Appeals Court Opinion Expands Cybersecurity Liability

In a move that could held define cyber-security standards in commercial interactions, the Fifth Circuit Court recently said a company that gets hacked may be liable to commercial parties under a negligence theory. Though economic loss doctrine in many states would prevent recovery under negligence theories, the court found that in New Jersey law the company could be held responsible, as a data breach poses reasonably forseeable economic loss to a class to which a company owes a duty of care, and where the class does not have a contractual remedy.