himself alleged that he suffered from emotional distress.
Plaintiffs also insisted that this issue was "specifically considered" in In re Department of Veterans Affairs Data Theft Litigation, No. 06-0506, 2007 WL 7621261 (D.D.C. Nov. 16, 2007) ("VA Data Theft Litig."). Hr'g Tr. at 27 ("[T]he Court said yes, that's an adverse effect, that gives rise to Article III standing."); see also Hr'g Tr. at 27-28 ("[T]he injury occurs at that moment. And this is a precise issue that the Court looked at in the VA Laptops case."). It is true that the VA Data Theft opinion denied a motion to dismiss for lack of subject matter jurisdiction. But the court in that case did not consider at any point whether a release of data in and of itself constitutes an injury that would give rise to standing.
The VA plaintiffs did not rely on the fact of the breach as the foundation for their suit; they specifically alleged that they had suffered pecuniary and emotional harm as a result of the theft, including the cost of credit reports and credit monitoring services, and mental anguish. VA Data Theft Litig., 2007 WL 7621261, at *3. The government moved to dismiss on the grounds that these allegations of harm were not tied to any particular plaintiff and that they were insufficiently detailed. Id. The court simply found the general allegations of monetary harm to be sufficient,
At the hearing, plaintiffs appeared to be drawing on the concepts underlying the Supreme Court's decision in Spokeo when they maintained that they had standing simply because they were the victims of a Privacy Act violation:
Hr'g Tr. at 26-28; see Spokeo, 136 S.Ct. at 1549. Plaintiffs acknowledged that Spokeo requires a would-be plaintiff to make a showing of harm, Hr'g Tr. at 28, but they maintained that the showing had been
Hr'g Tr. at 28-29.
What plaintiffs are suggesting, then, is that the challenged action that makes the defendant liable — in this case, a failure to prevent a breach — is also the harm: the loss of the data is the whole story. But adopting that approach would collapse the standing analysis in data breach cases entirely, answering both of the injury-in-fact inquiries — is the harm actual or imminent and is it concrete and particularized? — and the causation and redressability inquiries — is the injury fairly traceable to the defendant's unlawful action and would the relief sought cure the harm? — with a single allegation: my data was involved. Adopting such a tautological approach would effectively eliminate the requirement to establish the elements of Article III standing in data breach cases brought against the government, and while the Supreme Court may be headed in that direction, it has not arrived there yet.
A close reading of the majority opinion in the Spokeo case reveals that the Court did not relax traditional standing requirements — if anything, Spokeo reaffirmed the constitutional underpinnings of the doctrine — and it stopped short of the theory plaintiffs advance here. The holding addresses only one prong of the standing analysis — concreteness — and it left critical aspects of even that issue open for further development. While the Court opined that a violation of a statute enacted to protect rights that have traditionally been recognized in our courts could give rise to a concrete injury without more in some circumstances, it cautioned that it would not do so in all circumstances. And disappointing commentators everywhere, it left the delineation of the boundary for another day. Since isolated phrases from the opinion can point in different directions when lifted out of context, it is necessary to review the opinion of the Court in some detail. But the message to be gleaned from that analysis is that the holding underscored that an injury in fact predicated on a statutory violation — even a violation of a statute intended to protect a traditionally recognized personal right — must carry with it a risk of "real harm."
Spokeo is a firm that conducts searches of computerized databases to supply visitors to its website with information about the people they identify. Spokeo, 136 S.Ct. at 1544. The plaintiff, Robins, became aware that personal information that had been disseminated about him — including his age, marital status, and employment — was incorrect, and he instituted a class action against the company for violating the Fair Credit Reporting Act. Id. at 1546. The district court dismissed the action on the grounds that Robins had failed to allege the necessary injury in fact, but the Ninth Circuit reversed, finding that the allegation that Robins's own statutory
The Spokeo analysis begins by reciting the holding in Lujan that "the `irreducible constitutional minimum' of standing consists of three elements": injury in fact, traceability, and redressability, id. at 1547, quoting Lujan, 504 U.S. at 560, 112 S.Ct. 2130, and that a plaintiff must allege facts demonstrating each. Id., citing Warth, 422 U.S. at 518, 95 S.Ct. 2197. The Court reiterated that "[i]njury in fact is a constitutional requirement, and `it is settled that Congress cannot erase Article III's standing requirements by statutorily granting the right to sue to a plaintiff who would not otherwise have standing.'" Id. at 1547-48, quoting Raines v. Byrd, 521 U.S. 811, 820 n.3, 117 S.Ct. 2312, 138 L.Ed.2d 849 (1997). The Court listed the multiple components of the injury-in-fact element, but it went on to discuss just the particularization and concreteness requirements. Id. at 1548-50.
The Court repeated that "for an injury to be `particularized,' it must affect the plaintiff in a `personal and individual way.'" Id. at 1548, quoting Lujan, 504 U.S. at 560 n.1, 112 S.Ct. 2130. But it emphasized that particularization is "not sufficient. An injury in fact must also be `concrete.'" Id. ("We have made it clear time and time again that in injury in fact must be both concrete and particularized."). The opinion went on to explain that while the injury must be "`de facto,' that is, it must actually exist," and that it must be "`real' and not `abstract,'" it is not necessary that the injury be tangible to be concrete. Id. at 1548-49 ("[W]e have confirmed in many of our previous cases that intangible injuries can nevertheless be concrete.").
How would one go about identifying an intangible harm that constitutes a concrete injury in fact? Writing for the Court, Justice Alito explained that "both history and the judgment of Congress play important roles." Id. at 1549.
Id. (citations omitted). At the same time, the opinion cautioned that "Congress' role in identifying and elevating intangible harms does not mean that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right." Id. (emphasis added).
Id. Turning back to the other hand, Justice Alito went on:
Id. (emphasis added) (emphasis and citations omitted).
Applying all of those general principles to the case before him, Justice Alito derived two conclusions: that Congress clearly intended to prevent the harm that had befallen Robins, i.e., the dissemination of false information, when it enacted the provisions that were alleged to have been violated, but that Robins could not meet the requirements of Article III standing simply by alleging a "bare procedural violation." Id. Since it was possible that a violation of one of the statute's procedural requirements could result in no harm, the case was remanded to the Ninth Circuit to address "whether the particular procedural violations alleged ... entail a degree of risk sufficient to meet the concreteness requirement." Id. at 1550.
According to plaintiffs, their allegation of a statutory violation supplies a basis for standing since they suffered the harm of an intangible violation of their privacy — a harm traditionally recognized at common law that Congress specifically intended to protect when it enacted the statute in question. Hr'g Tr. at 28-29. But that is exactly what the Supreme Court found to be insufficient in Spokeo without a further showing that real harm, albeit even intangible harm, would necessarily follow.
This reading of Spokeo is consistent with the Circuit precedent that the Court is bound to follow; the Court of Appeals emphasized in Hancock v. Urban Outfitters that Spokeo did not alter the standing requirements. "Spokeo held that plaintiffs must have suffered an actual (or imminent) injury that is both particularized and `concrete... even in the context of a statutory violation'.... For that reason, a plaintiff cannot `allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III.'" Hancock, 830 F.3d at 514, quoting Spokeo, 136 S.Ct. at 1549. In Hancock,
Id. at 514,
Plaintiffs seemed to find support in Justice Thomas's concurring opinion in Spokeo, Hr'g Tr. at 28, but Justice Thomas did not address the precise situation before the Court either. In agreeing with the decision to remand, he differentiated between a suit brought by an individual to vindicate a private right, and a suit seeking to vindicate a public right — a demand that a federal agency "follow the law." Spokeo, 136 S.Ct. at 1552 (Thomas, J., concurring). He said that in the second instance, there needs to be some personal impact on the plaintiff, and given separation of powers concerns, Congress cannot simply authorize private plaintiffs to enforce public rights without meeting all of the constitutionally based requirements. Id. But he differentiated that situation from a suit like the one in Spokeo in which a private plaintiff was seeking to enforce his own private rights against a private party: "[i]f Congress has created a private duty owed personally to Robins to protect his information, then the violation of the legal duty suffices for Article III injury in fact." Id. at 1554 (Thomas, J., concurring).
But more important, even if one assumes that the principles reviewed by the Justices would apply equally to cases against the government, the Spokeo discussion arose in the context of a statute that creates a private right of action for a statutory violation without the need for a showing of harm. See id. at 1553 (Thomas, J, concurring) ("Congress can create new private rights and authorize private plaintiffs to sue based simply on the violation of those private rights. A plaintiff seeking to vindicate a statutorily created private right need not allege actual harm beyond the invasion of that private right.") (emphasis added) (citation omitted); see also id. at 1549 ("[T]he violation of a procedural right granted by statute can be sufficient in some circumstances to constitute injury in fact.... [A] plaintiff in such a case
The Privacy Act is not that sort of statute. Congress carefully limited the remedies that would be available in a Privacy Act case, and it specifically added the requirement of a showing of actual harm beyond the statutory violation and its impact on one's privacy before the government would be required to answer in Court. So even if the Court were inclined to read the tea leaves and predict that the Supreme Court will eventually find that the bare allegation that a plaintiff was a victim of a data breach, without more, is enough to create standing to sue under the Privacy Act given the privacy rights involved, the victory for plaintiffs would be a hollow one. Because notwithstanding any invasion of privacy, before the Court may pierce the shield of sovereign immunity and exercise jurisdiction, it must consider still whether the complaint plausibly alleges that the named plaintiffs suffered the actual damages necessary to require the government to submit to a Privacy Act claim, and as set forth further below, it does not.
And finally, even if the Court were to find that there is standing to sue under the Privacy Act because Congress authorized plaintiffs to sue to vindicate their private rights in that Act, that would only confer standing to bring the Privacy Act claim. Contrary to plaintiffs' suggestion, see Hr'g Tr. at 30,
For all of these reasons, in the Court's view, standing in this case must rise or fall on the sufficiency of the allegations of actual or future harm set forth in the complaint, and it is necessary to undertake that analysis.
b. Actual Identity Theft or Fraudulent Credit Card Activity
Twenty plaintiffs allege that they have already experienced identity theft or have been the victims of financial fraud. They describe unauthorized charges made to existing accounts or accounts fraudulently opened in their names, unauthorized inquiries made concerning their credit, fraudulent tax returns filed in their names, or other improper uses of their credit card or Social Security numbers. CAC ¶¶ 13, 14, 16, 17, 19, 21, 24, 26, 28-32, 38, 39, 41, 45, 49, 50; NTEU Compl. ¶¶ 80-84. For example:
Only two of these plaintiffs allege that they incurred out-of-pocket expenses related to actual identity theft. See CAC ¶ 22 (plaintiff "paid approximately $198 to a credit repair law firm for assistance in closing the fraudulent accounts and removing them from her credit report" and "expended approximately $50 to obtain copies of her credit report"); CAC ¶ 41 (plaintiff purchased credit repair services). None of the plaintiffs who allege that unauthorized charges were made to their accounts allege that they were held financially responsible for the charges, see CAC ¶¶ 13, 16, 19, 22, 28-31, 38-39, 41, 45, 49, 50; NTEU Compl. ¶ 80-84, and none who experienced other attempts to utilize their identity alleged that they incurred out-of-pocket costs other than fees paid to purchase credit monitoring, which will be addressed separately below.
A number of courts have held that to base standing on past actual harm, plaintiffs in a data breach case must allege not only that their personal data was misused, but also that they suffered economic loss as a result. See, e.g., Whalen v. Michaels Stores Inc., 689 Fed.Appx. 89, 90 (2d Cir. 2017) ("Whalen does not allege a particularized and concrete injury suffered from the attempted fraudulent purchases ...; she never was either asked to pay, nor did pay, any fraudulent charge."); Burton v. MAPCO Exp., Inc., 47 F.Supp.3d 1279, 1284-85 (N.D. Ala. 2014) (plaintiff alleged unauthorized charges on his debit card but had no standing because he did not allege that he had to pay the charges); In re Barnes & Noble Pin Pad Litig., No. 12-cv-8617, 2013 WL 4759588, at *6 (N.D. Ill. Sept. 3, 2013) ("[Plaintiff] has not pled that actual injury resulted and that she suffered any monetary loss due to the fraudulent charge.... In order to have suffered an actual injury, she must have had an unreimbursed charge on her credit card.");
Other courts, including some in this district, have held that allegations that plaintiffs' data was misused state an injury in fact, even in the absence of any allegation that they suffered financial consequences as a result. See In re Sci. Applications Int'l Corp. Backup Tape Data Theft Litig., 45 F.Supp.3d 14, 25 (D.D.C. 2014) ("SAIC") (holding that the "handful" of the plaintiffs who claimed to have suffered actual identity theft "clearly suffered an injury" but ultimately holding they did not have standing because they failed to allege causation); Welborn v. IRS, 218 F.Supp.3d 64, 76-77 (D.D.C. 2016) (holding that plaintiffs who alleged actual identity theft in the form of false tax returns filed in their names pled injury in fact); In re Zappos.com, Inc., MDL No. 2357, 2016 WL 2637810, at *3-*4 (D. Nev. May 6, 2016).
There is no controlling authority on whether plaintiffs alleging actual harm must allege economic losses from a data breach to show injury in fact. The D.C. Circuit's recent opinion in Attias v. CareFirst dealt with allegations of future harm only, and did not directly address the question. 865 F.3d at 626. The Court finds the Michaels Stores line of cases to be persuasive, and it is inclined to agree that a plaintiff must allege unreimbursed out-of-pocket expenses from the alleged identity thefts to state an injury in fact. See Michaels Stores Inc., 689 Fed.Appx. 89 (2d Cir. 2017); Burton, 47 F.Supp.3d at 1280-81; In re Barnes & Noble, 2013 WL 4759588, at *3-*4; Hammond, 2010 WL 2643307, at *8. However, since the D.C. Circuit has recently stated that a substantial threat of identity theft can satisfy the "actual or imminent" prong of the injury-in-fact element, and that identity theft would constitute a concrete and particularized injury, Attias, 865 F.3d at 627-29, and it did not mention any need for an out-of-pocket loss, it appears that the Court of Appeals may well ultimately agree with those district judges who have ruled that identity theft is an actual injury, notwithstanding a lack of economic harm. So while this Court finds that only two of the plaintiffs have alleged any injury in fact, it will also go on, as the SAIC court did, to consider whether any of the plaintiffs who have experienced credit or IRS irregularities have satisfied the remaining elements of the Lujan test and can overcome defendants' other arguments that jurisdiction is lacking.
c. Future Identity Theft and Other Future Harms
The CAC alleges generally that the defendants' actions "placed millions of government workers at a heightened risk of identity theft." CAC ¶ 210; see also NTEU Compl. ¶ 92. The CAC plaintiffs allege that as a group, they face an increased risk of experiencing a host of injuries, including: "money and time expended to prevent, detect, contest, and repair identity theft [and] fraud;" "money and time expended to order credit reports and place temporary freezes on credit, and to investigate options for credit monitoring and identity theft protection services;" and "lost opportunity costs and loss of productivity from efforts to mitigate and address the adverse effects of the Data Breaches." CAC ¶ 163.
Numerous individual plaintiffs predicate injury in fact on the likelihood of possible harm in the future. For example:
Some plaintiffs claim to be suffering from stress now due to a fear of identity theft, physical harm, or some unspecified threat to their safety in the future, CAC ¶¶ 18-19, 22-25, 28, 30-31, 35, 37, 43-44, 46, 50; NTEU Compl. ¶ 94; and others point to expenses they incurred to prevent or monitor future identity theft. CAC ¶¶ 17, 21, 25, 28, 34, 40, 41.
Future harm is neither concrete nor imminent for standing purposes unless it is "certainly impending," Pub. Citizen, Inc., 489 F.3d at 1293, or it presents a "substantial risk." Clapper, 568 U.S. at 414, 422 & n.5, 133 S.Ct. 1138. A harm that is "remote, speculative, conjectural, or hypothetical" will not suffice. Pub. Citizen, Inc., 489 F.3d at 1293; see also Clapper, 568 U.S. at 422, 133 S.Ct. 1138 ("[R]espondents lack Article III standing because they cannot demonstrate that the future injury they purportedly fear is certainly impending...."); Williams v. Lew, 77 F.Supp.3d 129, 132-33 (D.D.C. 2015) (plaintiffs' fears, which "rest[ed] on [a] hypothetical premise," did not provide standing because they were based on possible future injury, not a certainly impending one), aff'd, 819 F.3d 466, 474 (D.C. Cir. 2016) (holding that a court "cannot exercise jurisdiction based on `worr[ies] and
The D.C. Circuit recently weighed in on this issue in Attias v. CareFirst Inc., 865 F.3d 620 (D.C. Cir. 2017). Although plaintiffs take the position that the decision binds this Court to find that they have standing to pursue their action, see Class Pls.' Suppl. Submission, the Court is not persuaded that the holding covers this case. The Court of Appeals found in that data breach lawsuit that the plaintiffs' plausible allegation that they were subject to a substantial risk of identity theft was sufficient to satisfy the injury-in-fact element of the Lujan test, but it drew that conclusion, and found the allegation to be plausible, under circumstances that do not pertain here.
The Attias case arose out of a cyberattack on CareFirst, a health insurance company. After the data breach was reported, plaintiffs sued and predicated standing on an allegation that the breach had exposed them to a heightened risk of identity theft in the future. The district court concluded that the plaintiffs' theory of injury was "too speculative" to satisfy the requirement in Clapper that the harm be "clearly impending," and it dismissed the case for lack of subject matter jurisdiction. Attias v. CareFirst, Inc., 199 F.Supp.3d 193, 200 (D.D.C. 2016).
The Circuit Court reversed, stating that the Supreme Court had "clarified that a plaintiff can establish standing by satisfying either the `certainly impending' test or the `substantial risk' test," Attias, 865 F.3d at 626-27 (emphasis in original), citing Susan B. Anthony List v. Driehaus, ___ U.S. ___, 134 S.Ct. 2334, 2341, 189 L.Ed.2d 246 (2014) (an allegation of future injury may suffice if the "threatened injury is certainly impending" or there "is a substantial risk that the harm will occur"). It then zeroed in on the latter:
Id. at 627, quoting Food & Water Watch, Inc. v. Vilsack, 808 F.3d 905, 915 (D.C. Cir. 2015). The Court explained that since "[n]obody doubts that identity theft, should it befall one of these plaintiffs, would constitute a concrete and particularized injury," the critical question for injury-in-fact purposes "is whether the complaint plausibly alleges that the plaintiffs now face a substantial risk of identity theft as a result of CareFirst's alleged negligence in the data breach." Id. (emphasis in original). In other words, if plaintiffs can allege that the risk of future harm is substantial, that satisfies the Lujan requirement that the injury be imminent.
The Court then combed through the complaint to identify the allegations that made the claim of an increased risk plausible, id. at 627-28, and it noted that the complaint alleged that CareFirst collected and stored sensitive information including credit card and social security numbers.
Id. at 628-29, citing Remijas v. Neiman Marcus Grp., 794 F.3d 688, 693 (7th Cir. 2015). Based on that analysis, the Court of Appeals found:
Attias, 865 F.3d at 629.
While the Court used broad language to announce its conclusion, its determination that the Attias allegations were sufficient cannot be separated from its repetition of the rhetorical question posed in Remijas and the Seventh Circuit's answer. In other words, standing in Attias was predicated on the slender thread that one could fairly assume what the thieves meant to do with the stolen information. While drawing such an inference may have been logical in the case of a domestic crime directed at credit and financial information maintained by a retail establishment or a private health insurer, it is not necessarily logical here, and Attias supplies no other principle to follow.
Plaintiffs suggest that this case is "on all fours with the allegations in Attias," Class Pls.' Suppl. Submission at 3, but they fail to address the fact that Attias, and the case upon which it relies, Remijas, were predicated on the theft of credit card information, which the courts inferred could be utilized by the hackers themselves to perpetrate financial fraud. Remijas, 794 F.3d at 692-93; see also Galaria v. Nationwide Mut. Ins. Co., 663 Fed.Appx. 384, 388 (6th Cir. 2016) (court drew reasonable inference that the domestic criminal theft of personal information from an insurance company was for the fraudulent purposes alleged in the complaint). Moreover, in Remijas, there was clear evidence that a large number of the particular credit card numbers that had been stolen had already actually been used. Id. at 690. As the district court in Attias pointed out:
199 F.Supp.3d at 200, quoting Remijas, 794 F.3d at 690 (citations omitted).
But those allegations are absent here, and the complaint does not allege anything that even comes close.
Plaintiffs have not plausibly alleged that the means to commit credit card or bank fraud were included in this breach, since there is no allegation that those account numbers are called for in the standard forms at issue or that they are provided in the course of background investigations. The CAC alleges in paragraph 144 that the personal information provided to OPM includes "information about financial accounts" and "financial and investment records," see also CAC ¶¶ 66, 146, and it states that job applications "include financial information." CAC ¶ 144. But no plaintiff who alleges that he or she suffered from financial fraud, such as the unauthorized use of a credit or debit card, alleges that the card numbers or accounts that were compromised had been supplied to OPM in a government form.
Moreover, a detailed review of the forms themselves, which are specifically referenced in the complaint, see, e.g., CAC ¶¶ 66-70, reveals that they do not ask for account-identifying information. The SF 85, the standard Questionnaire for Non-Sensitive Positions, asks no questions whatsoever concerning finances beyond calling for the identification of present and former employers. See https://www.opm.gov/forms/pdf_fill/sf85.pdf.
The more detailed SF 86, the Questionnaire for National Security Positions, does not ask applicants for their active credit or debit card numbers. The form, which is 127-pages long, finally gets to the questions related to business dealings and personal finances on page 63. See https://www.opm.gov/forms/pdf_fill/sf86-non508.pdf. And of the many questions asked, only two call for account numbers of any sort,
Also, while this ruling is not based on the original complaints that were consolidated and amended in this multidistrict litigation, the Court notes that many of the plaintiffs specifically alleged that the breaches were widely reported to have been perpetrated by the Chinese government.
So here, we do have a situation where a "long sequence of uncertain contingencies involving multiple independent actors has to occur before the plaintiffs in this case will suffer any harm," Attias, 865 F.3d at 629, and what is more, the nature of that harm is entirely undefined.
There is no question that plaintiffs have plausibly alleged that the building blocks of some forms of identity theft — social security numbers coupled with names, birthdates, and addresses — were included in the cache of information that was taken from OPM. But the Consolidated Amended Complaint does not point to any particular objective behind the breach beyond the claim that it was carried out to obtain sensitive data for an unspecified "improper use." CAC ¶¶ 7, 117, 128, 132. Neither complaint directly alleges, or marshals any facts that would support an inference, that those behind this attack are likely to use the information for credit card fraud or identify theft purposes, that they are likely to make it available to other
As for the plaintiffs who allege a risk of future bodily injury or express concerns for their personal safety, CAC ¶¶ 13, 18, 22-26, 35, 37, 43, 44, the complaint is devoid of allegations that would give rise to a plausible conclusion that the threat is clearly impending or that the risk became significant as a result of the breach.
In sum, the Court holds that only the two plaintiffs who alleged that they incurred expenses to rectify the actual fraud or identity theft they experienced, CAC ¶¶ 22, 41, have alleged injury in fact.
2. Causation
This does not end the standing analysis. Those plaintiffs, as well as any other plaintiffs who experienced some sort of identity theft event without an economic loss, lack standing because their alleged injuries are not "fairly traceable" to defendants' challenged actions. Lujan, 504 U.S. at 560, 112 S.Ct. 2130. Plaintiffs maintain that all they need to allege to show causation is that defendants failed to secure their personal information, hackers stole it, and plaintiffs "consequently were subjected to actual and imminent harm." CAC Pls.' Opp. at 23 ("Nothing further is required at this point to show that the harm is plausibly traceable to Defendants' misconduct."). But the allegations in the complaint do not even rise to the level of "consequently" — plaintiffs repeatedly allege that the breach occurred and an unauthorized use of personal information occurred "thereafter." And while the short discussion of causation at the conclusion of the Attias decision may lend some support to plaintiffs' legal position, see Attias, 865 F.3d at 629, the Court finds that neither complaint plausibly alleges any connection between the OPM breaches and the claimed harm.
Plaintiffs allege that OPM's failures enabled unknown third parties not before the Court to access their personal information, and they also allege that in some instances, plaintiffs' personal information has been used improperly by unknown parties. As the district court pointed out in Food & Water Watch v. EPA:
5 F.Supp.3d 62, 76 (D.D.C. 2013), quoting Lujan at 560-61, 112 S.Ct. 2130; see also Lujan, 504 U.S. at 562, 112 S.Ct. 2130 ("[W]hen the plaintiff is not himself the object of the government action or inaction
It is true that in the Attias case, the D.C. Circuit concluded, "[b]ecause we assume, for purposes of the standing analysis, that plaintiffs will prevail on the merits of their claim that CareFirst failed to properly secure their data and thereby subjected them to a substantial risk of identity theft, we have little difficulty concluding that their injury in fact is fairly traceable to CareFirst." Attias, 865 F.3d at 629 (citation omitted). But the Court noted that the issue had not been briefed extensively, id., and there are too many missing links in the chain for that statement to pertain here. As noted above, unlike in Attias, plaintiffs do not allege here that either defendant maintained the financial account information used in the alleged identity thefts. Furthermore, they do not allege any facts that plausibly connect the various isolated incidents of the misuse or attempted misuse of plaintiffs' information to the breaches at issue here. Cf. Remijas, 794 F.3d at 692-95 (plaintiffs had standing in a data breach case involving the theft of department store credit card numbers when the stolen card numbers were used after the hack to make fraudulent charges).
"Generally, to prove that a data breach caused identity theft, the pleadings must include allegations of a nexus between the two instances beyond allegations of time and sequence." Resnick v. AvMed, Inc., 693 F.3d 1317, 1326 (11th Cir. 2012). But allegations of time and sequence are all that plaintiffs provide here: they allege that the breaches occurred and that plaintiffs then learned of the identity theft. See CAC ¶ 16 ("Bos ... received notice from OPM.... Bos thereafter learned that an unauthorized credit card account had been opened in his name."); CAC ¶ 30 (plaintiff provided personal information to the federal government, learned of the data breaches, and was "thereafter" informed of unauthorized charges on his debit card);
Moreover, the events alleged to have occurred after the breach are separated across time and geography, and they follow no discernible pattern: there are a handful of false income tax returns mixed in with such occurrences as a debit card charge here, a charge to a PayPal account (which requires a password) there, several new credit inquiries, the creation of a new cellular phone account, and the cancellation of an account with a local utility. One cannot easily construct any kind of colorable theory that would link these events together, especially given the absence of evidence that the account numbers utilized here were ever provided to OPM. The Court therefore holds that these sets of allegations that two things happened in sequence are not sufficient to show causation.
In addition, to hold defendants accountable for plaintiffs' alleged injuries, the Court would have to presume that the vast majority of identity thefts plaintiffs experienced were not perpetrated by other criminals or were not the result of data breaches of other entities.
In the end, plaintiffs can point to nothing that would begin to connect this hack to such random events as an unauthorized spending spree at Best Buy. See CAC ¶ 39. Since plaintiffs' allegations of fraudulent financial activity are based on pure speculation about the actions of a chain of unknown third-party wrongdoers who are not before the Court, they are insufficient to establish standing. See Clapper, 568 U.S. at 414, 133 S.Ct. 1138 (expressing the Court's "usual reluctance to endorse standing theories that rest on speculation about the decisions of independent actors"). Plaintiffs have not satisfied their burden to adduce facts showing that the choices of third parties "have been or will be made in such manner" to show causation as to OPM or KeyPoint. Lujan, 504 U.S. at 562, 112 S.Ct. 2130.
For all of these reasons, the Court holds that neither the CAC nor NTEU plaintiffs have Article III standing, and it will grant defendants' motions to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1).
The Court recognizes, particularly in light of the recent decision in Attias, that standing is a very close and difficult question in this case. But there are other significant challenges to subject matter jurisdiction to contend with. Even if plaintiffs have standing, they must establish that
II. Plaintiffs' Claims Cannot Proceed.
A. Claims Against OPM
1. Plaintiffs' Privacy Act claims must be dismissed.
The CAC plaintiffs' first count against OPM alleges that the agency violated the Privacy Act. CAC ¶¶ 175-85. This act "regulate[s] the collection, maintenance, use, and dissemination of information" by federal agencies, Privacy Act of 1974, § 2(a)(5), 88 Stat. 1896 (codified at 5 U.S.C. § 552a), setting detailed requirements on how agencies should manage their records. 5 U.S.C. § 552a(e). It provides "civil relief to individuals aggrieved by failures on the Government's part to comply with [the Act's] requirements," Doe v. Chao, 540 U.S. at 618, 124 S.Ct. 1204, when those failures "have an adverse effect on an individual." 5 U.S.C. § 552a(g)(1)(D). Under the Act, the United States is liable for "[a]ctual damages sustained by the individual as a result of" the agency's failure to comply if a court determines that an agency has "acted in a manner which was intentional or willful." 5 U.S.C. § 552a(g)(4)(A) (setting the minimum amount a plaintiff obtains at "no less than $1,000").
Plaintiffs assert that the agency "willfully and intentionally failed to comply with [the Federal Information Security Management Act]" which "adversely affected Plaintiffs and Class members." CAC ¶ 178. In doing so, they contend, OPM violated both the disclosure provision, CAC ¶ 183, and the safeguards provision, CAC ¶ 182, of the Privacy Act.
a. All but two CAC plaintiffs fail to plead actual damages, and therefore the Court lacks subject matter jurisdiction to hear their claims.
The term "actual damages" under the Act is "limited to proven pecuniary or economic harm." FAA v. Cooper, 566 U.S. 284, 299, 132 S.Ct. 1441, 182 L.Ed.2d 497 (2012); see also Earle v. Holder, No. 11-5280, 2012 WL 1450574, at *1 (D.C. Cir. Apr. 20, 2012) (unpublished) ("[B]ecause nothing in appellant's pleadings could be construed as alleging he sustained pecuniary loss as a result of the [defendant's] alleged Privacy Act violation, the district court correctly determined he was not entitled to damages.").
Reading the complaint in the light most favorable to plaintiffs, the Court finds that all but two plaintiffs fail to allege facts that support a plausible inference that they sustained actual damages within the meaning of the Act. Plaintiffs who allege unauthorized charges on their financial accounts do not allege any out-of-pocket or unreimbursed costs resulting from the thefts, see CAC ¶¶ 13, 19, 29, 30, 38, 41, 50, so they have not alleged "actual damages" within the meaning of the Act. Further, most plaintiffs alleging other forms of identity theft, such as fraudulent tax returns or the improper use of Social Security numbers, allege that they spent time, but not money, addressing these events. See CAC ¶ 13, 14, 16, 17, 21, 24, 26, 28, 29, 31, 32, 39, 45, 49, 50. The plaintiffs
The two plaintiffs who spent money to address actual identity theft did allege "actual damages" under the Act. See CAC ¶¶ 22, 41. But their disclosure provision claim fails under Rule 12(b)(6) because it does not plausibly allege that OPM "disclosed" private information as that statutory term has been defined by the D.C. Circuit, and their safeguards provision claim fails because they have not pled sufficient facts to allege that their injuries were "a result of" OPM's actions.
b. The disclosure provision claim fails because OPM did not intentionally or willfully disclose plaintiffs' information within the meaning of the Act.
Plaintiffs allege that OPM violated the disclosure provision of the Privacy Act. CAC ¶ 183. This provision prohibits a federal agency from disclosing "any record... contained in a system of records" without the written consent of the "individual to whom the record pertains." 5 U.S.C. § 552a(b). But this claim fails because it hinges on the act of third-party cyber criminals who hacked OPM's systems and were outside of OPM's control. CAC ¶¶ 114-37.
The D.C. Circuit has held, upon review of the Act's "purposes, legislative history, and integrated structure ... that Congress intended the term `disclose' to apply in virtually all instances to an agency's unauthorized transmission of a protected record, regardless of the recipient's prior familiarity with it." Pilon v. U.S. Dep't of Justice, 73 F.3d 1111, 1124 (D.C. Cir. 1996). In this case, OPM did not "transmit" plaintiffs' information: a third party stole it. See also VA Data Theft Litig., 2007 WL 7621261, at *6 ("It is difficult to imagine how an illegal act of a third party over whom the [agency] had no control could ... constitute an intentional or willful disclosure by the [agency]"). Accordingly, the Court holds that plaintiffs' allegations do not plead an intentional or willful "disclosure" by OPM.
c. While plaintiffs have alleged a willful violation of the safeguards provision of the Privacy Act, their claim fails because they do not allege sufficient facts to show that their injuries were "a result of" OPM's conduct.
Plaintiffs also contend that OPM violated the safeguards provision of the Act. CAC ¶ 182. This provision requires federal agencies to "establish appropriate administrative, technical, and physical safeguards" to protect agency records. 5 U.S.C. § 552a(e)(10). To be an "intentional or willful" violation of this provision of the Privacy Act, an agency's actions must be "greater than gross negligence." Waters v. Thornburgh, 888 F.2d 870, 875 (D.C. Cir. 1989), abrogated on other grounds by Chao, 540 U.S. at 618, 124 S.Ct. 1204. Its
Courts have held that allegations that an agency has been warned "of recurring, systemic, and fundamental deficiencies in its information security ... if proven, would support a finding that defendants were warned of the deficiencies in their information security but failed to establish proper safeguards." Hawley, 543 F.Supp.2d at 52 (holding that allegations that the Office of Inspector General "repeatedly informed" the agency of problems with its information security pled "intentional and willful" conduct); see also VA Data Theft Litig., 2007 WL 7621261, at *4-*5 (allegations that an agency had been "warned repeatedly of deficiencies in [its] information security and yet failed to do anything to establish proper safeguards" were sufficient to plead that the agency "acted with something greater than gross negligence").
Plaintiffs here allege that OPM was warned repeatedly by its Office of Inspector General that the agency's computer security was deficient. CAC ¶¶ 84-113 (alleging that OPM was warned of information security deficiencies, including that it "fail[ed] to implement or enforce multi-factor authentication," "failed to promptly patch or install security updates for its systems," "lacked a mature vulnerability scanning program to find and track the status of security weaknesses ... and failed to continuously monitor the security controls of its software systems," and "failed to engage in appropriate oversight of its contractor-operated systems"). They also allege that its failure to correct these specific deficiencies identified by the Inspector General "enabled hackers to access and loot OPM's systems for nearly a year without being detected," CAC ¶ 134; that "inadequate patching of software systems contributed to the [breaches]," CAC ¶ 135; and that "OPM's failure to implement ... tiered identity management controls for system administrators exposed hundreds of its sub-networks, instead of a single sub-network, to breach," and if it implemented such controls, "the intrusion would have been detected earlier and the cyber thieves prevented from accessing the entire OPM network." CAC ¶ 137. Assuming the truth of the allegations in the complaint, as required when resolving a motion to dismiss, the Court holds that these factual statements do allege that OPM acted in an "intentional or willful" manner. See Hawley, 543 F.Supp.2d at 52.
But the allegations still fail to state a claim because they plead facts insufficient for the Court to plausibly infer that OPM's failure to comply with the safeguards provision "ha[d] an adverse effect" on plaintiffs, 5 U.S.C. § 552a(g)(1)(D), or that their damages are "as a result of" the agency's failures. 5 U.S.C. § 552a(g)(4)(A). See, e.g., Lugo v. U.S. Dep't of Justice, 214 F.Supp.3d 32, 41 (D.D.C. 2016) (holding that plaintiffs must plead "a `causal connection' between the agency violation and the adverse effect"), quoting Doe v. Dep't of Justice, 660 F.Supp.2d 31, 49 (D.D.C. 2009).
The two plaintiffs who allege actual damages make only a temporal connection between the OPM breaches and their damages. See CAC ¶ 22 (alleging that plaintiff was notified of the breaches, that in August of 2015, the FBI informed her "that her [government investigation information] had been acquired by the so-called Islamic State of Iraq and al-Sham," and that while reviewing her credit report at an unspecified time, she discovered accounts had
Therefore, the Court will dismiss the few claims under Privacy Act over which it arguably has jurisdiction for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6).
2. Plaintiffs fail to state a claim under the Little Tucker Act.
CAC plaintiffs' second count alleges that OPM violated the Little Tucker Act, 28 U.S.C. § 1346. This act authorizes a "civil action or claim against the United States, not exceeding $10,000 in amount, founded... upon any express or implied contract with the United States." Id. § 1346(a)(2). But in this case, there is no contract.
Plaintiffs allege in connection with federal employment that, along with all class members who completed SF 85 and SF 86 forms, they were in a contractual relationship with OPM. CAC ¶ 192. The contractual claim is based on the fact that each form contains a statement advising job applicants that the information called for "will be protected from unauthorized disclosure." See, e.g., SF 86 at 2. It also warns that the information "may be disclosed without your consent ... as permitted by the Privacy Act [5 U.S.C. § 552a(b)], and by routine uses," and each form lists eleven permitted uses. CAC ¶¶ 68-69; see, e.g., SF 86 at 2. Plaintiffs assert that they relied on their "reasonable expectation and understanding that OPM was agreeing to prevent the disclosure of such information to unauthorized third parties and/or for improper purposes," and that OPM breached this agreement. CAC ¶¶ 192-93.
The statements in these forms, however, do not create a contract between plaintiffs and OPM because a pre-existing legal duty cannot form the basis for a contract. Allen v. United States, 100 F.3d 133, 134 (Fed. Cir. 1996) ("Performance of a pre-existing legal duty is not consideration."), citing Restatement (Second) of Contracts § 73 (1981) ("Performance of a legal duty owed to a promisor which is neither doubtful nor the subject of honest dispute is not consideration[.]"); Floyd v. United States, 26 Cl. Ct. 889, 891 (1992) ("That which one is under a legal duty to do, cannot be the basis for a contractual promise."), aff'd, 996 F.2d 1237 (Fed. Cir. 1993); Youngblood v. Vistronix, Inc., No. 05-21, 2006 WL 2092636, at *4 (D.D.C. July 27, 2006) ("It is a general maxim of contract law that a party cannot offer as consideration a duty that the party is already obligated to perform.").
In any event, plaintiffs fail to allege facts to support the plausible inference of a contract. There is no offer because government forms are not considered binding contracts. See, e.g., Chattler v. United States, 632 F.3d 1324, 1330 (Fed. Cir. 2011) (holding that a passport applicant's completion of a form for faster processing is a request for such processing, not a promise by the government to do so). Further, there was no acceptance because no one authorized to bind the government entered into a contract with plaintiffs. Stout Rd. Assocs., Inc. v. United States, 80 Fed.Cl. 754, 756 (2008) ("Only government officials who possess a Contracting Officer's warrant are authorized to bind the United States to a contract."). And as already explained above, there is no consideration. Allen, 100 F.3d at 134; Floyd, 26 Cl. Ct. at 891 (language in a contract that is "essentially no more than a restatement of a pre-existing legal duty ... cannot stand as consideration sufficient to support a return promise").
3. The Court lacks subject matter jurisdiction to hear plaintiffs' claim under the APA.
The third count in the Consolidated Amended Complaint seeks declaratory and injunctive relief under the APA for OPM's alleged violations of the Privacy Act and FISMA. CAC ¶ 198 (alleging that "OPM acted arbitrarily and capriciously, [and] abused its discretion" when it violated the Privacy Act, FISMA, and regulations and technical standards for data security). Plaintiffs allege a series of failures by OPM relating to the operation of its computer and software systems, both before its systems were breached and after. CAC ¶¶ 200, 202.
The APA may serve as the waiver of sovereign immunity for claims brought by an individual who "suffer[ed a] legal wrong because of agency action, or [was] adversely affected or aggrieved by agency action." 5 U.S.C. § 702. It cannot, however, be invoked when another statute "expressly or impliedly forbids the relief which is sought." Id. The Privacy Act limits the injunctive relief available under the statute to an order that an agency correct inaccurate, incomplete, irrelevant, or untimely records, 5 U.S.C §§ 552a(g)(1)(A), (2)(A), or give individuals access to their records. Id. § 552a(g)(1)(B). No other forms of injunctive relief are available to plaintiffs for violations of the Act. See Edison v. Dep't of Army, 672 F.2d 840, 846-47 (11th Cir. 1982), citing Parks v. IRS, 618 F.2d 677, 683-84 (10th Cir. 1980); Cell Assocs., Inc. v. Nat'l Insts. of Health, 579 F.2d 1155, 1161-62 (9th Cir. 1978); Houston v. U.S. Dep't of Treasury, 494 F.Supp. 24, 29 (D.D.C. 1979). Given this, plaintiffs cannot invoke the APA to obtain injunctive relief that the Privacy Act forbids.
Plaintiffs' assertions that OPM's violations of the FIMSA warrant judicial
4. The NTEU plaintiffs fail to state a constitutional claim.
The NTEU plaintiffs have brought just one claim on behalf of themselves and the NTEU members whose personal information was exposed by the breaches: that OPM violated their constitutional right to informational privacy. NTEU Compl. ¶¶ 95-98. The Court holds that the NTEU complaint fails to allege a legally cognizable constitutional claim.
Legal authority on the existence of a constitutional right to informational privacy is limited. The Supreme Court has addressed the matter in only three cases, and in those cases, it assumed — but did not expressly recognize — the existence of such a legal interest. See NASA v. Nelson, 562 U.S. 134, 138, 131 S.Ct. 746, 178 L.Ed.2d 667 (2011); Nixon v. Adm'r of Gen. Servs., 433 U.S. 425, 457-65, 97 S.Ct. 2777, 53 L.Ed.2d 867 (1977); Whalen v. Roe, 429 U.S. 589, 599-600, 605-06, 97 S.Ct. 869, 51 L.Ed.2d 64 (1977). Based on the assumption that the Constitution protects an individual's "interest in avoiding disclosure of personal matters," NASA, 562 U.S. at 138, 131 S.Ct. 746, quoting Whalen, 429 U.S. at 599, 97 S.Ct. 869; Nixon, 433 U.S. at 457, 97 S.Ct. 2777, the Court has examined whether there are constitutional limits on the amount or type of information the government may collect from citizens in three different contexts.
In Whalen, the Supreme Court considered a challenge to a New York statute that required physicians and pharmacists to report prescription information for certain narcotics to the state health department, which would maintain the information in a centralized computer file. 429 U.S. at 593, 97 S.Ct. 869. The plaintiffs expressed a fear that the computerized data would be misused, and they claimed that the statute invaded a constitutionally protected "zone of privacy," which included an "individual interest in avoiding disclosure of personal matters" and an interest in the right to make important individual decisions independently. Id. at 598-600, 97 S.Ct. 869. But the Court found that the New York program did not pose a threat to either interest. Id. In a "word about issues we have not decided," the Court observed that the government's right to collect and use private data for public purposes is "typically accompanied by a concomitant statutory or regulatory duty to
In Nixon, the Court rejected a constitutional challenge to the Presidential Recordings and Materials Preservation Act, 44 U.S.C. § 2111, which compelled the President to turn over his Presidential papers and recorded conversations for review, and which the President claimed would violate his constitutional right to privacy. 433 U.S. at 429, 434, 454-55, 459, 97 S.Ct. 2777. Emphasizing that the statute "mandate[d] regulations ... aimed at preventing undue dissemination of private materials," id. at 458, 97 S.Ct. 2777, the Court concluded that the public interest in preserving the documents outweighed any expectation of privacy the former President may have had in the materials, id. at 465, 97 S.Ct. 2777, and it rejected his claim without ruling on the question of whether the President had a valid constitutional interest in the first place. Id. at 457, 97 S.Ct. 2777 ("We may agree with appellant that, at least when Government intervention is at stake, public officials, including the President, are not wholly without constitutionally protected privacy rights in matters of personal life unrelated to any acts done by them in their public capacity.") (emphasis added).
Finally, in NASA, the Court held that challenged portions of the federal government's standard background investigation did not violate any constitutional right to informational privacy, emphasizing that the Privacy Act "covers all information collected during the background-check process" and imposes obligations for nondisclosure and criminal liability for willful violations of those obligations. 562 U.S. at 148, 156, 131 S.Ct. 746 (noting that in the context of hiring federal employees, the government "has a much freer hand in dealing `with citizen employees than it does when it brings its sovereign power to bear on citizens at large'") (citation omitted).
Faced with this lack of definitive guidance from the Supreme Court, the D.C. Circuit has simply assumed in cases involving the collection of information that keeping one's information private may have a constitutional dimension, and it has not gone on to resolve the issue. See, e.g., Franklin v. Dist. of Columbia, 163 F.3d 625, 638-39 (D.C. Cir. 1998); Am. Fed'n of Gov't Emps. v. Dep't of Hous. & Urban Dev., 118 F.3d 786, 795 (D.C. Cir. 1997); Nat'l Fed'n of Fed. Emps. v. Greenberg, 983 F.2d 286, 294-95 (D.C. Cir. 1993); United Steelworkers of Am., AFL-CIO-CLC v. Marshall, 647 F.2d 1189, 1240-41 (D.C. Cir. 1980). Indeed, the Court expressed "grave doubts as to the existence of a constitutional right of privacy in the nondisclosure of personal information." Am. Fed'n of Gov't Emps., 118 F.3d at 791 ("Were we the first to confront the issue we would conclude with little difficulty that such a right does not exist."); see also Greenberg, 983 F.2d at 293-94 (expressing the view of two panel members that Whalen is ambiguous as to the right's existence).
Given this reticence on the part of the higher courts, and the absence of binding precedent one way or the other, this Court also finds it prudent to avoid wading into the legal waters surrounding the existence or scope of any constitutional right to informational privacy in general when it is not necessary to do so. And it is not necessary here because the NTEU claim is asking the Court to recognize a constitutional violation that no court has even hinted might exist: that the assumed constitutional right to informational privacy would be violated not only when information is disclosed, but when a third party steals it. See NTEU Compl. ¶¶ 96-98; NTEU's Opp. at 25-44 (arguing that the government has an affirmative duty "grounded in the constitutional right to informational privacy" to safeguard plaintiffs' private data). In other words, even if an individual who completes an SF 85 or SF 86 has a constitutional right to privacy in the information he or she is being asked to provide, it is well-established that the government has the right to gather that information. And even if it might violate the Constitution for the government to then deliberately disclose the information,
At bottom, what the NTEU plaintiffs allege is a violation of the Privacy Act, see NTEU Compl. ¶ 97 ("By failing to heed the repeated warnings of OPM's OIG and otherwise failing to satisfy obligations imposed on her by statute and other appropriate authority, the Defendant has manifested reckless indifference to her obligation to safeguard personal information...."), but they have not brought a Privacy Act claim or alleged the facts that would enable them to do so, and they cannot find support for the allegedly unfulfilled "obligation" in the Constitution.
The sole source plaintiffs identify for the existence of the affirmative duty they would have this Court enforce is a law review article. NTEU's Opp. at 37, citing A. Michael Froomkin, Government Data Breaches, 24 Berkley Tech. L. J. 1019, 1049 (2009) ("When the State takes a person's data and holds it in a fashion outside the person's control, the State has done to that data exactly what Chief Justice Rehnquist
B. Claims Against KeyPoint
The CAC plaintiffs assert that KeyPoint is liable for negligence, negligent misrepresentation and concealment, invasion of privacy, breach of contract, violations of the Fair Credit Reporting Act, and various state statutes governing unfair and deceptive trade practices and data breaches. CAC ¶¶ 216-75. The Court holds that plaintiffs' claims against KeyPoint must be dismissed because the firm is immune from suit as a government contractor.
The Supreme Court has held that "government contractors obtain certain immunity in connection with work which they do pursuant to their contractual undertakings with the United States." Campbell-Ewald Co. v. Gomez, ___ U.S. ___, 136 S.Ct. 663, 672, 193 L.Ed.2d 571 (2016), quoting Brady v. Roosevelt S.S. Co., 317 U.S. 575, 583, 63 S.Ct. 425, 87 S.Ct. 471 (1943). That immunity applies unless a contractor "violates ... federal law and the Government's explicit instructions" or "ha[s] `exceeded his authority' or the authority `was not validly conferred.'" Id. at 672-73, quoting Yearsley v. W.A. Ross. Constr. Co., 309 U.S. 18, 20-21, 60 S.Ct. 413, 84 S.Ct. 554 (1940) ("[A]uthority to carry out [a] project [is] validly conferred, that is, [when] what [is] done was within the constitutional power of Congress, there is no liability on the part of the contractor for executing [Congress's] will.").
There is no dispute that KeyPoint was acting pursuant to a valid contract with OPM. CAC ¶¶ 1, 123 (alleging that KeyPoint was acting pursuant to a contract with the United States at the time of the events underlying the complaint). So the question is whether the complaint plausibly alleges that KeyPoint violated federal law and OPM's explicit instructions or exceeded its authority under the contract. Campbell-Ewald Co., 136 S.Ct. at 672-73, quoting Brady, 317 U.S. at 575, 63 S.Ct. 425.
1. KeyPoint has derivative immunity because it was a government contractor.
Plaintiffs argue that because KeyPoint "violated section 552a(e)(10) ... [and] section 552a(b) of the Privacy Act," it is not protected by derivative government immunity. CAC Pls.' Opp. at 60-61. KeyPoint maintains that this argument does not provide a basis to abrogate its immunity because a contractor cannot violate the Privacy Act. KeyPoint Mem. at 20.
The Privacy Act imposes requirements on each "agency" that maintains a system of records, see, e.g., 5 U.S.C. § 552a(d), and section 552a(a)(1) of the statute refers to 5 U.S.C. § 551, the Freedom of Information Act, for the definition of the term agency:
5 U.S.C. § 552(f)(1). With respect to government contractors, the statute expressly provides:
5 U.S.C. § 552a(m)(1). Thus, the Act requires that the agency ensure that the requirements of the Act are implemented; it does not hold contractors responsible for doing so. See Metro. Life Ins. Co. v. Blyther, 964 F.Supp.2d 61, 71 (D.D.C. 2013), citing Unt v. Aerospace Corp., 765 F.2d 1440, 1447 (9th Cir. 1985) (dismissing Privacy Act claims against insurance companies that cover life insurance for federal employees and holding that "the Privacy Act does not apply to government contractors"); see also Abdelfattah v. DHS, 787 F.3d 524, 533 n.4 (D.C. Cir. 2015) ("[t]he Privacy Act creates a cause of action against only federal government agencies and not private corporations or individuals"); see also Martinez v. Bureau of Prisons, 444 F.3d 620, 624 (D.C. Cir. 2006) (holding that the Act "authoriz[es] suit against an `agency'" and affirming dismissal of Privacy Act claims against individuals because individuals are not federal agencies).
2. Plaintiffs do not adequately identify a portion of KeyPoint's contract with OPM that KeyPoint breached.
Plaintiffs argue, though, that KeyPoint "breached the terms of its contract with OPM ... [because] [f]ederal contracts necessarily incorporate the requirements of the Privacy Act" via section 552a(m)(1). CAC Pls.' Opp. at 61-62, citing CAC ¶ 123 ("The contract between OPM and KeyPoint incorporates the requirements of the Privacy Act. 5 U.S.C. § 552a(m)(1)").
But this is simply an attempt to do indirectly what plaintiffs cannot do directly, and it fails as well. It is true that section 552a(m)(1) provides: "[w]hen an agency provides by a contract for the operation by or on behalf of the agency of a system of records to accomplish an agency function, the agency shall, consistent with its authority, cause the requirements of this section to be applied to such system." 5 U.S.C. § 552a(m)(1); see also 48 C.F.R. § 24.102(a). But the implementing regulation goes on to provide: "the system of records operated under the contract is deemed to be maintained by the agency," 42 C.F.R. § 24.102(c), and section
Even if one can draw an inference that pursuant to this provision of the Act, OPM imposed contractual requirements that prohibited KeyPoint from "disclosing" any record in accordance with § 552a(b), and bound it to establish appropriate safeguards under § 552a(e)(1), the complaint does not allege facts that would show that these presumed contractual terms were violated. There is no allegation in the complaint that KeyPoint "disclosed" anything — the complaint alleges that KeyPoint was the victim of a breach, and that a set of its log-in credentials was "stolen." CAC ¶¶ 4, 117, 127, 133.
With respect to safeguards, plaintiffs conclusorily allege that KeyPoint breached its contract with OPM because it "fail[ed] to ensure the security and confidentiality of records and to protect against known and anticipated threats," CAC ¶ 123, and by "unreasonably failing to safeguard its security credentials and Plaintiffs' [government investigation information]." CAC ¶ 122. But these general statements do not supply any facts and do not state a claim for breach of contract. Plaintiffs allege that KeyPoint "lack[ed] software logs to track malware entering its systems and data exiting its systems," id. ¶ 121, but they can point to no provision of the contract between OPM and KeyPoint requiring those measures. A plaintiff must provide "factual content [in her complaint] that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged," Brown v. Sessoms, 774 F.3d 1016, 1020 (D.C. Cir. 2014), quoting Iqbal, 556 U.S. at 678, 129 S.Ct. 1937, and those facts are lacking here.
Finally, plaintiffs make only conclusory allegations that KeyPoint exceeded its authority in executing its contract with OPM. See CAC ¶ 122 (alleging that "[b]y unreasonably failing to safeguard its security credentials and Plaintiffs' and Class members' [government investigation information], KeyPoint departed from its mandate, exceeded its authority, and breached its contract with OPM"). These allegations offer no more than "labels and conclusions" and so they do not suffice to state a claim. Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (2009), quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955.
3. Even if KeyPoint acted negligently, it did not lose its sovereign immunity.
Finally, plaintiffs maintain that "derivative sovereign immunity is not available to contractors who act negligently in performing their obligations under the contract." CAC Pls.' Opp. at 62, quoting In re Fort Totten Metrorail Cases, 895 F.Supp.2d 48, 74 (D.D.C. 2012). But Fort Totten does not eliminate contractor immunity any time a plaintiff alleges negligence by government contractor.
Applying the doctrine of derivative immunity for government contractors for the first time in this circuit, Fort Totten involved a claim against a subcontractor that had agreed to replace certain safety features on train tracks and conduct safety tests of those features. 895 F.Supp.2d at 72-73. The plaintiffs asserted that the subcontractor "negligently failed to perform safety and compatibility testing in violation of its contractual obligations and applicable standards of care," but the contractor asserted it had derivative sovereign immunity under Yearsley. Id. at 74-75. The purported sovereign entity, Washington Metropolitan Area Transit Authority ("WMATA"), filed cross-claims against
In deciding whether the subcontractor had immunity, the court analyzed the various claims against the subcontractor, considering whether they were predicated on the subcontractor carrying out its contract with WMATA or on the subcontractor's breach of that contract and negligence in performing its obligations under the contract. Id. WMATA asserted that the subcontractor was required by the contract to ensure the compatibility of certain products to perform the requisite safety testing but failed to carry out these obligations. Id. Thus, the court concluded, "the very premise of these claims is that [the contractor] acted against the `will of the sovereign' by breaching its contractual duties to [the sovereign entity] and by performing negligently under the contract," undermining the contractor's attempt to invoke derivative immunity. Id. The court held that the contractor was "not entitled to derivative sovereign immunity under Yearsley as to these claims." Id.
The instant case is distinguishable from Fort Totten, which involved the unique circumstance where the governmental entity itself was making the allegation. Here, plaintiffs provide only conclusory allegations that KeyPoint exceeded its authority or acted negligently, and its conclusory allegations are based on its contentions that KeyPoint violated FISMA and breached its contract with OPM. See CAC ¶¶ 122-24. But as explained above, plaintiffs do not identify any contract provisions that KeyPoint allegedly violated, and their claims that it violated federal law cannot stand. And importantly, the sovereign in this case, OPM, does not disavow the actions of KeyPoint. Indeed, the complaint indicates as much, alleging that "OPM did not terminate or suspend its contract with KeyPoint." CAC ¶ 5. Thus, plaintiffs fail to plead facts sufficient to allege that KeyPoint violated OPM's explicit instructions or exceeded its authority under its contract with the agency.
Accordingly, all of plaintiffs' claims against KeyPoint will be dismissed for lack of subject matter jurisdiction.
C. Claims against both defendants for declaratory judgment and injunctive relief will be dismissed for lack of subject matter jurisdiction.
Finally, the Court will dismiss the CAC plaintiffs' Count IV, which seeks a declaration that defendants' conduct is unlawful, a judgment requiring them to indemnify plaintiffs for their economic injury and provide "free lifetime identity theft protection services," and an order that
CONCLUSION
For the reasons set forth above, the Court will dismiss plaintiffs' Consolidated Amended Complaint and the NTEU Complaint for lack of subject matter jurisdiction based on both standing and sovereign immunity grounds, and the Court also finds that the CAC fails to state a claim under the Privacy Act and the Little Tucker Act, and that the NTEU complaint fails to state a constitutional claim. A separate order will issue.
FootNotes
There are no additional questions in the form that seek financial information.
The complaints do not suggest that "the fruits of the data breach" were used for the alleged identity thefts because, as noted above, they do not allege that OPM or KeyPoint maintained the account numbers that were used improperly, nor do they allege that the government forms compromised in the breaches call for that information. The CAC states conclusorily that "[s]tolen federal job applications and investigation forms contain ... financial records that include bank account and credit card information," CAC ¶ 146, but that allegation is belied by the forms themselves, and no individual plaintiff alleges that he or she provided a credit card, debit card, or bank account number. One individual NTEU plaintiff alleged that through the SF 85P and 86 "he disclosed or authorized the release to OPM of, among other information ... financial information (including his investment accounts)," NTEU Compl. ¶ 6; another simply alleges that "financial information" was provided, NTEU Compl. ¶ 8; and the third individual plaintiff does not mention finances at all. NTEU Compl. ¶ 7. And both complaints are devoid of allegations that would provide "a clear indication that the data breach was for the purpose of using the plaintiffs' personal data to engage in identity fraud." Khan, 188 F.Supp.3d at 532.
Plaintiffs contend that they have shown injury in fact anyway because they allege that the breaches were "a targeted and malicious attack," and not an inadvertent part of an ordinary burglary such as the theft of the laptop in the SAIC case. CAC Pls.' Opp. at 17-18, citing Pisciotta v. Old Nat. Bancorp, 499 F.3d 629, 632 (7th Cir. 2007); Am. Fed'n Gov't Emps. v. Hawley, 543 F.Supp.2d 44, 45, 50-51 (D.D.C. 2008). But these non-binding cases were decided before Clapper, and the standing decisions did not turn whether the data theft was targeted or malicious, rather than inadvertent.
In Pisciotta, the Seventh Circuit did not rely on the nature of the hack when ruling that plaintiffs had standing; it simply disagreed with the line of cases requiring plaintiffs whose data has been compromised to experience a misuse of the data in order to state an injury in fact. 499 F.3d at 634. Similarly, the standing decision in Hawley did not turn on the nature of the theft of personal data. 543 F.Supp.2d at 50. More importantly, these cases predate Clapper, which made clear that "[a]llegations of possible future injury are not sufficient." 568 U.S. at 409, 133 S.Ct. 1138, quoting Whitmore v. Arkansas, 495 U.S. 149, 158, 110 S.Ct. 1717, 109 L.Ed.2d 135 (1990) (emphasis added) (internal alterations and quotation marks omitted). In other words, the allegation that the breaches of OPM and KeyPoint were "targeted and malicious" does not eliminate the requirement that plaintiffs' potential harm be certainly impending or, at least, that the risk of harm be "substantial."
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