Federal Judge Denies Class Arbitration Request in Legal Data Security Case

An Illinois federal judge has ruled that client data security claims filed against a Chicago-based law firm must be decided through individual arbitration.  In Shore et al. v. Johnson & Bell, Ltd., No. 1:16-CV-04363 (N.D. Ill), plaintiffs’ attorney Jay Edelson sought to engage in class-action litigation against Johnson & Bell, a law firm Edelson claims failed to adequately protect its client data.  Although no actual client data breach is alleged in the case, Edelson claims Johnson & Bell clients should receive a refund of a portion of the legal fees paid to the firm due to the firm’s use of allegedly outdated technology such as email and time-entry systems that are prone to hacking.  Edelson reportedly has plans to file class-action cases against at least 15 law firms he believes utilize insufficient client data security measures.

Previously, the dispute was sent to arbitration based on the terms of an engagement letter signed by individual Johnson & Bell clients.  In a recent ruling, the Northern District of Illinois held the engagement letter does not provide for class arbitration.  In addition, the court ruled that it was up to the court, not an arbitrator, to decide the issue of class or collective arbitration.  Edelson plans to appeal the federal court’s decision ordering Johnson & Bell clients to engage in individual arbitration to the United States Court of Appeals for the Seventh Circuit.

Stay tuned to this blog for future updates on this interesting case!

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