Readers of this blog may recall a piece in which we discussed a New Jersey State law known as Daniel’s Law and Atlas Data Privacy Corporation (“Atlas Data”), a consumer data protection company. Shortly after Daniel’s Law was amended in July 2023, Atlas Data filed hundreds of lawsuits against various companies on behalf of thousands of individuals purportedly possessing Daniel’s Law claims. Although many of those cases have been stayed, a Pennsylvania federal judge recently dealt a swift blow to data brokers after denying Defendants’ Motion to Dismiss the action on constitutionality grounds.
Daniel’s Law Does Not Unconstitutionally Restrict Freedom of Speech
The facts alleged in Atlas Data Privacy Corp., et al. v. MyHeritage Ltd., et al. track the facts alleged in each of the hundreds of lawsuits Atlas Data has filed on behalf of approximately 19,000 “covered persons,” as defined under Daniel’s Law. After all of the judges in the District Court of New Jersey (“DNJ”) recused themselves, at least 37 cases were consolidated in the DNJ and assigned to a Pennsylvania federal judge. In MyHeritage, the eight individual plaintiffs are two correctional officers and six police officers who allege that they were threatened with violence as a result of their public service duties. Plaintiffs allegedly sent written notices to Defendants requesting that they cease disclosing or re-disclosing Plaintiffs’ home addresses and unlisted telephone numbers. After Defendants allegedly failed to respond to these requests, Plaintiffs assigned their Daniel’s Law claims to Atlas Data (Daniel’s Law was amended in July 2023 to allow covered persons to assign their claims to a third-party), who then commenced the instant case against numerous Defendants. In response, Defendants filed a consolidated Motion to Dismiss on the grounds that Daniel’s Law is unconstitutional on its face. Unfortunately, however, the assigned judge denied Defendants’ motion. And this means trouble for data brokers.
In denying Defendants’ Motion to Dismiss, the Court rejected Defendants’ constitutional challenge to Daniel’s Law. In its decision, the Court determined that: (1) covered persons’ home addresses and unlisted telephone numbers are not a matter of public significance; (2) Daniel’s Law furthers a need of the highest order of the State of New Jersey; and (3) Daniel’s Law serves a significant State interest. Defendants’ also argued that Daniel’s Law is unconstitutional because it imposes damages for non-compliance without any regard to culpability. In other words, Defendants argued that Daniel’s Law is a strict liability statute, and thus, unconstitutional. The Court denied Defendants’ challenge on these grounds as well, stating in its opinion that New Jersey’s highest state court likely would not construe Daniel’s Law as a strict liability statute.
Future Daniel’s Law Lawsuits
Given the high bar, it is not surprising that the Court denied Defendants’ constitutionality-based Motion to Dismiss. Defendants have until December 12, 2024 to appeal the Court’s decision to the Third Circuit Court of Appeals (“Third Circuit”).
Other states have enacted, or are in the process of enacting, statutes similar to Daniel’s Law. These laws have severe consequences for companies that fail to comply with requests from consumers to stop disclosing their home addresses and unlisted telephone numbers.
Unless and until Defendants appeal to the Third Circuit, the Court’s decision has massive ramifications for companies that collect and share consumer data. If your company collects and shares consumer data, it is imperative that you have policies and procedures in place to timely comply with consumer requests to cease disclosing home addresses and unlisted telephone numbers (under Daniel’s Law, companies must comply with non-disclosure requests within ten business days of receipt of same). Failure to timely comply with non-disclosure requests can be extremely costly, as violations of Daniel’s Law carry, among other things, a statutory penalty of actual damages or $1,000 for each violation.
If you need assistance in connection with a Daniel’s Law claim or with implementing or updating your data privacy practices and procedures, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.
The material contained herein is provided for informational purposes only and is not legal advice nor is it a substitute for seeking legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
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