Author: Alex W. Karasik

By Alex W. Karasik, Tyler Z. Zmick, and Elizabeth C. Mincer

Duane Morris Takeaways:  In the Illinois Supreme Court’s latest ruling in the biometric privacy space, it decided in Walton v. Roosevelt University, 2023 IL 128338 (Ill. Mar. 23, 2023), that claims brought under the Biometric Information Privacy Act (“BIPA”) by bargaining unit employees are preempted by Section 301 of the Labor Management Relations Act (“LMRA”) where an employer invokes a broad management rights provision in a CBA.  This ruling – which is consistent with federal court decisions addressing the issue – is a rare win for defendants facing BIPA class actions.  Employers with unionized workforces may now be able to assert an LMRA preemption defense in seeking dismissal of BIPA claims based on decisions issued by Illinois’s highest state court and the U.S. Court of Appeals for the Seventh Circuit.

Case Background

Plaintiff alleged that when he started working at Roosevelt University in 2018, Roosevelt required him to enroll a scan of his hand geometry onto a biometric timekeeping device as a means of clocking in and out of work.  Plaintiff sued Roosevelt the following year, alleging that the university violated Sections 15(a), 15(b), and 15(d) of the BIPA in connection with Roosevelt’s use of the timekeeping system by (i) failing to develop a written policy made available to the public establishing a retention policy and guidelines for destroying biometric data, (ii) collecting his biometric data without providing him with the requisite notice and obtaining his written consent, and (iii) disclosing his biometric data without consent.

In response to the complaint, Roosevelt moved to dismiss on the basis that Plaintiff’s claims were preempted by Section 301 of the Labor Management Relations Act (“LMRA”).  Specifically, Roosevelt argued that Plaintiff had been a union member while employed by Roosevelt, and the collective bargaining agreement (“CBA”) between Roosevelt and Plaintiff’s union contained a management rights clause broad enough to cover the manner by which union employees clocked in and out of work.  As support, Roosevelt cited the U.S. Court of Appeals for the Seventh Circuit’s decision in Miller v. Southwest Airlines Co., 926 F.3d 898 (7th Cir. 2019), which held that federal labor law preempts BIPA claims when the claims require interpretation or administration of a CBA.

The Cook County Circuit Court rejected Roosevelt’s LMRA preemption argument, finding Miller distinguishable and holding that BIPA claims are “not intertwined with or dependent substantially upon consideration” of terms of a CBA because a person’s rights under the BIPA “exist independently of both employment and any given CBA.”  Id. ¶ 6.  Because the issue presented a close call, however, the Circuit Court certified the following question for interlocutory appeal: “Does Section 301 of the [LMRA] preempt [BIPA] claims asserted by bargaining unit employees covered by a [CBA]?”

The Illinois Appellate Court answered the certified question “yes.”  In doing so, the court noted that the Seventh Circuit had recently come to the same conclusion in a case where “the relevant factual and legal circumstances . . . [were] indistinguishable.”  Id. ¶ 8 (citing Fernandez v. Kerry, Inc., 14 F.4th 644 (7th Cir. 2021)).  The appellate court determined that Fernandez reached the correct conclusion, as the BIPA “contemplates the role of a collective bargaining unit acting as an intermediary on issues concerning an employee’s biometric information.”  Id. ¶ 10 (noting that the BIPA prohibits private entities from collecting biometric information without obtaining consent from the subject or the subject’s legally authorized representative).

The Illinois Supreme Court’s Decision

The Illinois Supreme Court subsequently allowed Plaintiff’s petition for leave to appeal, after which it affirmed the appellate court’s decision.  The Supreme Court observed that the Seventh Circuit had twice held that federal law preempts BIPA claims asserted under similar circumstances, and it noted that when interpreting federal statutes, Illinois courts look to the decisions of the U.S. Supreme Court (“SCOTUS”) and federal circuit and district courts.  It further noted that the SCOTUS’s interpretation of federal law is binding, and that in the absence of SCOTUS precedent, the weight given to federal circuit and district court interpretations of federal law depends on factors such as uniformity of law and the soundness of the decisions.  See id. ¶¶ 23-24 (“[I]f lower federal courts are uniform in their interpretation of a federal statute, this court, in the interest of preserving unity, will give considerable weight to those courts’ interpretations of federal law and find them to be highly persuasive.”).

In comparing Plaintiff’s case to the Seventh Circuit decisions, the Supreme Court acknowledged that the relevant CBA provisions in Plaintiff’s case and in Fernandez both contained similarly broad management rights clauses.  See id. ¶ 31 (noting the CBA between Roosevelt and Plaintiff’s union stated that “[s]ubject to the provisions of this Agreement, the Employer shall have the exclusive right to direct the employees covered by this Agreement” and that “[a]mong the exclusive rights of management . . . are: the right to plan, direct, and control all operations performed in the building [and] to direct the working force”).

In sum, because the Supreme Court did not find Miller and Fernandez to be “without logic and reason,” id., it deferred to the uniform federal case law on the issue and held that when an employer invokes a CBA’s broad management rights clause in response to a BIPA claim brought by a bargaining unit employee, the plaintiff’s BIPA claims are preempted by the LMRA.

Implications For Employers

Like the Seventh Circuit’s decisions in Miller and Fernandez, Walton reflects a rare defendant-friendly development and provides a basis for certain employers to seek dismissal of BIPA claims on LMRA preemption grounds.  The defense applies only to a subset of employers, however, as it can be asserted only by (i) employers with unionized employees who (ii) have entered into a CBA with a union that contains a management rights clause broad enough to cover the manner by which employees clock in and out of work.  Furthermore, unionized employees are not prohibited from seeking redress for alleged BIPA violations – they are simply required to first pursue those claims through the grievance procedures in their CBAs rather than in state or federal court.

Moreover, the National Labor Relations Board (“NLRB”) – the agency that enforces the National Labor Relations Act (“NLRA”) – has indicated that it intends to reshape current law regarding employee privacy and management rights provisions. If such changes take effect, they could reshape how courts assess federal labor law preemption in future BIPA cases.

The Walton ruling highlights the importance of carefully negotiating and drafting CBA provisions, particularly with respect to management rights.  Employers in states with strict privacy laws (like the BIPA) should consider contract language that specifically provides management with the right to use and store certain biometric data and/or implement other new technologies.

By Gerald L. Maatman, Jr., Jennifer A. Riley, and Alex W. Karasik

Duane Morris Takeaways: The last year saw a virtual explosion in privacy class action litigation. As a result, compliance with privacy laws in the myriad of ways that companies interact with employees, customers, and third parties is a corporate imperative. To that end, the class action team at Duane Morris is pleased to present the inaugural edition of the Privacy Class Action Review – 2023. This new publication analyzes the key privacy-related rulings and developments in 2022 and the significant legal decisions and trends impacting privacy class action litigation for 2023. We hope that companies and employers will benefit from this resource in their compliance with these evolving laws and standards.

Click here to download a copy of the Privacy Class Action Review – 2023 eBook.

Co-Editor of the Review Jerry Maatman provided insights on our new publication earlier this week to the Wall Street Journal in its article on privacy class action litigation, which can be found here: Biometric-Privacy Rulings in Illinois Expand Potential Liability for Tech Firms – WSJ

Duane Morris partners Jerry Maatman, Jennifer Riley, and Alex Karasik also recently recorded the first edition of “The Class Action Weekly Wire,” our new podcast series, in which contributors to our Duane Morris Class Action Review discuss the significant rulings and legislation in various areas of law. To add context to our new publication, last Friday’s edition discussed recent developments in privacy class action litigation. Click here to watch and listen to the podcast!

By Gerald L. Maatman, Jr., Alex W. Karasik, Tyler Z. Zmick, and Jennifer A. Riley

Duane Morris Takeaways:  In the latest ruling in Illinois in the biometric privacy class action space, the Illinois Supreme Court decided today in Cothron v. White Castle, 2023 IL 128004 (Ill. Feb. 17, 2023), that a separate claim for damages accrues under the Biometric Information Privacy Act (“BIPA”) each time a private entity scans or transmits an individual’s biometric identifier or information, in violation of section 15(b) or 15(d).

This ruling could exponentially increase monetary damages in class actions brought under the BIPA, especially in the employment context, where employees scan in and out of work multiple times per day for several hundred days per year.

Case Background

Plaintiff alleged that after she started working at White Castle in 2004, the company required her to use a fingerprint-based system to access the workplace computer she used in her position as a manager.  Plaintiff sued White Castle several years later in 2018, alleging that the company violated Sections 15(b) and 15(d) of the BIPA in connection with the fingerprint-based system by (i) collecting her biometric data without providing her with the requisite notice and obtaining her written consent, and (ii) disclosing her biometric data without consent.

After removing the complaint to the U.S. District Court for the Northern District of Illinois, White Castle moved for judgment on the pleadings on the basis that Plaintiff’s claims were untimely.  Specifically, White Castle argued that Plaintiff’s BIPA claims accrued in 2008 (when her first fingerprint scan occurred after the BIPA took effect), yet she did not file her complaint until 2018.  The District Court rejected White Castle’s one-time-only theory of claim accrual, holding that the lawsuit was timely because each separate unauthorized fingerprint scan constituted an independent violation of the statute, meaning Plaintiff’s BIPA claims were timely because her last fingerprint scan occurred within five years of the filing of her complaint.  Because the issue presented a close call, however, the District Court permitted White Castle to file an interlocutory appeal with the Seventh Circuit regarding whether Section 15(b) and 15(d) claims accrue each time a private entity scans a person’s biometric identifier and each time a private entity transmits a scan to a third party, respectively, or only upon the first scan and first transmission.

The U.S. Court of Appeals for the Seventh Circuit accepted the interlocutory appeal. Id. ¶ 9. After determining that Plaintiff had standing to bring her action in federal court under Article III of the U.S. Constitution, the Seventh Circuit addressed the parties’ respective arguments on the accrual of a claim under the Act.  Id.  Ultimately, the Seventh Circuit found the parties’ competing interpretations of claim accrual reasonable under Illinois law, and it agreed with Plaintiff that “the novelty and uncertainty of the claim-accrual question” warranted certification of the question to the Illinois Supreme Court.  Id. at 1165-66.  The Seventh Circuit “observed that the answer to the claim-accrual question would determine the outcome of the parties’ dispute, this court could potentially side with either party on the question, the question was likely to recur, and it involved a unique Illinois statute regularly applied by federal courts.”  Id..

The Illinois Supreme Court’s Decision

In a 4-3 split ruling, the Illinois Supreme Court held today that that a separate claim accrues under the BIPA each time a private entity scans or transmits an individual’s biometric identifier or information, in violation of section 15(b) or 15(d).  First, the Illinois Supreme Court analyzed the certified question with respect to Section 15(b), which provides that no private entity “may collect, capture, purchase, receive through trade, or otherwise obtain” a person’s biometric data unless it first provides notice and receives written consent.  740 ILCS 14/15(b).  Relying on the plain language of the statute and the fact that the actions of “collecting” and “capturing” biometric data can occur more than once, the Supreme Court agreed with Plaintiff’s interpretation – namely, that Section 15(b) “applies to every instance when a private entity collects biometric information without prior consent.”  Id. ¶¶ 19, 23.  As interpreted in the context of the facts of the case, the Supreme Court further observed that White Castle obtains an employee’s fingerprint, stores it in its database, and then compares the fingerprint taken during subsequent scans to verify the identity of the employee.  In the Supreme Court’s words, White Castle “fails to explain how such a system could work without collecting or capturing the fingerprint every time the employee needs to access his or her computer or pay stub.”  Id. ¶ 23.  Accordingly,  consistent with the District Court’s decision in Cothron and the Illinois Appellate Court’s conclusion in Watson, 2021 IL App (1st) 210279, ¶ 46, the Illinois Supreme Court held that an entity violates Section 15(b) the first time it collects biometric data without having provided the requisite notice and obtaining consent, in addition to “each subsequent scan or collection.”  Id. ¶ 24.

Next, closely tracking its analysis of Section 15(b), the Supreme Court similarly held that BIPA Section 15(d) – which prohibits the disclosure, redisclosure, or dissemination of biometric data without consent – “applies to every transmission to a third party.”  Id. ¶ 28. Like the verbs “collect” and “capture” in Section 15(b), the acts of disclosing and redisclosing biometric data occur upon the initial disclosure in addition to any subsequent disclosure or redisclosure of the data.  See id. ¶ 29 (“A fingerprint scan system requires a person to expose his or her fingerprint to the system so that the print may be compared with the stored copy, and this happens each time a person uses the system.”).

The majority opinion also rejected White Castle’s remaining “nontextual” arguments supporting its single-accrual interpretation.  White Castle argued that a BIPA claim accrued only upon the initial collection or disclosure of a person’s biometric data because an individual loses the right to control his or her biometric data as soon as the data is collected and/or disclosed.  In rejecting the argument, the Supreme Court again relied on the statute’s plain language, stating: “[n]o such limitation appears in the statute.  We cannot rewrite a statute to create new elements or limitations not included by the legislature.”  Id. ¶ 39.

Next, the Supreme Court turned to White Castle’s argument that in light of the BIPA’s liquidated damages provision, interpreting the statute to mean an entity violates Sections 15(b) and 15(d) every time it collects or discloses biometric data means “a party may recover for “each violation,” allowing multiple or repeated accruals of claims by one individual could potentially result in punitive and “astronomical” damage awards that would constitute “annihilative liability” not contemplated by the legislature and possibly be unconstitutional.”  Id. ¶ 41.  For example, White Castle estimated that if Plaintiff was successful and allowed to bring her claims on behalf of as many as 9,500 current and former White Castle employees, classwide damages in her action may exceed $17 billion.  Once again, the Supreme Court rejected White Castle’s argument because the statutory language is clear and supports plaintiff’s position.  See id. ¶ 40 (“As the district court observed, this court has repeatedly held that, where statutory language is clear, it must be given effect, “ ‘even though the consequences may be harsh, unjust, absurd or unwise.’ ” (Emphasis omitted.) Cothron, 477 F. Supp. 3d at 734 (quoting Peterson v. Wallach, 198 Ill. 2d 439, 447 (2002)).”).

Importantly, however, the Supreme Court acknowledged that trial courts could exercise their discretion to reduce the amount of statutory damages that plaintiffs can recover. Id. ¶ 42.  In closing, the Supreme Court reiterated the position that White Castle’s “policy-based concerns about potentially excessive damage awards under the Act are best addressed by the legislature,” and it “suggest[ed] that the legislature review these policy concerns and make clear its intent regarding the assessment of damages under the Act.”  Id. ¶ 43.  Accordingly, the Illinois Supreme Court concluded that the plain language of section 15(b) and 15(d) shows that a claim accrues under the BIPA with every scan or transmission of biometric identifiers or biometric information without prior informed consent.

The Dissent

Notably, three Illinois Supreme Court Justices, inclusive Chief Justice Theis, joined the Dissenting Opinion.  Of note, the Dissent opined that two significant consequences militate against the majority’s construction.  Id. ¶ 60.  First, under the majority’s rule, plaintiffs would be incentivized to delay bringing their claims as long as possible, since “If every scan is a separate, actionable violation, qualifying for an award of liquidated damages, then it is in a plaintiff’s interest to delay bringing suit as long as possible to keep racking up damages.”  Id.  Second, the Dissent noted that, “the majority’s construction of the Act could easily lead to annihilative liability for businesses.”  Id. at ¶ 61.

In sum, the Dissent commented that, “Imposing punitive, crippling liability on businesses could not have been a goal of the Act, nor did the legislature intend to impose damages wildly exceeding any remotely reasonable estimate of harm.  Id. ¶ 63.  To this point, the Dissent opined that, “nothing in the Act indicating that the legislature intended to impose cumbersome requirements or punitive, crippling liability on corporations for multiple authentication scans of the same biometric identifier. The legislature’s intent was to ensure the safe use of biometric information, not to discourage its use altogether.”

Implications For Employers

Following the Illinois Supreme Court’s similar pro-plaintiff ruling in Tims v. Black Horse Carriers, 2023 IL 127801 (Ill. Feb. 2, 2023), which applied a five-year statute of limitations to the BIPA instead of a one-year statute of limitations, the well is beginning to dry for businesses in terms of potential BIPA class action defenses. While employers can still explore novel exemptions, such as information captured from a patient in a health care setting, most companies caught in the crosshairs of BIPA class actions will be facing monumental amounts of potential damages.

Businesses confronted with BIPA class actions may need to explore alternative potential defenses, such as the constitutionality of the overbearing damages thresholds.  Companies will also likely push for legislative changes.  Nonetheless, given the bleak outlook of the law as it stands, it is imperative for businesses to immediately ensure they are compliant with the BIPA.

By Kelly A. Bonner, Alex W. Karasik, Gerald L. Maatman, Jr., and Jennifer A. Riley

Duane Morris Takeaways:  In a significant win for fashion and beauty retailers in the privacy class action space, in Warmack-Stillwell v. Christian Dior Inc., No. 1:22-CV-04633, 2023 U.S. Dist. LEXIS 22926 (N.D. Ill. Feb. 10, 2023), an Illinois federal court held that an exemption to the Illinois Biometric Information Privacy Act (“BIPA”) for data captured from a patient in a health care setting barred proposed class action claims alleging that luxury giant Christian Dior Inc.’s (“Dior”) virtual try-on tool (“VTOT”) violated the BIPA.

Businesses in Illinois, particularly online fashion and beauty retailers, can use this ruling to attack BIPA claims involving VTOT technology.

Case Background

As discussed in our previous publications, lawsuits involving BIPA claims and eyewear have been dismissed under one of BIPA’s statutory exemptions, which in relevant part excludes from its definitions of biometric identifiers and biometric information: (1) information captured from a patient in a health care setting; or (2) information collected, used, or stored for health care treatment, payment, or operations under the federal Health Insurance Portability and Accountability Act of 1996, including prescription lenses, non-prescription sunglasses, and frames meant to hold prescription lenses.

Plaintiff alleged that Dior maintained a VTOT feature on its website that collected users’ facial geometry data without first obtaining written consent or informing users of the purpose and length of time that their data was being collected in violation of Section 15(b) of BIPA. Plaintiff also alleged that Dior failed to provide a publicly available data retention and destruction schedule, as required by Section 15(a) of BIPA.

Dior moved to dismiss Plaintiff’s complaint on the basis that the BIPA’s health care exemption applied to non-prescription sunglasses, such as the ones sold by Dior and which the plaintiff alleged that she tried on with the VTOT technology, and thus precluded Plaintiff’s claims.

Plaintiff countered that the sunglasses were fashion accessories; Dior’s website was not a health care setting; and Dior’s consumers were not patients. Plaintiff also sought to distinguish prior decisions applying the BIPA’s health care exemption as focusing on the VTOT technology being used for prescription glasses, akin to optometrist fittings, and not in connection with the purchase of luxury sunglasses.  Id. at *8.

The Court’s Decision

The Court granted Dior’s motion to dismiss under Rule 12(b)(6).  First, the Court explained that Plaintiff qualified as a “patient in a health care setting” under the dictionary definition of the term “patient,” and that Dior’s VTOT feature “facilitates the provision of a medical device that protects vision.” Id. at *8.  Similarly, the Court held that use of the VTOT technology constituted “health care,” which the dictionary defined as “efforts made to maintain or restore physical, mental, or emotional well-being especially by trained and licensed professionals.”  Id. at *9.

In addition, the Court reasoned that the relevant test was “not a user’s subjective understanding, but rather an objective application of the text of the exemption.” Id. at *8-9.  The Court opined that the outcome of the analysis should not change if a consumer uses the VTOT in search of primarily stylish sunglasses rather than protective ones.

Plaintiff attempted to distinguish Dior’s website from a “health care setting” by arguing that “[a]n artist prepping a canvas is not providing a health care service if they use a scalpel instead of an Xacto knife.”  Id. at *9.  As to that point, the Court concluded that the VTOT feature facilitated the purchase of sunglasses to wear on one’s face and protect one’s eyes, thus performing the product’s intended medical function rather than an unconventional purpose.

Similarly, the Court rejected Plaintiff’s attempts to analogize her case to BIPA suits against blood plasma centers, in which courts rejected application of the health care exemption.  Even if the cases applied the same definitions of “health care” and “patient,” the Court concluded that the removal of plasma for commercial purposes is not “health care because the purpose — at least from the plasma donors’ perspectives — was not to ‘maintain or restore physical, mental or emotional well-being’; it was to get paid.”  Id. at *11.

Finally, the Court notably denied Dior’s motion to dismiss under Rule 12(b)(1), rejecting Dior’s argument that Plaintiff failed to allege an injury-in-fact sufficient for Article III standing. The Court concluded that Plaintiff sufficiently alleged an injury-in-fact under Section 15(a) “because “unlawful retention of a person’s biometric data is as concrete and particularized an injury as an unlawful collection of a person’s biometric data.”   Id. at *11.

Accordingly, the Court granted Dior’s motion to dismiss on Rule 12(b)(6) grounds, but rejected Dior’s Article III standing argument and denied its motion based on Rule 12(b)(1).

Implications for Retailers

The Court’s decision in Warmack is a solid victory for fashion and apparel retailers, and indicates that courts are willing to expand the BIPA’s healthcare exemption to more retail-oriented environments, and adopt a plain reading of the statue rather than seeking to discern legislative intent. This ruling could have significant implications for personal care products retailers, especially those who utilize VTOT features to assess skin complaints such as aging, hyperpigmentation, and recommend treatments, and whether those defenses will draw regulatory scrutiny for purposed “drug” claims.

In the meantime, retailers should stay abreast of biometric data privacy laws in Illinois and beyond, and ensure that their privacy policies stay current with evolving nationwide legislation.