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Friday, 13 May 2011 - Lawyers take aim at Sony hack, may miss on payout |
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    Edition: U.S. Article Comments (0) Follow Reuters Facebook Twitter RSS YouTube Read Exxon says oil barrel should be in $60-$70 range 11:43am EDT German court convicts then frees Nazi guard Demjanjuk | 4:21pm EDT U.S. attacks militants in Pakistan as pressure grows | 4:18pm EDT Penelope Cruz adds spice to enjoyable "Pirates 4" 11:28am EDT Senator describes "gruesome" bin Laden photos 11 May 2011 Discussed 148 Obama at U.S. base to pay tribute to bin Laden mission 114 Son says bin Laden sea burial demeans family: report 66 Pakistan threatens U.S. on cooperation if more raids Watched Deadly earthquake rocks Spain Wed, May 11 2011 Russia 'shot down Georgia' drone Mon, Apr 21 2008 Commodities sink as dollar rebounds 2:47am EDT Lawyers take aim at Sony hack, may miss on payout Tweet Share this By Dan Levine SAN FRANCISCO (Reuters) - The recent hacker attack at Sony Corp and other corporate data breaches are attracting more class-action lawyers eager to score a payday, though huge monetary settlements may be elusive. At least 25 lawsuits... Email Print Related News Special report: Chinese stock scams are the latest U.S. import 1:16pm EDT Sony defends speed of notification of data breach Sat, May 7 2011 Sony says "Anonymous" set stage for data theft Wed, May 4 2011 UPDATE 3-Sony hires firms to clean up after breach Tue, May 3 2011 UPDATE 2-U.S. Sarbanes law doesn't protect media leaks-court Tue, May 3 2011 Analysis & Opinion Consumer groups embrace “do not track” bill Tech wrap: Microsoft’s Skype deal roasted Related Topics Technology Home » Media » Stocks     A person plays a video game at a Sony Playstation in the Sony's flagship store in Berlin, April 27, 2011. Credit: Reuters/Thomas Peter By Dan Levine SAN FRANCISCO | Thu May 12, 2011 1:22pm EDT SAN FRANCISCO (Reuters) - The recent hacker attack at Sony Corp and other corporate data breaches are attracting more class-action lawyers eager to score a payday, though huge monetary settlements may be elusive. At least 25 lawsuits have been filed against Sony in U.S. federal courts over the theft of user data from the PlayStation game network, according to Westlaw, a Thomson Reuters Corp legal database. The lawsuits accuse Sony of negligence and breach of contract for allowing the personal data of more than 100 million online video game users to be compromised and stolen. The challenge for plaintiffs' lawyers in security breach cases is not proving liability on the part of companies, but establishing damages, according to attorneys involved in this kind of litigation. Sony has been criticized for not telling customers quickly enough last month that their personal data was compromised. The consumer electronics company said it is possible that whoever broke into Sony's system made off with about 12.3 million credit card numbers. "Had Sony properly secured its database through known and available encryption methods, even if a hacker were able to enter the network, he would be limited in his ability to inflict harm," one lawsuit says. A Sony representative declined to comment. The company has apologized to its customers. Judges are just beginning to address whether the disclosure of someone's personally identifiable information (PII) represents a loss of value, or if plaintiffs must show they suffered additional costs because of a hack. Last month, a federal judge in Oakland, California, declined to dismiss a proposed class-action lawsuit over a 2009 data breach at RockYou, which develops applications for Facebook and other social networking sites. The plaintiffs claim they provided PII in exchange for products and services. U.S. District Judge Phyllis Hamilton found that allegation sufficient to allow the lawsuit to move forward, but ruled that the case will fail if the plaintiffs cannot demonstrate tangible harm from the breach. Still, with even more personal information spreading online via cloud computing, which allows users to store files on the Internet, some plaintiffs' attorneys think the dollar awards will get bigger. "The breaches will become more spectacular in the future," said Ira Rothken, a San Francisco-based lawyer who handles privacy class actions. Rothken filed a motion on Monday to consolidate all the Sony lawsuits in the District Court for the Northern District of California. The FBI and attorney general in New York also are investigating the security breach. Data breach cases also have attracted larger class-action law firms that are better known for bringing shareholder securities fraud litigation. Milberg LLP, a veteran securities class-action law firm, is among those that have filed lawsuits over the Sony incident. The firm started to devote resources to online class actions "within the last year or so," partner Peter Seidman said. San Diego-based Robbins Geller Rudman & Dowd LLP, the national class-action firm started by one-time Milberg defector William Lerach, also sued Sony. If the lawsuits were consolidated, a judge would decide which lawyers will represent the plaintiffs -- and be in line to recoup most of the fees. A boutique law firm representing the RockYou plaintiffs, Edelson McGuire in Chicago, is also representing plaintiffs in the Sony case. The firm, which has long litigated data breach and Internet privacy lawsuits, has grown from five to 20 attorneys over the last three years, partner Jay Edelson said. There have been 190 reported data breaches this year, up from 142 in all of 2005, according to a tracking database maintained by the Open Security Foundation. In 2010, the number of reported breaches stood at 493, down from 624 the year before. But Internet privacy-related lawsuits do not yield the nine-figure settlements that can be found in classic securities fraud cases, Edelson said. Attorneys' fees in breach cases have historically topped out at $7 million to $8 million, he said. One of the largest early data breach cases, involving Internet advertising company Doubleclick, settled in 2002 and paid $1.8 million in legal fees. Companies will often propose solutions like free credit monitoring as part if a settlement. Indeed, Sony has already offered its customers complimentary enrollment in an identity theft protection plan. Karen Johnson-McKewan, a partner at Orrick, Herrington & Sutcliffe LLP who defends technology companies, said privacy cases could be more popular with plaintiff lawyers as the U.S. Supreme Court makes it more difficult to pursue other kinds of class actions. "This looks like potentially rich vein in their view," she said. (Reporting by Dan Levine. Editing by Robert MacMillan) Technology Home Media Tweet this Share this Link this Digg this Email Reprints   We welcome comments that advance the story directly or with relevant tangential information. We try to block comments that use offensive language, all capital letters or appear to be spam, and we review comments frequently to ensure they meet our standards. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. Comments (0) Be the first to comment on reuters.com. Add yours using the box above. Social Stream (What's this?) © Copyright 2011 Thomson Reuters Editorial Editions: Africa Arabic Argentina Brazil Canada China France Germany India Italy Japan Latin America Mexico Russia Spain United Kingdom United States Reuters Contact Us Advertise With Us Help Journalism Handbook Archive Site Index Video Index Reader Feedback   Mobile Newsletters RSS Podcasts Widgets Your View Analyst Research Thomson Reuters Copyright Disclaimer Privacy Professional Products Professional Products Support Financial Products About Thomson Reuters Careers Online Products Acquisitions Monthly Buyouts Venture Capital Journal International Financing Review Project Finance International PEhub.com PE Week FindLaw Super Lawyers Attorney Rating Service Reuters on Facebook Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests. NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq delayed by at least 15 minutes. For a complete list of exchanges and delays, please click here.

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