Nos. 2-14-0782 & 2-14-0998 cons. Opinion filed August 6, 2015 ______________________________________________________________________________

IN THE

APPELLATE COURT OF ILLINOIS

SECOND DISTRICT ______________________________________________________________________________

MATIAS MAGLIO, Individually and as ) Appeal from the Circuit Court Father and Next Friend of Macailee Maglio, ) of Kane County. a Minor, and on Behalf of All Others Similarly ) Situated, and ALEXANDER GIL, Individually ) and on Behalf of All Others Similarly Situated, ) ) Plaintiffs-Appellants, ) ) v. ) No. 13-L-358 ) ADVOCATE HEALTH AND HOSPITALS ) CORPORATION, Individually and d/b/a ) Advocate Medical Group, ) Honorable ) James R. Murphy, Defendants-Appellees. ) Judge, Presiding. ______________________________________________________________________________

VERONICA VIDES, Individually and as ) Appeal from the Circuit Court Mother and Next Friend of I.X.A. and ) of Lake County. B.K.A., Minors, PETER SINK, PAULA ) WISNIOWICZ, GREGG WISNIOWICZ, ) SHARI SLAVIN, ARTHUR COHEN, ) DAVID COHEN, JENNIFER COHEN, ) MARIANNA COHEN, AUDREY ) FRIEDLAND, JULIE MARDER, ERIC ) MARDER, AMY FRIEDLAND, LORI ) FRIEDLAND, SCOTT FRIEDLAND, ) MICHAEL FRIEDLAND, RENEE ROUSE, ) ROBIN FIELDS, MITCHEL A. FIELDS, ) Individually and on Behalf of All others ) Similarly Situated, ) ) Plaintiffs-Appellants, ) )

v. ) No. 13-CH-2701 ) ADVOCATE HEALTH AND HOSPITALS ) CORPORATION, d/b/a Advocate Medical ) Group, ) Honorable ) Mitchell L. Hoffman, Defendant-Appellee. ) Judge, Presiding. ______________________________________________________________________________

JUSTICE JORGENSEN delivered the judgment of the court, with opinion. Presiding Justice Schostok and Justice Birkett concurred in the judgment and opinion.

OPINION

¶1 In these consolidated cases, plaintiffs filed putative class actions against defendant,

Advocate Health and Hospitals Corporation, individually and d/b/a Advocate Medical Group

(Advocate), raising claims of negligence, violations of the Personal Information Protection Act

(Protection Act) (815 ILCS 530/1 et seq. (West 2014)), the Consumer Fraud and Deceptive

Business Practices Act (Fraud Act) (815 ILCS 505/1 et seq. (West 2014)), and invasion of

privacy, after four computers containing patient information were stolen from Advocate’s

offices. Plaintiffs did not allege that their personal information was used in any unauthorized

manner as a result of the burglary, but they claimed that they face an increased risk of identity

theft and/or identity fraud. In each case Advocate moved to dismiss under section 2-619.1 of the

Code of Civil Procedure (Code) (735 ILCS 5/2-619.1 (West 2014)) and the trial court dismissed

plaintiffs’ complaint, with prejudice, pursuant to: (1) section 2-619(a)(9) of the Code, finding

that the disclosure of confidential information did not constitute an injury-in-fact sufficient to

confer standing to pursue an action against Advocate; and, alternatively, (2) section 2-615 of the

Code, finding that the complaint failed to state a claim upon which relief could be granted.

Plaintiffs appeal. We affirm.

¶2 I. BACKGROUND

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¶3 Advocate is a network of affiliated doctors and hospitals that treat patients throughout the

state. On July 15, 2013, burglars stole from Advocate’s administrative building in Park Ridge

four password-protected computers that contained certain information relating to about 4 million

patients. Advocate subsequently notified the patients about the incident, set up a call center to

answer their questions, and offered them one year of free credit-monitoring services, including

identity theft resolution assistance and identity theft insurance.

¶4 On September 25, 2013, several plaintiffs sued Advocate in the circuit court of Lake

County (appeal No. 2-14-0998). On October 24, 2013, several plaintiffs sued Advocate in the

circuit court of Kane County (appeal No. 2-14-0782). Both actions were brought as putative

class actions.

¶5 The complaints asserted substantially similar allegations. Plaintiffs, who were patients or

former patients of Advocate, alleged that the personal information contained in the four stolen

computers, which have not been located, included their names, addresses, dates of birth, social

security numbers, health insurance data, Medicare and Medicaid data, medical diagnoses,

diagnosis codes, and medical record numbers. Advocate learned of the burglary on July 15,

2013, and notified plaintiffs on August 23, 2013. Plaintiffs alleged that the theft was caused by

Advocate’s failure to meet its obligation to abide by the best practices and industry standards

concerning the security of personal information and the computers associated therewith. They

also alleged that Advocate failed to timely notify them of the data breach and that Advocate’s

computers were not secure or encrypted. Thus, they further alleged, Advocate facilitated and

allowed for the unlawful disclosure of patients’ private and confidential health information.

(Plaintiffs did not allege that anyone had improperly accessed or used the information that was

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on the stolen computers or that they have suffered identity theft and/or identity fraud as a result

of the burglary.)

¶6 Specifically, in their negligence counts, plaintiffs alleged that Advocate had a duty,

pursuant to federal and state law, including the Protection Act and the Fraud Act, to securely

maintain and to not disclose or disseminate, without patient authorization, the personal

information at issue. They alleged that Advocate breached this duty when it used unsecured,

unencrypted computers to store such information and thus permitted the unlawful and

unauthorized disclosure of the information. Plaintiffs asserted that, as a result of Advocate’s

breach, they suffered personal and pecuniary damages.

¶7 In their Protection Act counts, plaintiffs alleged that Advocate was a “data collector”

(815 ILCS 530/5 (West 2014) (defined as an “entity that, for any purpose, handles, collects,

disseminates, or otherwise deals with nonpublic personal information”)) and did not timely

notify them of the breach (815 ILCS 530/10(a) (West 2014) (notice to be given “in the most

expedient time possible and without unreasonable delay, consistent with any measures necessary

to determine the scope of the breach and restore the reasonable integrity, security, and

confidentiality of the data system”)). Plaintiffs sought an injunction to require Advocate to

comply with the statute.

¶8 In their counts pursuant to the Fraud Act, plaintiffs alleged that Advocate committed

unfair trade practices by failing to maintain reasonable procedures to protect against

unauthorized access to plaintiffs’ personal information, that Advocate violated public policy

because class members had no choice but to submit their information, that Advocate intended

that members rely on its unfair practices, and that the practices were willful, wanton, continuing,

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and widespread. Also, plaintiffs noted that a Protection Act violation constituted an unlawful

practice under the Fraud Act. 815 ILCS 530/20 (West 2014).

¶9 In their counts alleging invasion of privacy, plaintiffs asserted that Advocate’s

impermissible and unauthorized disclosure and dissemination constituted an unauthorized

intrusion into plaintiffs’ privacy and seclusion, which was highly offensive to them and would be

so to a reasonable person. Plaintiffs also alleged that Advocate’s intrusion was an invasion of

private matters, causing them anguish and suffering. Additionally, the Lake County plaintiffs

included a count asserting intentional infliction of emotional distress. All plaintiffs sought class

certification, damages, attorney fees, costs, statutory interest, penalties, and injunctive and/or

declaratory relief.

¶ 10 Advocate moved to dismiss plaintiffs’ complaints, arguing that: (1) plaintiffs lacked

standing because they did not suffer the requisite injury-in-fact (735 ILCS 5/2-619(a)(9) (West

2014)), where their claimed injury—merely that the information was stolen—was insufficient

and any claim that plaintiffs face an increased risk of identity theft and identity fraud was

speculative; and (2) each count failed to state a claim upon which relief could be granted (735

ILCS 5/2-615 (West 2014)).

¶ 11 On May 27, 2014, the Lake County circuit court dismissed, with prejudice, plaintiffs’

complaint. The court found that allegations of possible future injury were insufficient to confer

standing. Plaintiffs did not allege facts that “would plausibly establish an ‘imminent’ or

‘certainly impending’ risk that they will be victimized.” The court further noted that “the harm

that Plaintiffs fear is contingent on a chain of attenuated hypothetical events and actions by third

parties independent of the defendant,” noting that these included: whether their data was actually

taken after the burglary, whether it was subsequently sold or otherwise transferred, whether

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anyone attempted to use it, and whether they succeeded. The increased risk that plaintiffs will be

identity theft victims at some indeterminate point in the future, the court determined, did not

constitute an injury sufficient to confer standing, where the occurrence of such future injury

rested on the criminal actions of independent decision-makers and where the complaint lacked

sufficient factual allegations that such future injury was imminent or certainly impending.

¶ 12 Addressing the Protection Act and the Fraud Act claims, and even assuming that

Advocate violated the statutes by inadequately notifying plaintiffs, the court found that the

violations, without any actual damages due to the data breach, were insufficient to establish

standing. The time and expenses that plaintiffs incurred to mitigate the risk of identity theft were

also insufficient to confer standing, because they involved a response to a speculative threat.

Next, addressing plaintiffs’ allegations concerning anxiety and emotional distress, the court

found that these, too, were insufficient to establish standing, as they were not based on an

imminent threat; rather, they alleged only speculative future criminal acts. Also, the court found

that plaintiffs’ loss-of-privacy allegations were insufficient to establish standing, where they did

not plead that the information was disclosed.

¶ 13 Next, the trial court addressed Advocate’s section 2-615 argument, finding in the

alternative that plaintiffs’ causes of action did not state claims upon which relief could be

granted. As to negligence, the court determined that plaintiffs failed to allege a compensable

present injury. Addressing the Protection Act and the Fraud Act claims, the court found that

plaintiffs did not allege actual damages arising from statutory violations and could not rely on

speculative future or presumed damages. As to the invasion-of-privacy-by-public-disclosure-of-

private-facts claim, the court found that plaintiffs failed to allege that Advocate disclosed and

disseminated plaintiffs’ private information; further, even if they did so allege, they failed to

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allege publicity. Next, as to intentional infliction of emotional distress, the court determined that

the allegations were insufficient to satisfy the extreme-and-outrageous and causation-of-severe-

emotional-distress elements of the cause of action. The complaint, it found, simply set forth

conclusory allegations.

¶ 14 Finally, the court addressed Advocate’s argument that the economic-loss doctrine, which

bars recovery in tort actions for solely economic losses, barred plaintiffs’ tort claims. The court

agreed with Advocate, noting that the plaintiffs did not respond to this argument and that case

law instructed that the alleged injuries were economic losses (except for emotional distress,

which the court found not to be viable where it was based on speculative harm) and, therefore,

were barred because plaintiffs did not allege that they suffered personal injury or property

damage and because no exception applied.

¶ 15 On July 10, 2014, the Kane County circuit court dismissed, with prejudice, plaintiffs’

complaint. It determined that plaintiffs did not sufficiently allege standing, where they made no

allegations of an actual or certainly impending identity theft. As to the damages element of the

negligence and the Fraud Act claims, the trial court found that dismissal was warranted because

plaintiffs alleged only an increased risk of possible future identity theft, rather than any present

harm. As to the invasion-of-privacy claim, the court similarly found it lacking, where, at most,

Advocate was negligent and where plaintiffs had voluntarily given Advocate the information at

issue. As to the public-disclosure-of-private-facts theory, the court found that the allegations did

not support two elements of such a claim: that Advocate had publicized the information or that

the information was publicized at all. Finally, addressing the economic-loss doctrine, the court

found that plaintiffs could not recover for purely economic losses under tort theories and that

none of the exceptions applied.

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¶ 16 Plaintiffs appeal.

¶ 17 II. ANALYSIS

¶ 18 On appeal, plaintiffs argue that the trial courts’ orders dismissing their complaints, for

both lack of standing and failure to state claims, were erroneous. For the following reasons, we

conclude that plaintiffs did not have standing to bring their suits. Accordingly, we need not

reach the alternative bases upon which the trial courts dismissed the complaints.

¶ 19 Advocate’s motions to dismiss were brought pursuant to section 2-619.1 of the Code,

which allows a party to move for dismissal under both sections 2-615 and 2-619. 735 ILCS 5/2-

619.1 (West 2014). A section 2-615 motion to dismiss attacks the legal sufficiency of a

complaint. Carr v. Koch,

. In ruling on such a motion, a court must accept

as true all well-pleaded facts in the complaint, as well as any reasonable inferences that may

arise from them. Bonhomme v. St. James,

. The critical inquiry is whether

the allegations in the complaint, when construed in the light most favorable to the plaintiff, are

sufficient to establish a cause of action upon which relief may be granted.

A cause of action

should not be dismissed under section 2-615 unless it is clearly apparent from the pleadings that

no set of facts can be proven that would entitle the plaintiff to recover. Khan v. Deutsche Bank

AG,

.

¶ 20 A motion brought pursuant to section 2-619 admits the sufficiency of the complaint, but

asserts an affirmative defense or other matter that avoids or defeats the claim. Id. ¶ 18. In ruling

on a section 2-619 motion to dismiss, the court must interpret the pleadings and supporting

materials in the light most favorable to the nonmoving party. Van Meter v. Darien Park District,

(2003) (quoting In re Chicago Flood Litigation,

(1997)). Lack of standing is an affirmative matter that is properly raised under section 2-

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619(a)(9). Glisson v. City of Marion,

(1999). Where a plaintiff lacks

standing, the proceedings must be dismissed because the lack of standing negates the plaintiff’s

cause of action. Wexler v. Wirtz Corp.,

(2004). We review de novo a dismissal

under either section 2-615 or section 2-619. Carr,

.

¶ 21 The doctrine of standing ensures that issues are raised only by those parties with a real

interest in the outcome of the controversy. Wexler,

. Although determining

whether a plaintiff has standing depends on the allegations in the complaint (Barber v. City of

Springfield,

(2011)), the plaintiff need not allege facts in the

complaint that establish standing (Chicago Teachers Union, Local 1 v. Board of Education,

(2000)). Rather, a plaintiff’s lack of standing is an affirmative defense and, as

such, must be pleaded and proven by the defendant. Lebron v. Gottlieb Memorial Hospital,

(2010). Further, in assessing standing in a class action, which plaintiffs seek

these cases to be, we focus on the named plaintiffs’ allegations, not the general class they purport

to represent. I.C.S. Illinois, Inc. v. Waste Management of Illinois, Inc.,

(2010).

¶ 22 Standing requires some injury-in-fact to a legally cognizable interest. Greer v. Illinois

Housing Development Authority,

(1988) (diminution in value of property

is an injury-in-fact to a legally cognizable interest). To establish standing, the claimed injury can

be actual or threatened and it must be: (1) distinct and palpable; (2) fairly traceable to the

defendant’s actions; and (3) substantially likely to be prevented or redressed by the grant of the

requested relief. Carr,

. These cases focus on the first element.

¶ 23 Turning first to Illinois case law, in Chicago Teachers Union, Local 1, certain high

school physical education teachers and others challenged the constitutionality of a school code

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provision that allowed school districts to petition the State Board of Education for a waiver from

statutory mandates related to the daily requirement for physical education. The supreme court

held that the teachers did not have standing to challenge the statute, rejecting the teachers’

allegations that they would be injured by lost employment opportunities if the waiver were

granted. Chicago Teachers Union, Local 1,

. The court noted that any adverse

consequences, such as diminished need for physical education teachers, was “purely

speculative,” as such classes would be available as electives if a waiver were granted, the scope

of any reduction was “purely conjectural,” and the teachers, who were tenured, would still have

the opportunity to teach ninth and tenth grade students, to whom the waiver would not apply.

. The court concluded: “the teachers cannot be said to have sustained or be in

immediate danger of sustaining a direct injury as a result of enforcement of the challenged

statute that is distinct and palpable and substantially likely to be prevented or redressed by the

grant of the requested relief.” (Emphasis added.)

.

¶ 24 Here, plaintiffs’ allegations of injury are clearly speculative, and therefore plaintiffs lack

standing to bring suit. Their claims that they face an increased risk of, for example, identity theft

are purely speculative and conclusory, as no such identity theft has occurred to any of the

plaintiffs. Thus, their allegations fail to show a distinct and palpable injury.

¶ 25 Federal standing principles are similar to those in Illinois, and the case law is instructive.

In a federal court, to show standing under article III of the United States Constitution, a plaintiff

must establish the existence of an injury that is: (1) concrete, particularized, and actual or

imminent; (2) fairly traceable to the challenged action; and (3) redressable by a favorable ruling.

Clapper v. Amnesty International USA,

, ___,

(2013). As to

the first prong, an “allegation of future injury may suffice if the threatened injury is ‘certainly

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impending,’ or there is a ‘ “substantial risk” ’ that the harm will occur.” (Emphases added.)

Susan B. Anthony List v. Driehaus,

, ___,

(2014) (quoting

Clapper,

, ___ n.5,

, 1150 n.5). The Clapper Court noted,

however, that “ ‘[a]llegations of possible future injury’ are not sufficient.” (Emphasis added.)

Clapper,

,

(quoting Whitmore v. Arkansas,

(1990)). It also rejected the objectively-reasonable-likelihood standard, as inconsistent with the

requirement that the threatened injury be certainly impending to constitute an injury-in-fact; a

theory that relies on a highly attenuated chain of events, it noted, does not meet the certainly-

impending standard.

at ___,

; see, e.g., Peters v. St. Joseph Services

Corp., No. 4:14-CV-2872,

(S.D. Tex. Feb. 11, 2015) (putative class

action against hospital system following data breach dismissed, where the plaintiff did not have

standing to bring her federal claims; the heightened risk of future identity theft/fraud posed by

the data breach did not confer article III standing on persons whose information might have been

accessed).

¶ 26 Clapper and Susan B. Anthony are the Supreme Court’s most recent pronouncements on

standing that address the injury-in-fact requirement. However, plaintiffs rely on Pisciotta v. Old

National Bankcorp.,

(7th Cir. 2007), a pre-Clapper decision, to argue that a mere

increased risk of harm is sufficient to serve as the basis for an injury-in-fact and confer standing.

(noting that “the injury-in-fact requirement can be satisfied by a threat of future harm

or by an act which harms the plaintiff only by increasing the risk of future harm that the plaintiff

would have otherwise faced, absent the defendant’s actions” (emphasis added)). We agree with

the courts that have held that Clapper “compels rejection of [the plaintiffs’] claim that an

increased risk of identity theft is sufficient to satisfy the injury-in-fact requirement for standing.”

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Strautins v. Trustwave Holdings, Inc.,

(N.D. Ill. 2014); see also In re

Barnes & Noble Pin Pad Litigation, No. 12-CV-8617, Sept. 3,

, at *3 (N.D.

Ill. 2013); Peters,

. 1 Thus, we do not view Pisciotta, which would be

merely persuasive authority at best (Westlake Financial Group, Inc. v. CDH-Delnor Health

System,

), as instructive. 2 As another court has noted, “an

increased risk or credible threat of impending harm is plainly different from certainly impending

harm, and certainly impending harm is what the Constitution and Clapper require.” (Emphases

in original.) In re: Science Applications International Corp. (SAIC) Backup Tape Data Theft

Litigation,

(D.D.C. 2014). As plaintiffs here have not alleged that their

personal information has actually been used or that they have been victims of identity theft or

1 There appears to be an intra-circuit split in the Seventh Circuit, with two courts ruling

that Clapper abrogated Pisciotta and one court ruling otherwise. Compare Strautins,

, and Barnes & Noble,

, at *3, with Moyer v. Michaels Stores, Inc.,

No. 14C561,

, at *5 (N.D. Ill. July 14, 2014) (disagreeing that Clapper

overruled Pisciotta). 2 It has also been criticized as poorly reasoned. Peters,

, at *6 n.9

(noting that medical-device, toxic-substance, and environmental-injury cases, to which Pisciotta

drew analogies, were separate and distinguishable from data-breach cases; in environmental-

injury cases, the standing question was not whether damage had occurred, but rather how it

would manifest; further, monetary awards would likely restore data-breach victims to their

original position, whereas they might not adequately remedy the harms suffered by

environmental-injury victims).

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fraud, the arguably increased risk of such acts as a result of Advocate’s data breach is

insufficient to confer standing as that concept is applied in federal cases.

¶ 27 Plaintiffs further argue that the medical information at issue here warrants a finding that

the harm is implicit. They urge that an actual injury occurs when a medical professional fails to

keep a patient’s medical information private. Such information is, they assert, inherently

personal and particularized to the individual. We reject plaintiffs’ argument. They rely on

Tabata v. Charleston Area Medical Center, Inc.,

(W. Va. 2014), where the court

held that the petitioners, whose medical records were accidentally placed on the Internet, had

standing under state law to bring causes of action for breach of confidentiality and invasion of

privacy.

. Tabata is distinguishable because the data in that case was actually

published on the internet for six months (id. at 515 n.1), whereas, here, there has been no known

public disclosure or identity theft or fraud with respect to plaintiffs’ data in the nearly two years

since the burglary.

¶ 28 Plaintiffs also argue that their claims rest not on a speculative chain of possibilities, but

rather on actions that already occurred: the computers were stolen; unencrypted information is

accessible and recoverable by anyone having access to the computers; 3 the data has significant

monetary value; there is a known market for the sale of the data; and “it can be deduced that the

data is being used to the detriment of the” victims. They also point to a similar lawsuit filed in

federal court, also involving victims of the Advocate burglary, where two of the plaintiffs

documented actual exposure to identity theft and fraud. Tierney v. Advocate Health & Hospitals

Corp., No. 13CV6237,

, at *2 (N.D. Ill. Sept. 4, 2014). With respect to the

two plaintiffs who alleged that they were injured, where each was notified of fraudulent activity,

3 Advocate alleged in its filings that the computers were password-protected.

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such as attempted access to bank accounts and opened cell phone accounts, the court found that

they sufficiently alleged standing. However, four of the plaintiffs alleged only a speculative fear

that the information could have been bought and sold and placed them at risk for identity theft,

identity fraud, and medical fraud, and the court concluded that “[w]ithout any allegations to

support their mere conclusion of imminent harm, they fail to establish standing.”

¶ 29 We reject plaintiffs’ arguments and note again that their allegations are merely

speculative. They alleged in their complaints that the records of 4 million patients were affected

by the Advocate burglary. The fact that two plaintiffs to date (out of those 4 million) have

received notification of fraudulent activity, i.e., have suffered actual injury arising from

Advocate’s alleged wrongful acts, does not show that plaintiffs here face imminent, certainly

impending, or a substantial risk of harm as a result of the burglary, where no such activity has

occurred with respect to their personal data. Plaintiffs here are like the four plaintiffs in Tierney

who were unable to allege actual injury and who the district court found had no standing.

¶ 30 We also reject plaintiffs’ claims that they sufficiently alleged “appreciable emotional

injury” as a result of the burglary. Plaintiffs again point to the two Tierney plaintiffs who

received notification of fraudulent activity. They argue that it can be deduced that their data is

being viewed and used in a malicious way, causing them anxiety and emotional distress. Again,

given the speculative and conclusory nature of their allegations and the lack of imminent,

certainly impending, or a substantial risk of harm, this argument fails. See, e.g., Crisafulli v.

Ameritas Life Insurance Co., No. 13-5937,

, at *4 (D.N.J. 2015) (noting that

courts “across the country have rejected ‘emotional distress’ as a basis for standing” (citing

SAIC,

(the plaintiffs “do not have standing based on risk alone, even if their

fears are rational”))); Barnes & Noble,

, at *5 (anxiety insufficient to establish

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standing, where there was no imminent threat of the plaintiff’s information being used in a

malicious way).

¶ 31 Finally, plaintiffs argue that their invasion-of-privacy claims should not have been

dismissed for lack of standing. They contend that the release of the information is sufficiently

egregious without their having to show that it was accessed, because the privacy of their health

care has been compromised. We reject this argument, because case law requires actual

disclosure to a third party and plaintiffs have made no such allegations. See SAIC,

-29 (citing cases and holding that the plaintiffs, who did not contend that their personal

information was viewed or exposed in any way that would facilitate easy imminent access, did

not have standing based on invasion of privacy; rather, they were “out of luck”); Barnes &

Noble,

, at *4 (lack of facts alleging disclosure fatal to privacy argument); see

also Ainsworth v. Century Supply Co.,

(1998) (public disclosure is an

element of invasion-of-privacy tort).

¶ 32 Because we affirm the trial courts’ dismissals under section 2-619(a)(9) based on

plaintiffs’ lack of standing, we need not reach Advocate’s alternative arguments under section 2-

615.

¶ 33 III. CONCLUSION

¶ 34 For the reasons stated, the judgment of the circuit court of Kane County is affirmed, as is

the judgment of the circuit court of Lake County.

¶ 35 Affirmed.

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