While Illinois courts Amazon, privacy litigation threatens tech firms, Illinois employers
October 27, 2017

While Illinois courts Amazon, privacy litigation threatens tech firms, Illinois employers

The flood of biometric privacy litigation engulfing tech companies and employers should make the General Assembly think twice before passing new regulations that could increase costs and compliance burdens for companies.

Illinois’ political leaders are pulling out all the stops to lure Amazon’s second North American headquartersto the Prairie State. Billions in combined state tax credits, local incentives and infrastructure spending are reportedly on offer. The urgent desire to keep Illinois in play as a potential home for the online retail giant’s HQ2 has even made unlikely partners of Gov. Bruce Rauner, Chicago Mayor Rahm Emanuel and Cook County Board President Toni Preckwinkle.

Yet despite the herculean efforts to entice Amazon to set up shop in the Land of Lincoln, tech industry and business organizations have raised concerns that many state politicians and special interest groups are making Illinois inhospitable to tech firms and businesses in general.

Steve DelBianco, the president and CEO of e-commerce association NetChoice, in an Oct. 24 op-ed in The State Journal-Register called out “over-regulations” and “special interest attorneys” for “placing more hurdles on the path to prosperity for Illinois’s tech scene.” And Todd Maisch, CEO of the Illinois Chamber of Commerce, warned “against measures that limit our potential and hurt our overall business climate” in an article in the Quad City Times.

DelBianco criticized the flurry of class-action litigation under Illinois’ Biometric Information Privacy Act, or BIPA, which he said plaintiffs’ attorneys are pursuing “to increase their bottom line while harming some of our country’s leading tech companies.”

The BIPA was enacted in 2008 to safeguard biologically derived, or biometric, information, such as fingerprints, facial images and iris scans. It is the most stringent law of any state regarding the consent, notice and disclosure procedures private entities must follow when collecting, storing or using people’s biometric information. The BIPA gives private parties the right to sue for violations of the act and to collect the greater of $1,000 or actual damages for each violation negligently committed, and the greater of $5,000 or actual damages for each violation recklessly or intentionally committed. Plaintiffs can also collect attorneys’ fees and costs under the BIPA.

Since 2015, Illinois consumers have sued under the BIPA for alleged violations by companies that use facial-recognition technology, such as Facebook, Shutterfly, Google, Snapchat, Take-Two Interactive Software, Wow Bao and others, as well as companies that have used fingerprint scans, such as L.A. Tan.

In 2017, scores of employers have been hit with class-action lawsuits by Illinois employees for alleged violations of the BIPA, mostly in connection with the use of fingerprint-operated time-tracking machines. Since July, more than 30 class-action lawsuits against employers have been filed in Illinois under the BIPA, according to employment lawyers at Baker & Hostetler LLP. Those employers facing BIPA lawsuits range from Speedway LLC, a gas station and convenience store chain, to Alliance Ground International LLC, which provides cargo, mail and ramp handling services to airlines, to Paramount of Oak Park Rehabilitation & Nursing Center LLC, a nursing home.

In addition to class-action BIPA lawsuits, which employment lawyers at Quarles & Brady LLP have warned could be ruinous for employers, DelBianco noted as anti-business the “pro-lawsuit” bills that have been pushed in Springfield. These include several internet privacy bills introduced in the General Assembly during the spring legislative session. These bills – the Right to Know Act, the Geolocation Privacy Protection Act and the Microphone-Enabled Devices Act – would impose consent, notice, disclosure and security requirements on private entities with regard to the handling of people’s online information, geolocation information and the microphones on people’s devices.

Only the geolocation bill passed both chambers of the General Assembly. Maisch criticized the Geolocation Privacy Protection Act, as “creat[ing] solutions to problems that don’t exist, then pass[ing] along the costs to consumers, … benefitting Illinois’ legal community at the expense of everyone else.” Rauner vetoed the bill in September, explaining it would have contributed “to Illinois’ existing burden of red tape … [and] hurt Illinois’ growing reputation as a destination for innovation-based job creation.”

Some have urged an override of the governor’s veto of the geolocation privacy bill. Among the proponents of an override is the Digital Privacy Alliance, a digital privacy advocacy group whose board members include a partner at Edelson PC, the law firm that has brought several privacy-law class-action lawsuits, including some under the BIPA. In an op-ed in The State Journal-Register, Jeff Hamburg, the policy director for the Digital Privacy Alliance, notes the geolocation bill vetoed by Rauner only allows the attorney general or a state’s attorney to enforce it and thus does not encourage “court-clogging litigation.” Yet Hamburg does not mention that the original version of the bill did indeed allow individuals to sue and collect the greater of $1,000 or actual damages, along with attorney’s fees. Nor does Hamburg explain that state’s attorneys and the attorney general could themselves file geolocation privacy lawsuits against companies – and hire private attorneys to conduct them.

While privacy concerns in the internet age are real, the flood of potentially devastating class-action litigation against Illinois employers and tech companies should give lawmakers pause. There’s no doubt Illinoisans need more, not fewer, job opportunities. If the state is as eager to put out the welcome mat for innovators and job creators as some of its leaders would suggest, the General Assembly should think twice before passing a bevy of new digital regulations that could increase costs and compliance burdens for companies.

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