MICHAEL L. RUSTAD & THOMAS H. KOENIG*
Extending Learned Hand’s Negligence Formula
Information Security Breaches
Abstract: Negligent security policy is at the heart of recent data theft disasters
involving identity fraud and the misappropriation of electronic information. Several
statutes already give the state attorneys general or federal officials the right to seek
penalties against any company that fails to disclose security breaches when consumer
data has been compromised. However, no state or federal security breach
notification statutes give the victims of data theft a private cause of action for data
theft. At present, the combination of the economic loss rule, present injury
requirements, and the lack of a judicially created duty to secure data, presents an
insurmountable barrier to individual recovery for negligent data handling.
Companies use contractual devices such as “hold harmless” clauses and
indemnification to shift the costs of data theft to users. This article argues that
Learned Hand’s famous risk/utility test should be extended to create a duty to secure
computer systems applicable against companies that hold sensitive personal
information. The victims of negligent information security should be allowed to
recover damages from the data handlers whose failure to implement reasonable
security enables data theft. This negligent enablement theory of tort liability will
create the necessary policy incentives for companies to develop comprehensive
security solutions that will prevent data intrusions.
* Michael L. Rustad Ph.D., J.D., LL.M. is the Thomas F. Lambert Jr. Professor of Law and
Co-Director of the Intellectual Property Law Concentration at Suffolk University Law School
in Boston, Massachusetts. Professor Thomas H. Koenig chairs Northeastern University’s
Sociology and Anthropology Department and is on the Executive Committee of its Law,
Policy & Society Doctoral Program. The authors would like to thank Suffolk University Law
School reference law librarian Diane D’Angelo for her assistance in locating sources and
Carla Bulford of The Ohio State University Moritz College of Law for her helpful editorial
I/S: A JOURNAL OF LAW AND POLICY
The seamless interconnectivity of cyberspace is both the Internet’s
greatest strength and its Achilles heel. The failure of companies to
anticipate and guard against security risks is a “time bomb ready to
explode.” 2 Inadequate computer security is already a public relations
disaster and may soon become a legal disaster unless comPanies
anticipate and protect themselves against unauthorized access. In a
recent survey of corporate executives, the concern over insecure
corporate information systems topped the list of worries, exceeding
even the fear of terrorism.4 Current computer industry precautions are
insufficient to protect confidential consumer and company data from
third-party hackers or cybercriminals.
The widespread failure of information security is enabling a
worldwide epidemic of cybercrime. 5 In March of 2007, TJ Maxx
Companies, Inc. (TJX) disclosed that an unknown intruder
compromised the security of 45.6 million credit card numbers
1 See EDUARDO GELBSTEIN & AHMAD KAMAL, INFORMATION INSECURITY: A SURVIVAL GUIDE
TO THE UNCHARTED TERRITORIES OF CYBER-THREATS & CYBER-SECURIrY 2 (2d ed. 2002),
available at http://www.itu.int/wsis/docs/background/themes/security/
informationinsecurityed.pdf (“This profound integration of computers and information
technology is obviously the strength of modem life, but it is also its vulnerability. The greater
the vulnerability, the greater the ease with which it can be exploited.”); see also Michael L.
Rustad & Lori Eisenschmidt, The Commercial Law of Internet Security, 10 J. hIGH TECH. L.
213, 216 (1995) (explaining that cybercriminals may easily exploit several vulnerabilities at
the server level).
2 The Challenge of Electronic Data: Corporate Legal Obligations to Provide Information
Security, WALL STREET LAWYER: SECURITIES IN THE ELECTRONIC AGE, March 2006, at 1,
available at http://www.wildman.com/index.cftn?fa=attomey.bio&biolD=
3C9D 1202-BDB9-4A1 0-5D7B92567DDF568A (last visited Nov. 5, 2007).
4 The Harris Interactive Survey of Crisis Situations and Extent of Worry, Data Security Study,
Table 1 (reporting the compromise of corporate information systems to be a major worry for
61% of the 197 senior executives polled. Fifty-five percent of the respondents listed terrorism
as a “major worry.”).
5 The number of high profile data thefts or losses is skyrocketing. Not a month goes by
without a number of high profile data disasters. Privacy Rights Clearinghouse, A Chronology
of Data Breaches Updated, PRIVACYRIGHTS.ORG, http://www.privacyrights.org/ar/
ChronDataBreaches.htm#CP (last visited Nov. 5, 2007). See also, Christopher L. Sorey, The
Hidden Risks of Outsourcing: Is Your IP Safe Abroad?, 1 Am. U. Bus L. Brief 33 (2005),
available at http://www.wcl.american.edu/blb/O 1/2sorey.pdfrd= 1.
RUSTAD & KOENIG
associated with 451,000 American consumers. 6 ChoicePoint
inadvertently compromised sensitive consumer data by negligently
selling personal information to cybercriminals masquerading as
legitimate companies. 7 Citigroup Bank and Financial Services lost
computer tapes containing the personal data of 3.9 million customers.
MCI recently compromised the records of 16,500 current and former
employees due to the theft of an employee’s laptop. 9
Thirty-seven organizations reported the loss of personally
identifiable computer files containing social security numbers, account
numbers, and other personal information in May of 2007 alone. 10
Public institutions such as Louisiana State University, University of
Missouri and the University of California Irvine Medical Center were
among these data theft victims. l l Pillars of the corporate
establishment such as J.P. Morgan, IBM, and Priority One Credit
Union were also victimized. 1
2 While state and federal statutes require
companies to provide notice of data breaches, no statute gives
consumers a private cause of action for negligent security.
This article examines the duty to provide reasonable security to
protect computer systems from data theft by third-party criminals. The
unsettled legal issue is what duty, if any, a company owes to thirdparty customers with regard to the measures the company takes to
protect sensitive data. We argue that companies have a duty to
provide reasonable information security practices under the common
law of torts. 13 Expanded legal liability is necessary to convince
6 Jaikumar Vijayan, TJXData Breach. At 45.6 Million Card Numbers, It’s the Largest Ever,
COMPUTERWORLD SECURITY, March 29, 2007, http://www.computerworld.com/action/
article.do?command=viewArticleBasic&articleld=9014782&sourcerssnews 10 (last visited
Nov. 5, 2007).
8 MSNBC Staff, Citi Notifies 3.9 Million Customers of Lost Data, MSNBC.coM, June 7, 2005,
http://www.msnbc.msn.com/id/8119720/ (last visited Nov. 5, 2007).
9 Robert McMillan, MCI Employee Data Stolen in Laptop Theft, CNN.coM, May 23, 2005,
http://www.computerworld.com/mobiletopics/ mobile/story/0, 10801,101958,00.html (last
visited Nov. 5, 2007).
10 Privacy Rights Clearinghouse, supra note 5.
13 One commentator contends that companies already have a duty to provide reasonable
computer security and a duty to disclose data breaches should they occur. Thomas J.
I/S: A JOURNAL OF LAW AND POLICY
companies to take data protection more seriously in order to address
the foreseeable risks resulting from negligently designed or negligently
implemented computer security systems.
The best analytical approach for crafting this new duty involves
determining whether the burden of a comprehensive security solution
is less than the magnitude of the damages caused by lost or stolen data,
multiplied by the probability of occurrence. A major consideration in
the decision to impose liability for negligent security is whether a
company could have foreseen the particular harm resulting from its
existing security precautions and whether cost effective measures
would have significantly reduced the risk. At present, neither
consumers nor companies have any meaningful remedy for crossborder breaches of data protection. 14 In a world of corporate
accountability, companies should not be free to reallocate the risk of
data theft to consumers or to its business customers through
contractual devices such as “hold harmless” clauses and
indemnification agreements. For example, companies may not use
these contractual devices to bypass their duty to maintain reasonable
security of financial information under the Sarbanes-Oxley Act. 5 Nor
can healthcare providers side-step their duty to protect patient data
under the Health Information, Portability and Accountability Act. 16
Outsourcers of products already routinely use “hold harmless”
indemnity clauses in supply chain contracts to protect themselves
against vendors or suppliers that violate child labor laws or
Smedinghoff, Security Breach Notification-Adapting to the Regulatory Framework, THE
REVIEW OF BANKING & FINANCIAL SERVICES, Dec. 2005, at 12, available at
= (last visited Nov. 10, 2007).
14 Erin S. Davis, A World Wide Problem on the World Wide Web: International Responses to
Transnational Identity Theft via the Internet, 12 WASH. U. J.L. & POL’Y 201, 201 (2003)
(stating that the difficulty of developing cyberspace remedies lies in the radically divergent
legal traditions of countries connected to the Internet).
15 15 U.S.C. Â§1741, 7262 (2007).
16 Health Information, Portability & Accountability Act, 42 U.S.C. Â§Â§ 1320d-2, 1320d-4
RUSTAD & KOENIG
environmental standards. 17 Outsourcing information or data
processing “does not relieve a company” of its security obligations.1 8
This article argues for a general standard of care that requires the
implementation of reasonable information security practices to protect
against unauthorized access. Courts should strike down exculpatory
clauses on public policy grounds because data handlers perform a
necessary service of great importance to the public. 19 Exculpatory
clauses are entirely appropriate for hazardous recreational activities
such as skydiving but should not be enforceable for information
security breaches. Recreational activities such as skydiving are wholly
optional in every way. Consumers who engage in such recreational
activities do so by choice and assume the attendant risk; in contrast,
consumers have no ability to control or change the data flow crossing
international borders. A consumer is dependent upon the ability of the
company he or she contracts with to adopt reasonable information
security practices. Therefore information security should not be able
to be disclaimed or waived. 0 Consumers, unlike companies, are not in
a position to bargain over the nature of the computer security
employed in transmitting their personal data.21
A growing number of state and federal statutes already require
companies to notify customers of data theft. The duty to disclose
should be extended to a general duty to secure their computer systems
and to safeguard customer data. Private consumers should be armed
with a private cause of action in the event a company fails to
incorporate cost-justified precautions to secure their computer systems.
Similarly, companies that outsource data should be found negligent for
failing to conduct reasonable security audits of any party in the
distribution chain that handles consumer or company data. While there
are many competing ways to set the standard of care for computer
17 Howard B. Whitmore, You ve Outsourced the Operation, But Have You Outsourced the
18 Smedinghoff, supra note 13 (contending that outsourcing company has a continuing duty of
care to provide adequate computer security).
19 The Wisconsin Supreme Court defined exculpatory clauses as those “‘which relieve a party
from liability for harm caused by his or her own negligence.” Merten v. Nathan, 321 N.W.2d
173, 176 (1982).
20 Smedinghoff, supra note 13 (the author reviews both state and federal law provisions that
require security breach notification).
21 Richards v. Richards, 513 N.W.2d 118, 128 (1994) (explaining that exculpatory clauses
should not be enforced where there is no “opportunity to bargain”).
I/S: A JOURNAL OF LAW AND POLICY
security, the famous Learned Hand risk/utility formula is the most
appropriate test of negligent computer security. 22 In order to pass the
Learned Hand test, companies need to implement reasonable security
to eliminate excessive, preventable dangers. Learned Hand’s
risk/utility test will supplement but not supplant the negligence
standard used by industries which already recognize a duty to
implement reasonable computer security imposed by statute or as
negligence per se.
II: FORGING A DuTY OF CARE TO PROTECT THIRD PARTIES FROM DATA
A. LEARNED HAND’S RISK/UTILITY FORMULA
A company’s failure to secure financial data, which results in
injury to a consumer, will violate the Gramm-Leach-Bliley Act if the
company has not implemented a comprehensive information security
program. In the future, consumers can use such statutes to argue that
a company’s actions are negligent per se.24 Negligence per se is a
particularly powerful tool in the hands of a plaintiff because the
statutory violation is used to prove both the duty and the breach of the
standard of care for information security. No plaintiff has successfully
employed a negligence per se argument in a computer security case. It
is arguable that Congress did not intend to provide private plaintiffs
with a cause of action.2 5 In the absence of a statutorily defined duty to
maintain adequate computer security, injured consumers will likely
turn to the common law of negligence.
The modem approach to negligence adopts the Learned Hand test,
first articulated in United States v. Carroll Towing Co.,26 which
requires that fact finders determine whether the burden of precautions
prohibitively exceed the expected costs of accidents or injuries. In
22 A consumer injured by a company’s failure to give notice of a security breach already has a
negligence per se cause of action. However, no court has permitted a consumer to use federal
or state statutes in a lawsuit based upon the failure to implement reasonable security.
23 15 U.S.C. Â§Â§ 6801, 6805 (2007).
24 Posting of Julie Michal-Fuiks to Scott & Scott, LLP, http://blawg.scottandscottllp.com/
businessandtechnologylaw/2007/08 (Aug. 20, 2007, 09:03 CST).
26 159 F.2d 169 (1947).
RUSTAD & KOENIG
Carroll Towing, a barge named “Anna C” sunk when it was struck by
a breakaway barge that escaped from its moorings due to a strong wind
that exacerbated the negligence of Carroll Towing’s employee in
improperly securing its tethering lines.27 The trial court found that the
Anna C’s owner was contributorily negligent for failing to have
someone aboard to reduce the damage to other vessels if the barge
broke away. Judge Learned Hand noted that because there was no general
industry rule that required having an attendant on board at all times,
the barge owner’s duty was a function of three variables: (1) the
probability that a vessel would break away; (2) the damages or
resulting inury if it did; and (3) the burden of the adequate
precaution.2 The Learned Hand formula dictates a finding of
negligence, “if the probability be called P; the injury, L; and the
burden, B; liability depends upon whether B is less than L multiplied
by P: i.e., whether B < P * L.”29 If the damage could be avoided by
taking precautions at very little cost, then, even if the risk is slight, the
safety step is cost-justified because the burden, B, is less than the
probability of the accident multiplied by the gravity of the injury.
While Judge Learned Hand did not apply either empirical data or
expert testimony to quantify these variables, he nevertheless
apportioned liability because the owner of the Anna C could have
taken cost-justified precautions. 30 The American Law Institute
adopted a modified version of the Learned Hand test in the
Restatement (Second) of Torts, which defines negligence as an activity
in which the magnitude of the risk outweighs the utility.3 A low
271d. at 171.
21d. at 173.
30 In Carroll Towing, the court apportioned damages between the defendant and the careless
plaintiff who failed to take cost-justified precautions. Id. As Judge Posner notes: “It is a
bedrock principle of negligence law that due care is that care which is optimal given that the
potential victim is himself reasonably careful; a careless person cannot by his carelessness
raise the standard of care of those he encounters.” McCarty v. Pheasant Run, 826 F.2d 1554,
1557-58 (7th Cir. 1987).
31 Unreasonable risks are those of “such magnitude as to outweigh what the law regards as the
utility of the act …. RESTATEMENT (SECOND) OF TORTS, Â§ 291 (1965).
I/S: A JOURNAL OF LAW AND POLICY
probability risk that would result in limited damage does not justify
costly precautions. 32
B. EXTENDING THE LEARNED HAND FORMULA TO NEGLIGENCE THAT
ENABLES DATA THEFT
The Learned Hand formula is flexible enough to set the standard of
care for a broad range of negligent data handling scenarios. Learned
Hand’s risk/utility formula can be readily adapted to set a standard of
care for computer security because the total costs and probability of
computer security breaches can be compared to the cost of instituting
strong security measures. The cheaper the information security
precaution, the greater the risk of data theft and the greater the harm
caused by the cybercriminal, the more likely it is that the failure to
take the precaution was negligent.
The first step in applying a risk/utility test for data negligence is to
define the radius of the risk signified by “P” in the Learned Hand
formula. Two kinds of probabilities must be determined. First, there
is the probability that data will be lost or stolen due to a company’s
failure to implement comprehensive security solutions. Second, there
is the probability that data will be accessed and misused by third-party
criminals. As the probabilities of both of these events increases, the
duty to take precautions also increases. If the events have a low
probability of occurring then the burden of an extensive precaution is
not cost-justified. A company laptop stolen in the course of a routine
home burglary presents a low-level probability that the information on
the computer will be exploited because the common thief has no
interest in misappropriating data. In contrast, an organized
cybercriminal group that hacks into a company’s website is likely to
exploit purloined credit card numbers since the thieves are targeting
information, not tangible property.
The second step is to determine the “L” in the Learned Hand
formula, which is the potential loss if the company fails to invest in the
precaution that would have prevented the loss. Companies are more
likely to be required to enhance data security where the potential
losses due to data theft are unacceptably high. The misappropriation
of trade secrets due to negligently secured software, for example,
32 Blyth v. Birmingham Waterworks, 11 Exch. 781 (1856) (finding that the defendant was not
liable for having failed to take precautions to prevent water mains from freezing due to an
unprecedented cold snap).
RUSTAD & KOENIG
poses the risk of substantial and irreparable harm because these
intangible assets are often a company’s crown jewels.
A company is only negligent in Learned Hand’s formula if the
burden of precaution (“B”) is less than the estimated costs of a data
intrusion (“P * L”). Therefore, under the formula B < P * L, a
company is negligent in failing to take cost-justified precautions when
the burden of the precaution: employing encryption, enhanced
employee training, or other security measures, is less than the
probability of data theft multiplied by the loss that results from data
theft. The Learned Hand formula is of greater analytical than
operational significance because precise empirical data for
“operationalizing” these variables rarely exists. 33
Predicting the true cost of a data breach is challenging because it is
difficult to accurately estimate the costs created which may include:
lost employee productivity, legal fees, call centers, and the loss of
future customers, before the breach takes place. 34 A recent empirical
study conducted by Forrester Research Inc. concludes that the average
security breach costs between $90 and $305 per lost record. 35 An
earlier survey of senior executives in domestic corporations, released
in 2006, provides additional data about the cost of security breaches. 36
Respondents estimated the average direct cost of a data breach to be
$4.7 million; amounts ranged from $226,000 to $22 million. The
direct incremental costs included $54 per lost record, which was an
increase of 8% over 2005. 37 These estimates only include directly
measurable costs, not the additional expenses of lost executive time,
” McCarty, 826 F.2d at 1557 (noting that “the parties do not give the jury the information
required to quantify the variables that the Learned Hand Formula picks out as relevant. That is
why the formula has greater analytic than operational significance. Conceptual as well as
practical difficulties in monetizing personal injuries may continue to frustrate efforts to
measure expected accident costs with the precision that is possible, in principle at least, in
measuring the other side of the equation — the cost or burden of precaution.”).
34 Sharon Gaudin, Security Breaches Total $90 to $305 Per Lost Record, INFORMATION WEEK,
April 11, 2007, http://www.informationweek.com/news/
showArticle.jhtml?articlelD= 199000222 (last visited Nov. 6, 2007).
35 Sharon Gaudin, How Much Would Data Theft Cost You? Calculate it Online, INFORMATION
WEEK, April 11, 2007, http://www.informationweek.corn/software/
showArticle.jhtml?articlelD=199000336 (last visited Nov. 6, 2007).
36 Ponemon Institute, LLC, 2006 Annual Study: Cost of a Data Breach: Understanding
Financial Impact, Customer Turnover, and Preventative Solutions, 2006, at 2, available at
US: A JOURNAL OF LAW AND POLICY
foregone business opportunities, litigation expenditures and various
other high costs.38
The radius of the risk of data intrusion has dramatically increased
with the rise of computer-based data networks and thus, the burden of
precaution can be staggering. While the cost of encrypting data may
be easily cost-justified, many other measures such as enhanced
employee training, outside security consultancies, data monitoring, and
security audits of every party in a data transmission stream are
While reliable data on the incidence of security intrusions is not
available, courts can take judicial notice of the number of high profile
data intrusions in recent months. A security firm recently developed a
cost calculator for measuring the scope of negative financial impact in
identity theft or data breach scenarios. This cost calculator can be
adapted to produce the cost element in the Learned Hand formula.
This calculator automatically generates “an average cost, and a
plus/minus 20% range, for expenses associated with internal
investigation, notification/crisis management and regulatory/
compliance if the incident at issue were to give rise to a class action
claim” based on the number of affected records. For a company, the
foreseeable costs include attorneys fees, computer consultant costs,
payments to outside security experts, fortified data security solutions,
augmented data monitoring, customer support, call center monitoring,
certified mail notification to victims of data loss, media management,
regulatory compliance and the possibility of FTC penalties or fines
from other state or federal entities. 40 The cost calculations will be
more complex for outsourced data because of political uncertainties,
employment policies and workplace conditions in Third World
countries.4 1 The next section applies the Learned Hand formula to the
most common recent data intrusions which have occurred within U.S.
38 Id. at 8 (Indirect productivity costs for lost employee productivity were estimated at $30 per
record or $800,000. Customer opportunity costs including brand damage and impact on new
business was projected to be $98 per record or $2.6 million per company.).
39 Tech404, Data Loss Calculator, http://www.tech-404.com/calculator.html (last visited Nov.
41 Part II will explore the problems of calibrating risks when data is outsourced to Third World
back office operations.
RUSTAD & KOENIG
C. APPLYING THE LEARNED HAND FORMULA TO INTERNET-RELATED
The first wave of computer security lawsuits stemmed from claims
alleging that defective software offered inadequate security and was
unreliable in protecting network perimeters.42 California consumers
filed a class action lawsuit in State superior court against CardSystems
Solutions, Inc., alleging that the financial service company’s lax
computer security led to the wholesale misappropriation of credit and
debit cards.43 Intruders gained unauthorized access to forty million
credit cards and transferred data from 200,000 individual cards in the
CardSystems’s computer network. The plaintiffs’ complaint charged
the financial services company with unreasonable data handling
practices and negligent computer security, which included the
company’s failure to maintain properly configured firewalls and its
failure to encrypt confidential customer data.” The complaint also
charged the financial services firm with violating a California statute
requiring it to inform customers of computer intrusions that
compromise their personal data. In September 2005, the California
Superior Court ruled against the plaintiffs in Cardsystems, holding that
the credit card companies were not required to give individual notices
informing customers that their credit card information had been
Plaintiffs’ attorneys are beginning to conceptualize and articulate a
duty of care owed by data handlers when consumer’s personally
identifiable information is compromised. Class action suits against
42 Gary H. Anthes, The Dark Side-Looming Threats for the Future of IT, COMPUTERWORLD,
Mar. 7, 2005, available at http://www.computerworld.com/managementtopics/
management/story/0, 10801,100176,00.html?from=story_package (last visited Nov. 6, 2007).
43 Complaint for Declaratory and Injunctive Relief and Damages, Parke v. CardSystems
Solutions, Inc., No. CGC05-442624 (Cal. Super. Ct. July 5, 2005), available at
http://www.techfirm.com/cardsystems.pdf [hereinafter CardSystems Complaint] (last visited
Nov. 6, 2007).
45 Posting of K. M. Das to Privacy and Law Blog, http://www.privsecblog.com/
archives/litigation-califomrnia-court-rules-that-personal-notification-not-required-incardsystems-data-breach-case.html (Sept. 26, 2005) (In “[a] San Francisco Superior Court,
Judge Richard Kramer ruled that Visa and MasterCard do not have to send individual notices
to thousands of their customers in California based on the CardSystems data breach that
occurred between August 2004 and May of this year.”).
US: A JOURNAL OF LAW AND POLICY
Reed-Elsevier’s LEXIs/NEXIS 46 and ChoicePoint Inc.4 7 were filed for
failing to implement security that might have 4prevented the theft of
customers’ personally identifiable information. A growing number
of federal agencies require companies to notify consumers or other
users of security breaches. 49
After computer hackers compromised the credit card information
of customers of BJ’s Wholesale Club Inc., BJ’s entered into a consent
agreement with the Federal Trade Commission in which it agreed to
develop a comprehensive plan to protect the security of its
customers. 50 This increase in activity by the state and federal courts
and the Federal Trade Commission illustrates a growing willingness to
impose on companies a duty to implement reasonable software
security practices. The Gramm-Leach-Bliley Act, for example,
requires companies to establish information security programs, which
is the functional equivalent of a reasonable information security
standard of care:
Information security program. You shall develop,
implement, and maintain a comprehensive information
security program that is written in one or more readily
accessible parts and contains administrative, technical, and
physical safeguards that are appropriate to your size and
46 Jeff Ostrowski, West Palm Bank to Pay $50 Million in Privacy Case, PALM BEACH POST,
Aug. 1, 2006 (describing potential class action against ChoicePoint, Experian, LexisNexis,
First American Corporation and a number of other companies for inadequate data security).
47 Caleb Silver, ChoicePoint Execs Cash Out Amid Breach, CNNMONEY.COM, Feb. 25, 2005.
48 Dan Christensen, Major Information Brokers Face Class Action for Invasion of Privacy,
DAILY BUSINESS REvIEw, June 24, 2003, http://www.law.com/jsp/article.jsp?id=
1056139884864 (last visited Nov. 6, 2007).
49 “Taken as a group, the state and federal security breach notification rules (as they relate to
personal information) generally require that any business in possession of computerized
sensitive information about an individual must disclose a breach of the security of such
information to such person.” Smedinghoff, supra note 13 (reviewing state as well as federal
law provisions requiring security breach notification).
50 Federal Trade Commission, BJ’s Wholesale Club Settles FTC Charges, June 16, 2005,
http://www.flc.gov/opa/2005/06/bjswholesale.shtm (last visited Nov. 6, 2007) (explaining that
the failure to encrypt customer data and store consumer information in secure files was an
unfair and deceptive trade practice).
RUSTAD & KOENIG
complexity, the nature and scope of your activities, and the
sensitivity of any customer information at issue. 1
At present, the duty to provide adequate information security is
emerging in a few sectors of the economy such as healthcare and
financial services. 52 In the absence of a general duty of information
security, tort lawsuits provide the only viable alternative for those
victimized by inadequate security precautions. A special advisor to
President Bush opined that reform would come through litigation:
“We’ll see [vendors] getting sued [because] so much of our
infrastructure depends on computers that it’s unsustainable to hold
software companies blameless.” ‘ 2
In December of 2006, the TJX Companies discovered that it had
been victimized by a data heist of colossal dimensions.5 4 The TJX
website described the unprecedented data disaster:
The TJX Companies, Inc. suffered an unauthorized intrusion
or intrusions into its computer systems that process and store
information related to customer transactions. The intrusion
affected the portion of TJX’s computer system in
Framingham, MA that handles most of our credit card, debit
card, check and merchandise return transactions for most of
our stores in the U.S., Puerto Rico and Canada, along with a
portion of our computer system in the UK that handles credit
and debit card transactions for our stores in the U.K. and
Ireland. Based on our investigation to date, we believe that
our computer systems were first accessed by an unauthorized
intruder in July 2005, on subsequent dates in 2005 and from
mid-May 2006 to mid-January 2007, but that no customer
data was stolen after December 18, 2006. We do not know
5116 C.F.R. Â§ 314.1 (2003).
52 See generally Mark Rasch, Strict Liability for Data Breaches?, SECURITY Focus, Feb. 20,
2006, http://www.securityfocus.com/columnists/387 (last visited Nov. 6, 2007) (discussing
statutory standard of care in financial services industry).
53 Neville Smith, Insurers May be Hit by a Bad Idea Whose Time Has Come: Class Actions
Over Faulty Software Could Land Insurers in a Tangle, LLOYD’S LIST INT’L, Sept. 23, 2004.
54 Paul F. Roberts, Retailer TJX Reports Massive Data Breach: Credit, Debit Data Stolen,
Extent of Breach Unknown, INFOWORLD, Jan. 7, 2007, at 1, available at
http://www.infoworld.com/article/07/01/17/HNtjxbreachl.html (last visited Nov. 6, 2007).
US: A JOURNAL OF LAW AND POLICY
who the intruder was, whether there was one or more
intruder, or whether there was one or separate intrusions.
The massive TJX breach, which resulted in the compromising of
an estimated forty-five million credit card records, illustrates the
enormous radius of the risk presented by data loss in interconnected
computer systems. 56 State attorneys general are considering an action
against TJX arising from state deceptive trade practices law. The
action will weigh “all the factors in this breach, including when and
how it was discovered and when it was reported to the authorities.” 57
These state attorneys general have no jurisdiction to seek individual
relief for consumers, who must sue as private plaintiffs; both banks
and individuals have filed suits against TJX for the “negligent”
security that enabled this far reaching cybercrime. 58 A consumers’
lawsuit contends that “TJX failed to maintain adequate computer data
security, which resulted in the exposure of millions of customers’
personal financial information. The company’s actions put customers
at risk for fraud and identity theft and other damages.” 59 To prevail in
a negligent computer security case against TJX, the plaintiff must
prove: (1) a duty of care owed by TJX to the consumer class of
victims; (2) TJX’s computer security fell below the applicable
standard of care that amounts to a breach of that duty; (3) an injury or
loss; (4) cause in fact; and (5) proximate, or legal, cause.
Plaintiffs filing a negligent computer security case against TJX
will have little difficulty proving that the company owed them an
obligation to take reasonable care in protecting their data. These
plaintiffs may draw analogies to previous liability cases in which
business owners have been held liable for reasonably foreseeable
55 TJ Maxx, Frequently Asked Questions, http://www.tjx.con/tjx_faq.html (last visited Nov.
56 Ross Kerber, TJXDiffer on Scam Timeline, BOSTON GLOBE, April 7, 2007, at E8
(Massachusetts “investigators looking into the theft of more than 45 million credit and debit
card numbers from TJX Cos. are trying to determine when the Framingham retailer first
learned that its computer systems were compromised.”).
58 Robert Falertra, Time to Reconsider Big POS Opportunity, COMPUTER RESELLER NEWS,
April 2, 2007, at 56.
59 Bob Kievra, Lawsuit Filed Against TJX: Company Director Resigns, WORCESTER
TELEGRAM & GAZETTE, INC., Jan. 30, 2007, at El.
RUSTAD & KOENIG
third-party crimes. 60 They will argue that TJX owes customers a duty
of reasonable security to protect against unknown intruders stealing
their data just as a business has a duty to protect against third-party
criminal attacks on patrons. Premises liability cases, like computer
security cases, predicate liability on unsafe conditions. The duty to
implement -security thwarting third-party cybercrimes should turn on
whether the crime was foreseeable.
TJX’s attorneys would favor a narrow “specific harm” rule
because it would limit the company’s liability to the unlikely scenario
that the company was aware of specific, imminent threats to their
computer system. The “specific harm” rule borrowed from premises
liability would find a defender liable only upon proof that the precise
crime occurred.6 1 For example, a hotel owner would only be liable if
the specific harm was that a guest was shot on the premises.62 The
defendant would have no liability absent proof that the precise harm
has previously occurred on the premises. A landowner, for example,
does not have a duty to protect customers from violent crimes unless
the owner is aware of a particular threat from a third-party criminal.63
The Tennessee Supreme Court applied the Learned Hand balancing
test to a premises liability case:
In weighing the magnitude of harm and the burden imposed
upon defendant, the court must consider whether imposing a
duty to take reasonable measures to protect patrons from the
consequences of criminal acts of third persons would place
an onerous burden – economic or otherwise – upon
defendants. If it does not, then the court must consider
whether the burden outweighs the foreseeability and gravity
60 See McClung v. Delta Square Ltd. P’shp., 937 S.W.2d 891, 892 (Tenn. 2006) (reasoning
that the duty to protect customers from third party attacks turns on “the foreseeability of harm
and the gravity of harm… balanced against the commensurate burden imposed on the
business to protect against that harm); see also Jardel Co., Inc. v. Hughes, 523 A.2d 518 (Del.
1987) (holding merchant liable for negligently failing to provide adequate security and noting
that prior criminal attacks ratchets up the duty of care because of greater foreseeability); Foster
v. Winston-Salem Joint Venture, 281 S.E.2d 36 (N.C. 1981) (holding mall owner liable for
attack on customer because duty was based upon the greater radius of the risk proven by prior
criminal attacks in the lot).
61 Star Wealth Mgmt. Co. v. Brown, 801 N.E.2d 768, 773 (Ind. Ct. App. 2004) (discussing the
specific harm test of premises liability).
63 MARSHALL S. SHAPO, PRINCIPLES OF TORT LAW 99 (2003).
I/S: A JOURNAL OF LAW AND POLICY
of the possible harm, so as to preclude the finding of a duty
to take reasonable steps to protect patrons. We hasten to
point out, however, that the question of duty and of whether
defendants have breached that duty by taking or not taking
certain actions is one for the jury to determine based upon
proof presented at trial. Additionally, if properly raised as a
defense, under our doctrine of comparative fault, a plaintiffs
duty to exercise reasonable care for her own safety would be
weighed in the balance. 64
In the TJX case, if the Learned Hand theory is applied, the
question will be whether the company could have taken cost-effective
precautions to prevent the data heist. Under either the Learned Hand
test or the risk/utility tests adopted in premises liability actions, a
computer security risk is unreasonable and gives rise to a duty to act
with due care if the foreseeable probability and gravity of harm posed
by the data handler’s conduct outweighs the burden upon defendant to
implement security measures that would have prevented the harm.
The TJX plaintiffs’ burden will be to demonstrate a breach of the
standard of care if the company did not implement reasonable security
audits on a regular basis. The TJX data theft signals the reality that
companies will face an increased risk of hackers breaking into
company computers that process and store information including
payment systems, trade secrets and other proprietary information.
D. APPLYING THE LEARNED HAND FORMULA TO LOST LAPTOPS
To date, most data disasters have occurred as the result of
problems such as weak access controls in the terrestrial world rather
than from hackers in the ethereal milieu of cyberspace. 65 Companies
will need to strengthen access controls to meet industry standards in
their specific sector. 66 Sony recently enhanced its computer security
64 McClung, 937 S.W.2d at 905.
65 Michael L. Rustad, The Negligent Enablement of Trade Secret Misappropriation, 22 SANTA
CLARA COMPUTER & HIGH TECH. L.J. 455, 494 (2006) (presenting empirical findings from
study of the first decade of Economic Espionage Act cases demonstrating that the greatest
threat was employees or ex-employees as opposed to hackers hacking into computer systems).
66A wide variety of standards are evolving in the data security field. In a high security
environment such as the military or banking, for example, the standard may be fingerprint
recognition. Assa Abloy, ITG Introduces Smart Card Reader with Fingerprint Recognition,
PRODUCT NEWS NETWORK, June 6, 2007, at I. Another example of a security standard is the
RUSTAD & KOENIG
procedures to comply with Sarbanes-Oxley’s requirements as well as
reduce the probability of a negligent security lawsuit after audit
revealed weaknesses. 6
The largest category of unacceptable peril in a corporate
environment is not Internet-related cybercrime, but the mundane risk
of a lost laptop or other data storage device, which accounts for one
third of all data thefts. 68 The Learned Hand formula indicates that
companies should implement strong encryption coupled with fortified
employee training in order to minimize the costs associated with this
high probability event. A company can dramatically reduce the risk of
data loss from the laptop theft by implementing inexpensive security
precautions. 69 The 2007 Annual Study: U.S. Enterprise Encryption Trends found that, in the opinion of the surveyed executives,
encrypting data on laptops, file servers, emails and backup tapes is the
accepted standard for data risk reduction. 70 Yet, only 18 percent of the
respondents required laptop encryption “most of the time.” 71
The Learned Hand formula balances the probability of lost laptops multiplied by the gravity of the resulting data loss against the burden
of encrypting data in order to avoid the harm. Companies are
negligent when the burden of encryption is less than the danger arising from lost or stolen laptops. The entity that entrusts data to a data
handler will have potential lawsuits against the data handler as well as
threefold authentication system “via card, pin, and fingerprint.” Id. Industry standards are rapidly evolving as vendors market new technologies to ensure authentication, access control
and data protection. See, e.g., Press Release, Trapeze Smart Mobile, Trapeze Network Joins
Support Trusted Network Connect Initiative (Sept. 19, 2006).
67 Allen Holmes, Your Guide to Good-Enough Compliance, Cio, April 6, 2007,
http://www.cio.com/article/102751/TheROI of Noncompliance (last visited Nov. 6, 2007).
68 Ponemon Institute, supra note 36, at 12.
69 J. Patrick McGregor, Retailers Must Make Changes to Combat ID Theft, PITTSBURGH POSTGAZETrE, April 3, 2007, at A8 (Gartner Inc. estimates that a company could encrypt data for as little as $6 per customer account, “compared with ‘an expenditure of at least $90 per
customer account when data is compromised or exposed during a breach.”‘ As the price of
encryption continues to drop, the duty to implement this reasonable measure will increase.).
70 Press Release, PGP Corporation, Sponsored U.S. Study Shows Emergence of Strategic
Planning and Platform Approach to Encryption (2007), available at
http://www.pgp.com/newsroom/mediareleases/ponemon_2007.html (last visited Nov. 6,
I/S: A JOURNAL OF LAW AND POLICY [Vol. 3:2
any software licensor or developer who introduced code with design
defects that enable cybercrime.
Internet-related data thefts have not yet led to successful criminal
or civil remedies. An empirical study of all Economic Espionage Act
(EEA)73 prosecutions from the federal criminal statute’s enactment in
1996 to August 1, 2005 uncovered fewer than fifty economic or
espionage prosecutions filed in federal courts. 74 In addition, “nearly
every prosecution was for domestic rather than foreign economic
espionage.” 75 In a decade of EEA prosecutions, the Department of
Justice did not file a single case against a hacker stealing trade secrets
by “exploiting known software defects” during an Internet
transmission.76 The gross failure of the EEA to address Internetrelated data theft indicates the need to strengthen private tort remedies.
The negligent enablement of economic espionage threatens American
competitiveness. 77 Tort law gives private litigants incentives to file
negligent security lawsuits that benefit the consuming public by
uncovering reckless practices.
72 Michael L. Rustad & Thomas H. Koenig, The Tort of Negligent Enablement of Cybercrime,
20 BERKELEY TECH. L. J. 1553 (2005) (proposing a new tort to hold software vendors
accountable for defective products and services that pave the way for third-party
73 See Economic Espionage Act of 1996, Pub. L. No. 104-294, 110 Stat. 3488 (uodified at 18
U.S.C. Â§Â§ 1831-1839 (2000)); see also J. Michael Chamblee, Validity, Construction, and
Application of Title I of Economic Espionage Act of.1996, 177 A.L.R. FED. 609, 617-18
(2005) (The EEA was enacted to fill a gap in the law. “Other federal statutes, such as the
National Stolen Property Act, 18 U.S.C. Â§ 2314, and the Mail and Wire Fraud Statutes, 18
U.S.C. Â§ 1341 and 18 U.S.C. Â§ 1343, were also of limited use in combating the problem of
74 Rustad, supra note 65, at 458.
1 Id. at 494.
76 Id. at 461 (“At present, the injured targets of trade secret theft have no federal civil remedy
for the foreseeable consequential damages of economic espionage. Under the tort of negligent
enablement, a third-party software vendor or other data intermediaries would only be civilly
liable in federal court if they knew or should have known of vulnerabilities in software or
network design facilitating espionage. In the first decade of EEA prosecutions, no outside
hacker was prosecuted for misappropriating trade secrets by exploiting known software
defects.”) (Civil tort liability for the negligent enablement of trade secret theft on the Internet
would supplement lax public enforcement of state-sponsored economic espionage).
7 7Id. at 527.
RUSTAD & KOENIG
III. RISKY DATA HANDLING PRACTICES IN THIRD WORLD BPOs
A. INDIA’S UNSECURE DATA HANDLING PRACTICES
The radius of the risk of stolen data on the Internet is great because
hackers can compromise any connected computer without adequate
security in seconds. “They just sweep the Internet twenty-four hours a
day, seven days a week, looking for vulnerabilities and they will
capture all the data they can and sort through it later.”‘
78 Any offshore
data transfer to a Business Process Outsourcer (“BPO”) 79 poses
potential harm. The firm that “outsources” data must carry out due
diligence both through inspection and staff training in off-shore
facilities in order to protect its outsourced data.
The first high profile data misappropriation incidents occurring in
Third World BPOs occurred in India, the world’s largest outsourcing
data hub. India’s data outsourcing industry continues to expand at a
rapid rate and that growth has helped the Indian economy grow nine
percent in a recent year.80 India is particularly susceptible to charges
of lax computer security even though its call centers have recently
strengthened data safety precautions to protect against insider data
theft.’ The sun never sets on an Indian-based BPO; Indian call
centers and data processors manipulate consumer data twenty-four
hours a day, seven days a week. The practical result of domestic
companies outsourcing call centers to India is to place unprecedented
78 Richard Krantz, Industrial Espionage Becomes Favorite Way to Achieve Gains, VOICE OF
AMERICA NEWS, April 29, 2005, at 1.
79 BPO India.org, BPO (Business Process Outsourcing), http://www.bpoindia.org/ (last visited
Nov. 6, 2007) (A call center is an example of a BPO that is sometimes referred to as a back
office operation. A growing number of companies are outsourcing diverse information-based
activities. An Indian organization notes the list of functions outsourced is growing: “Call
centres apart, functions outsourced span purchasing and disbursement, order entry, billing and
collection, human resources, administration, cash and investment management, tax
compliance, internal audit, pay roll.., the list gets longer everyday.”).
80 Jared Sandberg, It Says Press Any Key, Where’s the Any Key?, WALL ST. J., Feb. 20, 2007,
at B 1 available at http://online.wsj.com/public/article/SBI 17193317217413139.html (last
visited Nov. 6, 2007).
81 Pete Engardio et al., Outsourcing: Fortress India? Call Centers and Credit-Card
Processors are Tightening Security to Ease U.S. and European Fears of Identity Theft, Bus.
WK., Aug. 16, 2004, at 28.
I/S: A JOURNAL OF LAW AND POLICY
access to confidential personal and financial data being placed in the
hands of low paid, remote workers.8 2
The employee turnover in India’s BPOs is extremely high, which
greatly increases the possibility that insiders will exploit their trusted
83 position. Data thieves in Pune, India misappropriated $426,000 by
registering false e-mail addresses in the names of their U.S. victims.”4
Call center employees based in India were able to manipulate
customers “into unwittingly divulging passwords and pin numbers
over the phone.” 5 In 2005, a British television journalist accused
“India’s outsourcing industry [of being] infested with hackers and
identity thieves. ”8 6 The reporter illustrated the potential for data theft
by Indian employees who allegedly purchased hundreds of UK-based
banking customers’ personally identifiable information.87 In the wake
of this exposd, members of Britain’s Parliament called for a halt on the
sending of consumer data to India because of concerns over inadequate . 88 security.
British companies are beginning to withdraw their “back-end
office operations from India” partly because “Indian cyberlaw, namely
the Information Technology Act of 2000, has been grossly inadequate
on the deal with complicated challenges concerning data protection.’ 89
A U.S. Trade Official contends: “India needs to have a credible data
protection regime in its own interest.” 90 Acme Tel Power Limited, for
82 Samantha Grant, I Just Bought a Flat Screen T. V. in Kolkata?, II PGH. J. TECH. L. &
POL’Y 1, 4-5(2006).
83 Sandberg, supra note 80.
84 Grant, supra note 82, at 1-2.
‘ Id. at2.
86 India Weighs Tougher Cybersecurity Laws After TV Expose, COMMWEB, Oct. 6, 2006.
7 Andy Mukherjee, Globalizing Law and Order, INT’L HERALD TRIBUNE, Jan. 11, 2007, at 16.
88 British Mls React to Outsourcing Security Breach, OUTSOURCING TIMES, June 24, 2005,
http://www.blogsource.org/2005/06/britishmpsrea.html (last visited Nov. 6, 2007).
89 Needfor Fast Track Action in Case of Data Security Breaches, FINANCIAL EXPRESS, Oct. 7,
2006, at 1.
90 U.S. Says India Needs to Have Credible Data Protection Regime, THE PRESS TRUST OF
INDIA, Oct. 6, 2006, at 1.
RUSTAD & KOENIG
example, closed its outsourcing operations in India because of the
company’s concern that its data was not secure. 91
It is clearly unfair to single out India for lax data handling security.
A recent empirical study concluded that India has the best information
security practices of any of the top forty outsourcing destinations
around the globe. 92 Indian business and government officials are
sensitive to international perceptions that the country has weak data
protection laws. An Indian attorney specializing in information
[T]he government should seriously consider enacting a
special law on data protection on the lines of the OECD
[Organization for Economic Co-Operation and
Development] guidelines followed by major European
countries and the EU Data Protection Directive. The lacunae
in the Act provide fuel to the anti-outsourcing brigade in the
UK and US to tarnish India’s image as an outsourcing hub.
It’s time the government got its act together and at least
implemented the proposed amendments. [The new IT law
will make companies] . . . accountable for leakages caused
Under mounting pressure from Anglo-American information
technology outsourcers, the Indian government “has shown a sense of
urgency,” proposing civil and criminal liability to make enablers liable
for data security breaches for facilitating data security breaches.94
These legal reforms would assign greater responsibility to Indian
companies that fail to implement the reasonable security measures
91 BPO to Pull Out After Data Theft Case (A CMAE Tele Power Limited Not Satisfied With the
Way the Data Theft Case is Being Handled in India), INDIA BUSINESS INSIGHT, Nov. 2, 2006,
92 Fort Knox of Data Security?, OFFSHORING TIMEs, Oct. 14, 2006, at 1 (“For example, the AT
Kearney Global Services Location Index 2005 ranks India highest in a detailed analysis
comparing 40 sourcing destinations across the world. The fact that India is very secure, from
a data protection viewpoint, has also been confirmed by independent surveys by various
credible organizations, including the Financial Services Authority and the Banking Code
Standards Board, both of the UK.”).
93 Mohammed S. Waris, Time to Get Our ITAct Together, FINANCIAL EXPREss, Oct. 27, 2006,
94 StiffPenaltyfor E-Crimes, THE TIMES OF INDIA, Oct. 18, 2006, at 1.
I/S: A JOURNAL OF LAW AND POLICY
needed to protect sensitive data.95 Augmented cybercrime laws,
however, are not likely to curb data theft because cybercriminals can
easily vanish into cyberspace. The U.S. company that “outsources” is
in the best position to ensure that back offices comply with minimum
security standards by investing in measures to protect customer data
and to redeem trust in their back office operations.
B. THE BPO’s STAKE IN ENHANCED DATA HANDLING SECURITY
Lapses in data protection create a problem of global dimensions.
Few countries have laws that are sufficiently robust to comply with
European Union minimum data protection standards. India models its
constitutional right to privacy on the right the United States Supreme
Court has found in the American Constitution; this degree of
protection does not comport with European standards because
protection is limited to public sector data transmissions. 96 The United
States has “only a patchwork of federal and state laws governing data
protection.q97 Consistent with United States jurisprudence, in 1996,
India’s Supreme Court held that a constitutional privacy right exists
only against the public sector.98 Because private industry is not
subject to the constitutional right of privacy, Indian civil law should
bridge the enforcement gap as the civil law does in the United States.
The European Community achieved greater harmonization of data
protection when the European Commission approved the Data
Protection Directive, which requires each of the twenty-seven Member
States to enact national legislation that protects “the fundamental
rights and freedoms of natural persons, and in particular their right to
privacy with respect to the processing of personal data.”99 The
European Union’s Data Directive forbids the transfer of personal
information across national borders without an “adequate level of
96 Christopher Wolf, PROSJAUER ON PRIVACY: A GUIDE TO PRIVACY AND DATA SECURITY LAW
IN THE INFORMATION AGE Â§ 14.5 (2006).
97 Grant, supra note 82, at 5.
98 Wolf, supra note 96, at 14-50.
99 Council Directive 95/46, art. 1, 1995 O.J. (L. 281/31) (EC); available at
RUSTAD & KOENIG
protection.”‘100 BPOs in India and around the Third World risk losing
all of their European outsourcing business unless they can meet the
Data Protection Directive’s requirement of “adequate]” privacy
protection standards which ensure reasonable security.” Negligent
entrustment liability against U.S. outsourcers will help ensure that
India’s information companies are appropriately sensitive to the need
for reasonable data security in their outsourcing activities. In the
absence of liability, American firms will be tempted to award data
handling contracts to the lowest bidders, which creates excessive,
preventable security risks.
A company has a duty of care to prevent, deter or control the theft
of data entrusted to Third World back office operations. The
traditional duty of reasonable care applies equally well to outsourced
data. Outsourcers know or should know that poorly paid and trained
Third World data handlers pose a threat of data theft. The Federal
Deposit Insurance Corporation (FDIC) released a study documenting
the risks of offshoring financial services. The risk of lost data turns on
the politics and socio-economics of the destination country along with
the following traditional outsourcing risks:
Operations/Transaction Risk: Weak controls may affect
Compliance Risk: Offshore vendors may not have adequate
Strategic Risk: Different country laws may not protect “trade
100 See id. at Article 25 (Article 25 addresses the adequate level of protection); available at
101 Export.gov, Welcome to the Safe Harbor, http://www.export.gov/safeharbor (last visited
Nov. 6, 2007) (The European Commission’s Directive on Data Protection went into effect on
October 1998. The Directive would have prohibited the transfer of personally identifiable data
to the United States because only some sectors of the American economy complied with the
European standard of reasonable security for privacy protection. “While the United States and
the European Union share the goal of enhancing privacy protection for their citizens, the
United States takes a different approach to privacy from that taken by the European Union. In
order to bridge these different privacy approaches and provide a streamlined means for U.S.
organizations to comply with the Directive, the U.S. Department of Commerce in consultation
with the European Commission developed a ‘Safe Harbor’ framework.” The U.S. approach is
for companies individually to attest to compliance with Europe’s data protection standards.).
I/S: A JOURNAL OF LAW AND POLICY
Credit Risk: A vendor may not be able to fulfill its contract
due to financial losses.
Privacy Concerns Raised by Offshoring: Few legal
restrictions exist on financial service companies sending
customer data to foreign countries. Financial institution
customers may not opt out of these information transfers to
nonaffiliated service providers if the transfer is for a purpose
described in section 502(e) of the Gramm-Leach-Bliley Act
(GLBA). For example, the opportunity to opt out does not
apply where the information transfer is to: (1) service or
process a financial product or service that the customer
requested or authorized; or (2) maintain or service the
customer’s account. 102
A consumer could use an outsourcer’s failure to implement
reasonable security in a negligence-based lawsuit. Any financial
institution outsourcing data has a continuing obligation to protect the
information from either internal or external threats to security,
confidentiality and integrity. This affirmative obligation extends to the “monitoring of the activities of those service providers to which
financial institutions transfer customer information.”10 3
Privacy risks correlate directly with the job types in the back office
operation. For instance, relatively low risk activities include computer
source coding or application development and maintenance, whereas
high risk activities include any function using personal data, such as
call centers or transaction processing. At present, financial institutions
are primarily offshoring low-risk IT work in addition to higher-risk,
customer database type work, including mortgage servicing and
C. APPLYING THE LEARNED HAND FORMULA TO BPO OUTSOURCING
Outsourcing data does not outsource liability. In order to reduce
their exposure to data lawsuits, U.S. companies must either closely
102 Federal Deposit Insurance Corporation, Offshore Outsourcing of Data Services by Insured
Institutions and Associated Privacy Risks, http://www.fdic.gov/regulations/examinations/
offshore (last visited Nov. 6, 2007).
RUSTAD & KOENIG
monitor BPOs or close these Third World data operations. Courts
should factor security lapses such as recent thefts of data from BPOs
into Learned Hand’s foreseeability of danger equation. However,
even if best information security practices set the floor, they do not set
the ceiling of due care given the current laxity of industry standards.
Compliance with a weak industry practice of entrusting confidential
data to offshore BPOs without due diligence is not a good test for
In The T.J. Hooper case, Judge Learned Hand ruled that an
industry custom of not having radios aboard barges was negligent even
though this precaution had not been widely adopted in the late
1920s. 10 4 Judge Hand rejected the barge owners’ argument that they
were not negligent because their industry had not yet generally
adopted radio receiving sets as a standard feature, finding that a “whole calling may have unduly lagged in the adoption of new and
available devices.” 0 5 Neither liability standards nor industry
standards have been promulgated to compel companies to do the most
elementary due diligence before transmitting data to Third World
information processors. However, the lack of an industry standard
should not bar recovery under Judge Learned Hand’s formulation.
The T. Hooper decision stands for the proposition that mere
compliance with industry custom is not a shield against negligence.
An information industry may unduly lag in its adoption of new and
available security solutions. Just because a software vendor complies
with inadequate industry customs does not mean it escapes liability. In
many sectors of the information economy, standards of security are in
their infancy. The wireless computer network industry has yet to
develop security standards that could serve as a surrogate for
Companies can only use custom as a reliable legal defense when
common prudence equals reasonable prudence. It is premature to
defer to ill-formed data security standards since even a standard for
encryption is not settled. Certifying organizations such as the National
Institute of Standards or voluntary industry groups must step in to
bridge the gap by developing consensus-based security standards to
protect outsourced voice, video, fax and data traffic. Since private
04 The T. J. Hooper, 60 F.2d 737 (2d Cir. 1932).
‘o5Id at 740.
106 Drew Clark, Cyber Security: White House Aide Criticizes Progress Toward Internet
Security, NAT’L J.’s TECH. DALY, July 30, 2002, at 1.
US: A JOURNAL OF LAW AND POLICY
industry standards are relatively undeveloped for the data handling
industry, best practices are not an effective shield against negligence
High profile disasters have led to two varieties of negligent data
handling claims: negligent enablement and negligent entrustment
actions. In a negligent enablement case, the defendant’s act or
omission in failing to protect customer data results in data theft. These
data disasters generally are attributable to some combination of lax
laptop policies, encryption failures, misplaced disks and data stolen by
dishonest employees. In contrast, in a negligent entrustment case, the
data handler has outsourced handling functions to thirds parties,
frequently to back office operations in Third World countries.
A BPO located in Bangladesh or Beijing will typically be beyond
the reach of the American legal process but plaintiffs can file
“negligent entrustment” claims against the outsourcer that failed to
supervise off-shore entities. Whether the case is a negligent
enablement or a negligent entrustment claim, the required elements are
the same: duty, breach, causation and damages. A court will enter
summary judgment or dismiss the plaintiffs claim in a negligent data
handling case unless the claimant proves: (1) the data handler owed
the plaintiff a duty of care, (2) the data handler breached that duty, (3)
the plaintiff sustained tangible, present damages and (4) the breach of
the duty proximately caused the damage.
IV. EMERGENT NEGLIGENT DATA CAUSES OF ACTION
A. NEGLIGENT ENABLEMENT FACT PATTERN
To date, the victims of data theft have been unsuccessful in
pursuing claims against data handlers for failure to secure personal or
company information. In Guin v. Brazos Higher Education Services, a
company negligently permitted one of its employees to store
unencr ted private customer data on a laptop computer that was later
stolen. Brazos sent a notification letter warning 8about the laptop
theft to all of its approximately 550,000 customers. rÂ° One of Brazos’
customers filed suit based upon breach of contract, breach of fiduciary
duty and negligence. The aggrieved customer produced no evidence
that a third party had accessed his personal information; much less that
107 Guin v. Brazos Higher Educ. Serv. Corp., 2006 U.S. Dist. LEXIS 4846 (D. Minn. 2006).
108 Id. at *4.
RUSTAD & KOENIG
he was a victim of fraud, identity theft or any other damages. 10 9 The
court granted the defendant’s summary judgment motion because of
the plaintiffs failure to trace cognizable damages arising from the
defendant’s breach of the standard of care. The negligence formula
requires the plaintiff to demonstrate a present and actual injury that
resulted from the negligent security practices, which the plaintiff in
Brazos failed to do.
Plaintiffs do not satisfy the injury requirement by pointing to the
possibility that their personal data might be exploited by an identity
theft in the future. Anticipated injury or fear of a future cybercrime is
insufficient to meet the injury requirement. “A plaintiff may recover
damages for an increased risk of harm in the future [only] if such risk
results from a present injury and indicates a reasonably certain future
harm.”1 10 As the Minnesota federal court stated, “future harm, not yet
realized, will not satisfy the damage requirement.”‘ 111
B. NEGLIGENT ENTRUSTMENT FACT PATTERN
Forbes v. Wells Fargo Bank, N.A is a typical negligent entrustment
case. 112 Subsidiaries of Wells Fargo hired a third-party service
provider to print monthly statements for home equity mortgage and
student loan customers. Computers containing Wells Fargo’s
customers’ unencrypted names, addresses, Social Security numbers
and account numbers were stolen from the contractor. 113 Two
customers filed suit against Wells Fargo, although there was no
evidence that the purloined information was either accessed or used.
The plaintiffs’ principal theory was that Wells Fargo’s contractor
negligently failed to implement adequate security to protect their
account information.’ 14 The court granted summary judgment in favor
of Wells Fargo because the plaintiffs were unable to demonstrate a
present injury, which is a requirement of a negligence claim. A
109 1d. at *5.
110 Forbes v. Wells Fargo Bank, N.A., 420 F. Supp. 2d 1018, 1020 (D. Minn. 2006).
.. Guin, 2006 U.S. Dist. LEXIS at *13 (citing Reliance Ins. Co. v. Anderson, 332 N.W.2d
604, 607 (Minn. 1982)).
112 Wells Fargo, 420 F. Supp. 2d at 1018.
13 Id. at 1019.
1d. at 1021.
US: A JOURNAL OF LAW AND POLICY
plaintiff must suffer some actual loss or damage in order to bring an
action for negligence.
C. No HARM, No FOUL
In both the negligent enablement and entrustment examples, the
court granted the defendants’ summary judgment because of the
plaintiffs’ failure to prove present damages. Plaintiffs’ attorneys have
unsuccessfully attempted to overcome the “present injury” barrier by
arguing that consumers may be identity theft victims in the future. No
plaintiff has been successful in receiving an award to compensate for
lost data where identity theft has not yet occurred.
Perhaps this area of law will continue to develop along the lines of
toxic torts law. In toxic torts cases, plaintiffs who have no present
injury but only suffer the threat of a future injury cannot meet the
injury requirement necessary in negligence-based actions. 1,
are split on the issue of whether a plaintiff must demonstrate a “present
injury” as a predicate for a medical monitoring claim. 116 Courts may
be reluctant to recognize negligent computer security claims where a
consumer’s data has been stolen until there is empirical or objective
evidence of an economic or other loss under the “present injury”
requirement. The victims of data theft will not have a viable claim
unless courts recognize that the mere compromise of data constitutes a
present injury. In medical monitoring cases, the victim of a toxic
exposure may not have a full-blown injury but nevertheless has the
financial burden of frequent testing and medical examinations. Every
right has a remedy and therefore a consumer whose personal data is
compromised incurs costs to mitigate identity theft. A consumer, for
example, would incur costs in closely monitoring credit reports and
taking other steps to mitigate losses. The victims of a widespread data
theft such as the TJX case could form a “monitoring class” roughly
115 Metro-North Commuter R.R. v. Buckley, 521 U.S. 424 (1997) (holding that a railroad
worker negligently exposed to asbestos, but without symptoms of any disease, cannot recover
under the Federal Employers’ Liability Act for negligently inflicted emotional distress unless
he manifests symptoms of a disease).
16 Paul A. Locke & Patricia I. Elliott, Caveat Broker: What Can Real Estate Licensees Do
About Their Potentially Expanding Liability for Failure to Disclose Radon Risks in Home
Purchase and Sale Transactions?, 25 Colum. J. Envtl. L. 71, 108 (2000) (noting that “the
courts are split on whether a present injury must accompany a medical monitoring claim”).
RUSTAD & KOENIG
paralleling consumers imp7anted with a defective medical device that
has not yet injured them.
Several other courts also have found that plaintiffs had no basis for
using criminal statutes as a surrogate for negligence.”18 For example,
in Stollenwerk v. Tri-West Healthcare Alliance, a health care
company’s corporate office was burglarized and a number of items
were stolen, including computer hard drives containing the personal
information of the defendant’s customers. 119 The Arizona court
rejected the plaintiffs’ tort claims on the grounds that the plaintiff was
unable to prove a cognizable injury. 120 The Stollenwerk court noted
that “an increased risk of experiencing identity fraud for the next seven
years” was not enough to satisfy the injury requirement for
negligence. 12 1 The speculative threat of future harm, not yet
materialized, will not satisfy the dama erequirement of negligence in
either enablement or entrustment cases.92
Most recently, in Randolph v. ING Life Ins. & Annuity Co.,
employees filed a class action lawsuit after a company representative’s
computer, which contained private personal information, was stolen in
a home burglary. 123 The plaintiffs’ class action suit asserted claims for
invasion of privacy, gross negligence and ordinary negligence. 124 The
D.C. District Court found that the plaintiffs lacked standing because
they could not prove an injury in fact.12 5 The plaintiffs were unable to
overcome the present injury requirement pleading that the data breach
17 See, e.g., Grovatt v. St. Jude Med. Inc., 425 F.3d 1116 (5th Cir. 2005) (describing “medical
monitoring class” of consumers implanted with prosthetic heart valves which have not yet
119 Stollenwerk v. Tri-West Healthcare Alliance, 2005 WL 2465906 (D. Ariz. 2005).
120 Id. at *4.
121 Id. at *5.
122 Plaintiffs have failed to demonstrate a cognizable injury in a number of other cases in
which data was lost or stolen. See, e.g., Giordano v. Wachovia Sec., LLC, 2006 U.S. Dist.
LEXIS 52266 (D.N.J. 2006); Bell v. Acxiom Corp., 2006 U.S. Dist. LEXIS 72477 (E.D. Ark.
2006); Key v. DSW, Inc., 454 F. Supp. 2d 684 (S.D. Ohio 2006).
123 Randolph v. ING Life Ins. & Annuity Co., 486 F. Supp. 2d 1, 2-3 (D.C. Cir. 2007).
24 1d. at2.
’25 Id. at 10.
I/S: A JOURNAL OF LAW AND POLICY
constituted an invasion of privacy and breach of fiduciary duty. The
court dismissed these causes of action on the grounds that they were
not in the plaintiffs’ original complaint depriving the defendant of
notice. It is unclear whether privacy-based torts or fiduciary duty
claims can be a way to side-step the present injury problem. The court
ruled that the plaintiff’s complaint did not comply with the notice
requirements of the Federal Rules of Civil Procedure, but noted that it
was of “no consequence” because they failed to allege an “actual or
imminent” injury in fact. 126 To date, no plaintiff has been successful
in a data theft case because courts do not consider the possibility of
identity theft a legally cognizable injury.
D. EcoNoMIc Loss RULE
In East River S.S. Corp. v. Transamerica Delaval, Inc., the Court
held that a plaintiff could not recover for tort damages in admiralty for
losses resulting from the defective design of main propulsion units
used in four oil-transporting supertankers. 127 The Court stated,
“[c]ontract law, and the law of warranty in particular, is well suited to
commercial controversies of the sort involved in this case because the
parties may set the terms of their own agreements setting the
responsibilities of a seller of a product that fails to perform the
function for which it was intended.”‘ 128 The Court precluded the
plaintiffs from suing in tort since the only damages were economic
loss, from harm to the malfunctioning turbines, rather than harm to
collateral property or an individual. 1
In the wake of East River, courts have stretched this economic loss
rule (ELR) beyond products liability to a wide variety of cases where
there is no collateral property damage or personal injury. 130 The
126 Id. at 9.
127 E. River S.S. Corp. v. Transamerica Delaval, 476 U.S. 858, 872-73 (1986).
129 Id. at 876.
130 See, e.g., Coastal Conduit & Ditching, Inc. v. Noram Energy Corp., 29 S.W.3d 282, 290
(Tex. App. 2000) (that a contractor’s claim for increased costs because of a gas company’s
failure to properly mark or install pipelines was barred by the economic loss rule); Transport
Corp. of Am. Inc. v. IBM Corp., 30 F.3d 953, 957 (8th Cir. 1994) (extending the economic
loss rule to bar a tort claim where a defective electronic disk drive was integrated into a
computer system); see also Anita Bernstein, Keep It Simple: An Explanation of the Rule of No
Recovery for Economic Loss, 48 ARIz. L. REv. 773 (2006); Jane Stapleton, Comparative
RUSTAD & KOENIG
Nevada Supreme Court described the path of the economic loss rule in
a case extending the doctrine to home construction cases:
[T]he economic loss doctrine arose, in large part, from the
development of products liability, but its application is
broader and serves to maintain a distinction between contract
and tort principles …. We conclude that damages sought in
tort for economic losses from a defective building are just as
offensive to tort law as damages sought from economic
losses stemming from a defective product.1 31
The economic loss rule has created a Maginot Line separating
expectation-based contract remedies from tort law arising out of
breaches of the standard of care.1 32 The underlying jurisprudence
supporting the ELR is the concern of liability out of proportion to the
defendant’s fault.133 In a typical computer breach case, the economic
losses are likely to take the form of consequential damages such as lost
profits, the loss of electronic funds or stolen personal identity
The rule barring economic loss in tort law precludes both negligent
enablement and data entrustment cases where there is a direct
contractual relationship between the parties. Even if the plaintiff can
prove the elements of negligent entrustment or enablement, courts
typically bar the action because there is no loss of life or resulting
property damage. The ELR will prevent most companies from
recovering for lost proprietary data, trade secrets and lost profits where
there is a contractual nexus between the data handler and “entruster.”
Economic Loss: Lessons from Case-Law-Focused “Middle Theory,” 50 U.C.L.A. L. REv. 531
131 Calloway v. City of Reno, 993 P.2d 1259, 1265-66 (Nev. 2000).
132 Sidney R. Barrett, Jr., Recovery of Economic Loss in Tort for Construction Defects: A
CriticalAnalysis, 40 S.C. L. Rev. 891, 894-95 (1989) (“The economic loss doctrine marks the
fundamental boundary between contract law, which is designed to enforce the expectancy
interests of the parties, and tort law, which imposes a duty of reasonable care and thereby
encourages citizens to avoid causing physical harm to others.”).
133 People Express Airlines v. Consolidated Rail Corp., 495 A.2d 107, 109-110 (N.J. 1985)
(explaining how a virtually per se rule bars recovery for economic loss unless the negligent
conduct also causes physical harm).
34 Pavlovich v. Nat’l City Bank, 435 F.3d 560, 569 (6th Cir. 2006).
US: A JOURNAL OF LAW AND POLICY [Vol. 3:2
The New Jersey Supreme Court rejected the ELR where the
plaintiff class was easily identifiable and the causal connection
between the defendant’s breach and economic loss was clear-cut.13 5 In
People Express v. Consolidated Rail, the New Jersey Supreme Court
permitted an airline to recover for purely economic losses in a case
where the railroad negligently caused a chemical fire resulting in the
shutting down of the terminal and the cancellation of flights. 136 In
J’Aire Corp. v. Gregory, the California Supreme Court allowed an
airport restaurant operator to recover in tort for purely economic losses
arising out of delays in remodeling of an airport due to a contractor’s
negligence. 137 However, few courts have followed the “highly
foreseeable” plaintiffs’ exception forged by the People Express and
J’Aire Corp courts. 138
Even assuming that the plaintiffs can prove a present injury in a
data interception case, courts permit no recovery for purely economic
losses.’ 39 However, plaintiffs may be able to file a tort action such as
fraudulent inducement. In a data entrustment claim, for example, a
Fortune 500 company may have misrepresented its security measures
to a prospective customer when the company had not audited a BPO
operation. If plaintiffs can prove that they were fraudulently induced
to enter into a data-handling contract, they will be able to overcome
the ELR since fraud in the inducement is an independent tort.
In HGI Assocs. v. Wetmore Printing Co., the Texas Supreme Court
held that tort damages for a fraudulent inducement claim are
recoverable even if the misrepresentations are “later subsumed in a
contract or whether the plaintiff only suffers an economic loss related
135 People Express Airlines, 495 A.2d at 112 (explaining that “the extent to which the
defendant knew or should have known the particular consequences of his negligence,
including the economic loss of a particularly foreseeable plaintiff, is dispositive of the issues
of duty and fault”).
“‘6/d. at 118.
137 J’Aire Corp. v. Gregory, 598 P.2d 60 (Cal. 1979).
138 See Bernstein, supra note 130 at 791.
139 To date, plaintiffs have not been successful in side-stepping the ELR in negligent data
handling cases. See, e.g., Trans States Airlines v. Pratt & Whitney Can., 682 N.E.2d 45, 48
(I11. 1997) (citing In re Chicago Flood Litigation, 680 N.E.2d 265, 275 (Ill. 1997) (stating,
“The event, by itself, does not constitute an exception to the economic loss rule. Rather, the
exception is composed of a sudden, dangerous, or calamitous event coupled with personal
injury or property damage.”).
RUSTAD & KOENIG
to the subject matter of the contract.”‘ 140 The Court in HGI Assocs.
further stated that a decision restricting fraud damages to situations in
which a plaintiff suffers an injury that is distinct from the economic
losses recoverable under a breach of contract claim is inconsistent with
Texas law. 141
Courts have also posited a second exception to the ELR “when the
sudden occurrence is highly dangerous and presents the likelihood of
personal injury or injury to other property.’ ‘
142 The ELR would not
bar consumer actions for negligent security cases where they have no
contractual privity with third-party negligent or reckless data handlers
such as Indian BPOs. Nevertheless, third-party actions against offshore data handlers will generally be impractical due to the
problems with cross-border jurisdiction, enforcement ofjudgments and
E. OVERCOMING THE NEGLIGENT ENABLEMENT BARRIER
Courts will need to be innovative to overcome the present injury and ELR barriers to recovery given the increasing radius of the risk of
data misuse or misappropriation. In a wrongful death case, the New
Hampshire Supreme Court broke new ground when it held a data
broker potentially liable for negligent handling of personally identifiable information of a victim killed by a stalker. In Remsburg v.
Docusearch, Inc., the representative of the decedent, a young female
murder victim, filed a lawsuit against an Internet-based investigative service which sold information allowing the murderer to locate his
Courts need to revisit both the injury requirement and the ELR to
advance the practical goal of providing a remedy for the significant losses posed by data theft despite the absolute bar to recovery currently posed by the ELR. The traditional justification for the ELR
is that a plaintiff should not have a negligence-based action where they already have a contract remedy. 144 This policy consideration is simply
40 HGI Assocs. v. Wetmore Printing Co., 427 F.3d 867, 876 (1 1th Cir. 2005) (citing Formosa
Plastics Corp. v. Presidio Engineers & Contractors, Inc., 960 S.W.2d 41, 46 (Tex. 1998)).
142 Stepan Co. v. Winter Panel Corp., 948 F. Supp. 802, 808 (N.D. Ill. 1996).
143 Remsburg v. Docusearch, Inc., 816 A.2d 1001, 1005-06 (N.H. 2003).
144 Southwestern Bell Tel. Co. v. Delanney, 809 S.W.2d 493, 495 (Tex. 1991).
I/S: A JOURNAL OF LAW AND POLICY
not applicable to negligent enablement or entrustment cases because
the claimants have no other remedy. In data handling claims, for
example, the customer has no contractual remedy against third-party
handlers, particularly when the negligent handler is located offshore.
Any contractual remedy that a consumer will have against the data
handler has often been, in effect, an anti-remedy because of warranty
and remedy limitations. 1
Courts should also be more open-minded when considering the
injury of having personal or company data intercepted because of
negligent data handling. At a minimum, courts should recognize
special damages arising from the need to monitor credit reports and
implement augmented security to mitigate the potential costs of
identity fraud. Companies should also be able to recoup the costs of
informing customers or implementing employee education where they
are the victims of data theft.
Groundbreaking social transformations have always required the
reworking of legal doctrine. 4 6 This article has examined the collision
of interests between a consumer and a company’s right to data security
and the company’s obligation to implement reasonable security
measures to prevent third-party cybercrimes as well as data theft from
laptops and other terrestrial storage devices. At present, consumers
and companies have no meaningful remedy for injuries such as the
theft of personal data, computer viruses or Internet fraud enabled by
Courts and legislatures need to be bolder in carving out tort duties
to compensate the victims of negligent security because data handlers
are in the best position to avoid the peril. In the absence of liability for
the negligent enablement of data theft, “immunity breeds
irresponsibility while liability induces the taking of preventive
145 Rustad & Koenig, supra note 72, at 1611 (contending that consumers have no meaningful
warranties and remedies in cyberspace contracts); Mark A. Lemley, Intellectual Property and
Shrinkwrap Licenses, 68 S. CAL. L. REv. 1239, 1241 (1995) (describing one-sided adhesive
contracts in cyberspace).
146 Courts have reworked the doctrine of premises liability to reflect societal changes. Until
the last three decades, courts denied recovery to the victims of third-party criminal attacks on
the grounds of no duty owed. See, e.g., Nigido v. First Nat’l Bank, 288 A.2d 127 (Md. 1972).
Courts overcame this “no duty” rule on public policy grounds of fairness and the law and
economics principle of placing the burden of precaution on the least cost avoider.
RUSTAD & KOENIG
vigilance.”‘ 47 The extension of Learned Hand’s negligence test to
computer and Internet security will help to establish the courts’
recognition that in order to protect consumers and companies from
data theft, it is necessary to increase tort liability.
Data handlers who fail to implement reasonable security or
effective perimeter defenses provide an invitation for cybercriminals in
distant venues. Despite the fact that companies have a large
theoretical negligence exposure under the Learned Hand formula,
plaintiffs have not successfully obtained awards against companies or
their data handlers. 1
48 The social and economic costs associated with
negligent data handling will not decrease until a stronger liability rule
emerges and the courts hold the industry accountable for failing to
implement reasonable security.
147 Thomas F. Lambert, Jr., Suing for Safety, TRIAL, Nov. 1983, at 48.
14′ Davis, supra note 14, at 207 (stating that the difficulty of developing cyberspace remedies
is the radically divergent legal traditions of countries connected to the Internet).
Are you busy and do not have time to handle your assignment? Are you scared that your paper will not make the grade? Do you have responsibilities that may hinder you from turning in your assignment on time? Are you tired and can barely handle your assignment? Are your grades inconsistent?
Whichever your reason is, it is valid! You can get professional academic help from our service at affordable rates. We have a team of professional academic writers who can handle all your assignments.
Students barely have time to read. We got you! Have your literature essay or book review written without having the hassle of reading the book. You can get your literature paper custom-written for you by our literature specialists.
Do you struggle with finance? No need to torture yourself if finance is not your cup of tea. You can order your finance paper from our academic writing service and get 100% original work from competent finance experts.
While psychology may be an interesting subject, you may lack sufficient time to handle your assignments. Don’t despair; by using our academic writing service, you can be assured of perfect grades. Moreover, your grades will be consistent.
Engineering is quite a demanding subject. Students face a lot of pressure and barely have enough time to do what they love to do. Our academic writing service got you covered! Our engineering specialists follow the paper instructions and ensure timely delivery of the paper.
In the nursing course, you may have difficulties with literature reviews, annotated bibliographies, critical essays, and other assignments. Our nursing assignment writers will offer you professional nursing paper help at low prices.
Truth be told, sociology papers can be quite exhausting. Our academic writing service relieves you of fatigue, pressure, and stress. You can relax and have peace of mind as our academic writers handle your sociology assignment.
We take pride in having some of the best business writers in the industry. Our business writers have a lot of experience in the field. They are reliable, and you can be assured of a high-grade paper. They are able to handle business papers of any subject, length, deadline, and difficulty!
We boast of having some of the most experienced statistics experts in the industry. Our statistics experts have diverse skills, expertise, and knowledge to handle any kind of assignment. They have access to all kinds of software to get your assignment done.
Writing a law essay may prove to be an insurmountable obstacle, especially when you need to know the peculiarities of the legislative framework. Take advantage of our top-notch law specialists and get superb grades and 100% satisfaction.
We have highlighted some of the most popular subjects we handle above. Those are just a tip of the iceberg. We deal in all academic disciplines since our writers are as diverse. They have been drawn from across all disciplines, and orders are assigned to those writers believed to be the best in the field. In a nutshell, there is no task we cannot handle; all you need to do is place your order with us. As long as your instructions are clear, just trust we shall deliver irrespective of the discipline.
Our essay writers are graduates with bachelor's, masters, Ph.D., and doctorate degrees in various subjects. The minimum requirement to be an essay writer with our essay writing service is to have a college degree. All our academic writers have a minimum of two years of academic writing. We have a stringent recruitment process to ensure that we get only the most competent essay writers in the industry. We also ensure that the writers are handsomely compensated for their value. The majority of our writers are native English speakers. As such, the fluency of language and grammar is impeccable.
There is a very low likelihood that you won’t like the paper.
Not at all. All papers are written from scratch. There is no way your tutor or instructor will realize that you did not write the paper yourself. In fact, we recommend using our assignment help services for consistent results.
We check all papers for plagiarism before we submit them. We use powerful plagiarism checking software such as SafeAssign, LopesWrite, and Turnitin. We also upload the plagiarism report so that you can review it. We understand that plagiarism is academic suicide. We would not take the risk of submitting plagiarized work and jeopardize your academic journey. Furthermore, we do not sell or use prewritten papers, and each paper is written from scratch.
You determine when you get the paper by setting the deadline when placing the order. All papers are delivered within the deadline. We are well aware that we operate in a time-sensitive industry. As such, we have laid out strategies to ensure that the client receives the paper on time and they never miss the deadline. We understand that papers that are submitted late have some points deducted. We do not want you to miss any points due to late submission. We work on beating deadlines by huge margins in order to ensure that you have ample time to review the paper before you submit it.
We have a privacy and confidentiality policy that guides our work. We NEVER share any customer information with third parties. Noone will ever know that you used our assignment help services. It’s only between you and us. We are bound by our policies to protect the customer’s identity and information. All your information, such as your names, phone number, email, order information, and so on, are protected. We have robust security systems that ensure that your data is protected. Hacking our systems is close to impossible, and it has never happened.
You fill all the paper instructions in the order form. Make sure you include all the helpful materials so that our academic writers can deliver the perfect paper. It will also help to eliminate unnecessary revisions.
Proceed to pay for the paper so that it can be assigned to one of our expert academic writers. The paper subject is matched with the writer’s area of specialization.
You communicate with the writer and know about the progress of the paper. The client can ask the writer for drafts of the paper. The client can upload extra material and include additional instructions from the lecturer. Receive a paper.
The paper is sent to your email and uploaded to your personal account. You also get a plagiarism report attached to your paper.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.Read more
Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.Read more
Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.Read more
By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.Read more