The Librarian Wins In The Data Breach David Vs. Goliath Battle

A Florida librarian—whose confidential data was apparently accessed in a databreach involving Wells-Fargo and Sprint Nextel—won his lawsuit against the two giants on Tuesday, when neither company bothered to send anyone to represent them at the hearing.

Miami-Dade County Court Judge Jacqueline Schwartz ordered the two firms to pay Theodore Karantsalis the full amount he sought, plus court costs. Given that the consumer hadn't sustained any financial losses, he was only seeking $597 so the court order was for the two firms to pay $756.80.

Although that amount might seem trivial, Karantsalis initially argued that it was likely more than most consumers who filed class-action lawsuits ever received (after attorney fees are paid) and it would be received much more quickly.

The original incident involving Wells-Fargo and Sprint Nextel was baffling, as Karantsalis never knew how the companies got his confidential information as he wasn't a customer of theirs.

But his decision to use small claims court to fight back made the librarian activist—whose eclectic background includes serving as an inspector for the U.S. Immigration and Naturalization Service as performing security for the Transportation Security Administration—made him somewhat of a media darling. Consider the reader comments from our initial story about his efforts.

It seems that Karantsalis' modest $597 requested payout—which he said he calculated by tripling the cost of a PGP annual site license—would have likely been paid even had the judge not made her ruling. Karantsalis said that he received a FedEx package the day before the hearing, which included a 15-paragraph settlement offer from both Wells-Fargo and Sprint Nextel. That letter offered him the full $597, in exchange for his agreeing to not discuss the case in the media.

By waiting a day, he got the money anyway—plus $159.80 in court costs—and was free to say what he wanted.

But this case brings up some much bigger issues for retailers. The traditional U.S. court system does not do well with the data breach victims, who often have a very difficult time proving material financial losses. Small claims courts, as Karantsalis has proven, sidestep that issue.

With this settlement publicized, will tens of thousands consumers now take these frequent breach notification letters and drive to their local small claims court? The onerous nature of a retailer having to defend against literally tens of thousands of virtually identical accusations was precisely the kind of situation that class-action lawsuits were supposed to eliminate. But the civil demands for financial losses create a crack for these cases to slip into.

Will this Wells Fargo settlement start pushing consumer databreach victims all across the country to start singing the Wells Fargo song from "Music Man"? (O-ho the Wells Fargo Wagon is a-comin' down the street, I wish, I wish I knew whose settlement it will be!)

Maybe, just maybe, those data breaches might not be seen as so cost-free, after all.