Court Opinion

ID: 4680983
Source: CourtListenerOpinion
Date Created: 2021-04-26 15:00:18.897397+00
Date Added: 2024-06-11T08:03:58.585821
License: Public Domain

19-4310
McMorris v. Carlos Lopez & Assocs., LLC

                     United States Court of Appeals
                        For the Second Circuit

                                     August Term 2020

                             Submitted: November 25, 2020
                                Decided: April 26, 2021

                                          No. 19-4310

                                   DEVONNE MCMORRIS,

                                     Plaintiff-Appellant,

                      ROBIN STEVEN, SEAN MUNGIN, on behalf of
                     themselves, all others similarly situated, and
                                  the general public,

                                           Plaintiffs,

                                               v.

                      CARLOS LOPEZ & ASSOCIATES, LLC, CARLOS
                                      LOPEZ,

                                    Defendants-Appellees.

                     Appeal from the United States District Court
                       for the Southern District of New York
                       No. 18-cv-6500, Jesse M. Furman, Judge.
Before: CALABRESI, KATZMANN, AND SULLIVAN, Circuit Judges.

       Plaintiff-Appellant Devonne McMorris appeals from an order of the United
States District Court for the Southern District of New York (Furman, J.) dismissing
her claims against Defendants-Appellees Carlos Lopez & Associates, LLC (“CLA”)
and Carlos Lopez for lack of Article III standing. McMorris, along with two other
non-appealing plaintiffs, had initially filed a class-action complaint alleging a
variety of state-law claims against CLA and its principal based on an errant email
sent to all of CLA’s employees containing the sensitive personally identifiable
information (“PII”) of approximately 130 current and former CLA workers. On
appeal, McMorris argues that the district court erred by dismissing her claims
because, even though she did not allege that her PII had actually been misused as
a result of CLA’s errant email, she alleged an increased risk of identity theft
sufficient to confer Article III standing. We agree that in the context of
unauthorized data disclosures, plaintiffs may establish an Article III injury in fact
based solely on a substantial risk of identity theft or fraud, even when those
plaintiffs have not yet been the victims of such identity theft or fraud.
Nevertheless, the district court correctly concluded that McMorris failed to
establish an injury in fact in this case.

      AFFIRMED.

                                Abraham Z. Melamed, Derek Smith Law Group,
                                PLLC, New York, NY, for Plaintiff-Appellant
                                Devonne McMorris.

                                Joseph R. Palmore, Morrison & Foerster LLP,
                                Washington, DC (Michael B. Miller, Lena H.
                                Hughes, Janie Buckley, Morrison & Foerster LLP,
                                New York, NY, on the brief), for Defendants-Appellees
                                Carlos Lopez & Associates, LLC and Carlos Lopez.

                                         2
RICHARD J. SULLIVAN, Circuit Judge:

       Plaintiff-Appellant Devonne McMorris appeals from an order of the United

States District Court for the Southern District of New York (Furman, J.) dismissing

her claims against Defendants-Appellees Carlos Lopez & Associates, LLP and

Carlos Lopez for lack of subject-matter jurisdiction because McMorris and her co-

plaintiffs failed to allege an injury in fact sufficient to confer Article III standing.

For the reasons set forth below, we affirm.

                                         I. Background

       This case involves the intersection of two phenomena that have become

increasingly common in our digitized world: data breaches and inadvertent mass

emails.

       Carlos Lopez & Associates, LLP (“CLA”) provides mental and behavioral

health services to veterans, service members, and their families and communities. 1

1We draw the following facts from McMorris’s operative complaint and from the transcript of
the oral argument before the district court, as is proper when considering a dismissal for lack of
subject-matter jurisdiction. See Libertarian Party of Erie Cnty. v. Cuomo, 970 F.3d 106, 120–21 (2d
Cir. 2020) (explaining that, when considering a motion to dismiss “for lack of statutory or
constitutional power to adjudicate the action,” a court may refer to evidence outside the
pleadings), petition for cert. filed, No. 20-1151 (Feb. 23, 2021). In the present context involving a
facial challenge to the district court’s jurisdiction, we assume the facts in the complaint to be true
“unless contradicted by more specific allegations or documentary evidence,” and “we construe
all reasonable inferences to be drawn from those factual allegations in [McMorris’s] favor.”
Amidax Trading Grp. v. S.W.I.F.T. SCRL, 671 F.3d 140, 145 (2d Cir. 2011).

                                                  3
In June 2018, a CLA employee accidentally sent an email to all of the

approximately 65 employees at the company.          Attached to the email was a

spreadsheet containing sensitive personally identifiable information (“PII”) –

including Social Security numbers, home addresses, dates of birth, telephone

numbers, educational degrees, and dates of hire – of approximately 130 then-

current and former CLA employees. Two weeks later, CLA emailed its then-

current employees to address the accidental email, but it did not contact any

former employees regarding the disclosure or take any other corrective action.

      After the PII spreadsheet was circulated, three individuals whose

information had been shared – Robin Steven, Sean Mungin, and Devonne

McMorris (“Plaintiffs”) – filed a class-action complaint against CLA and its

principal, Carlos Lopez. In their operative complaint, Plaintiffs asserted state-law

claims for negligence, negligence per se, and statutory consumer protection

violations on behalf of classes in California, Florida, Texas, Maine, New Jersey, and

New York. They alleged that CLA “breached its duty to protect and safeguard

[their] personal information and to take reasonable steps to contain the damage

caused where such information was compromised.” App’x 2. Although Plaintiffs

did not allege that they had been the victims of fraud or identity theft as a result

                                         4
of the errant email, they claimed that, because their PII had been disclosed to all of

CLA’s then-current employees, they were “at imminent risk of suffering identity

theft” and becoming the victims of “unknown but certainly impending future

crimes.” Id. at 6, 9. Moreover, while they did not allege that the PII in the

spreadsheet was ever shared with anyone outside of CLA or taken or misused by

any third parties, Plaintiffs claimed that they cancelled credit cards, purchased

credit monitoring and identity theft protection services, and spent time assessing

whether they should apply for new Social Security numbers after the email

incident.

      CLA moved to dismiss Plaintiffs’ claims for, among other things, lack of

Article III standing. But before the deadline for Plaintiffs’ response to the motion

to dismiss, the parties reached a class settlement, which they asked the district

court to approve. In advance of the scheduled class settlement fairness hearing,

the district court sua sponte ordered further briefing on whether Plaintiffs

possessed Article III standing.

      At the fairness hearing held on November 14, 2019, the court informed the

parties of its preliminary conclusion that Plaintiffs lacked Article III standing

because they failed to allege “an injury that is concrete and particularized and

                                          5
certainly impending.” App’x 67. The district court emphasized that “the parties

concede that there is no evidence that any class members’ identity was actually

stolen . . . , let alone misused,” and that the sharing of Plaintiffs’ PII “was not the

result of any intentional act by third parties,” such as “hacking or some sort of

criminal conduct from which it could be inferred that those [who] retained data

intended to and were likely to misuse it.” Id. at 69. Rather, “the gravamen of the

claim in this case is that defendants essentially acted with insufficient care by

sharing [PII] of class members with employees within the company.” Id.

      On November 22, 2019, the district court issued a written opinion formally

denying the outstanding motion for approval of the class settlement and

dismissing the case for lack of subject-matter jurisdiction. See Steven v. Carlos Lopez

& Assocs., LLC, 422 F. Supp. 3d 801, 807 (S.D.N.Y. 2019). In that opinion, the district

court noted that, unlike several other circuits, the Second Circuit has not yet

addressed whether plaintiffs alleging the theft or inadvertent disclosure of their

data may establish standing to bring claims against the entity that held their data

based on an increased risk of future identity theft or fraud. See id. at 804. The

district court explained, however, that even if the Second Circuit were to recognize

such a theory, “it would be of no help to Plaintiffs in this case” because they failed

                                          6
to allege facts indicating that they faced “certainly impending” identity theft or

fraud, or even a “substantial risk” of such harm. Id. (internal quotation marks

omitted). The district court recognized that, unlike the cases in which other

circuits have held that data breach victims have established standing based on a

risk of future identity theft, Plaintiffs here did not allege that their data had been

misused in any way or compromised as the result of an intentionally targeted data

theft. See id. at 804–05. Indeed, the district court observed that “it is arguably a

misnomer to even call this case a ‘data breach’ case,” since, “[a]t best, the data was

‘misplaced’” by an internal CLA employee rather than taken by a third party. Id.

at 806 n.3 (internal citations omitted).

      The district court also held that Plaintiffs could not establish an Article III

injury in fact based on “the time and money spent monitoring or changing their

financial information and accounts.” Id. at 807. The court explained that, since

Plaintiffs failed to allege a substantial risk of identity theft or that such harm was

certainly impending, they could not establish standing by, in essence, inflicting

harm on themselves based on a speculative fear of future identity theft. See id.

      After concluding that Plaintiffs lacked Article III standing, the district court

held that it was “powerless to approve the parties’ proposed class settlement” and

                                           7
dismissed the case for lack of subject-matter jurisdiction. Id. (internal quotation

marks omitted). Following the district court’s decision, McMorris (without the

other named Plaintiffs) appealed.

                                   II. Discussion

      “The existence of standing is a question of law that we review de novo.”

Shain v. Ellison, 356 F.3d 211, 214 (2d Cir. 2004). Because federal courts are courts

of limited jurisdiction, if a “court determines at any time that it lacks subject-matter

jurisdiction, the court must dismiss the action.” Fed. R. Civ. P. 12(h)(3). That is so

even when a court is asked only to approve a class-action settlement, since “[a]

court is powerless to approve a proposed class settlement if it lacks jurisdiction

over the dispute.” Frank v. Gaos, 139 S. Ct. 1041, 1046 (2019). In a class action,

“federal courts lack jurisdiction if no named plaintiff has standing.” Id.

      “To establish standing under Article III of the Constitution, a plaintiff must

demonstrate (1) that he or she suffered an injury in fact that is concrete,

particularized, and actual or imminent, (2) that the injury was caused by the

defendant, and (3) that the injury would likely be redressed by the requested

judicial relief.” Thole v. U.S. Bank N.A., 140 S. Ct. 1615, 1618 (2020). “The party

invoking federal jurisdiction bears the burden of establishing” each element of

                                           8
standing, which “must be supported in the same way as any other matter on which

the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence

required at successive stages of litigation.” Lujan v. Defs. of Wildlife, 504 U.S. 555,

561 (1992). This case concerns only the first element of Article III standing: the

existence of an injury in fact.

      With respect to that element, the Supreme Court has made clear that

“allegations of possible future injury” or even an “objectively reasonable

likelihood” of future injury are insufficient to confer standing. Clapper v. Amnesty

Int’l USA, 568 U.S. 398, 409–10 (2013) (internal quotation marks, alterations, and

emphasis omitted). Rather, a future injury constitutes an Article III injury in fact

only “if the threatened injury is certainly impending, or there is a substantial risk

that the harm will occur.” Susan B. Anthony List v. Driehaus, 573 U.S. 149, 158 (2014)

(internal quotation marks omitted).

      This Court has not yet addressed whether a plaintiff may establish standing

based on a risk of future identity theft or fraud stemming from the unauthorized

disclosure of that plaintiff’s data. Some courts have suggested that there is a circuit

split on the issue. See, e.g., Tsao v. Captiva MVP Rest. Partners, LLC, 986 F.3d 1332,

1340 (11th Cir. 2021); Beck v. McDonald, 848 F.3d 262, 273–74 (4th Cir. 2017); Katz v.

                                          9
Pershing, LLC, 672 F.3d 64, 80 (1st Cir. 2012). But in actuality, no court of appeals

has explicitly foreclosed plaintiffs from establishing standing based on a risk of

future identity theft – even those courts that have declined to find standing on the

facts of a particular case. See, e.g., In re SuperValu, Inc., 870 F.3d 763, 773 (8th Cir.

2017) (declining to hold that “evidence of misuse following a data breach is

necessary for a plaintiff to establish standing” despite finding that certain plaintiffs

lacked standing); see also Tsao, 986 F.3d at 1343 (“Of course, as our sister Circuits

have recognized, evidence of actual misuse is not necessary for a plaintiff to

establish standing following a data breach.”). 2 Indeed, requiring plaintiffs to

allege that they have already suffered identity theft or fraud as the result of a data

breach would seem to run afoul of the Supreme Court’s recognition that “[a]n

allegation of future injury may suffice” to establish Article III standing “if the

threatened injury is certainly impending, or there is a substantial risk that the harm

will occur.” Susan B. Anthony List, 573 U.S. at 158 (internal quotation marks

2 The Third Circuit’s decision in Reilly v. Ceridian Corp. perhaps comes closest to unilaterally
rejecting an “increased-risk” theory of injury in fact in the context of a data breach. See 664 F.3d
38, 45 (3d Cir. 2011) (“In data breach cases where no misuse is alleged, however, there has been
no injury[.]”). But even there, the Third Circuit distinguished analogous cases from the Ninth
and Seventh Circuits on their facts instead of rejecting the “increased-risk” theory altogether. See
id. at 44 (explaining that, in contrast to those cases, “there [was] no evidence that the intrusion”
in Reilly “was intentional or malicious” or that any “identifiable taking occurred; all that [was]
known [was] that a firewall was penetrated”).

                                                10
omitted).       We therefore join all of our sister circuits that have specifically

addressed the issue in holding that plaintiffs may establish standing based on an

increased risk of identity theft or fraud following the unauthorized disclosure of

their data. 3

        Of course, the fact that plaintiffs may establish standing based on an

“increased-risk” theory does not mean that the Plaintiffs have done so here. As

the district court recognized, the courts that have confronted standing in the

context of the unauthorized disclosure of data have considered certain factors that

weigh in favor of finding an Article III injury in fact. And while none of these

factors is alone necessary or sufficient to confer standing, they all bear on whether

the risk of identity theft or fraud is sufficiently “concrete, particularized, and . . .

imminent.” Thole, 140 S. Ct. at 1618. We therefore endorse those factors here, most

of which are not implicated in this case.

3We express no view on the separate but related question of whether plaintiffs may allege a
present injury in fact stemming from the violation of a statute designed to protect individuals’
privacy, which primarily involves the application of the Supreme Court’s decision in Spokeo, Inc.
v. Robins, 136 S. Ct. 1540 (2016). See, e.g., In re Horizon Healthcare Servs. Inc. Data Breach Litig., 846
F.3d 625, 634, 636–38 (3d Cir. 2017). Here, Plaintiffs brought claims asserting only a risk of future
identity theft or fraud, so we have no reason to address this privacy-based theory of standing.
See id. at 639 n.20 (distinguishing that case from Reilly v. Ceridian Corp. because, in Horizon, the
plaintiffs were “not complaining solely of future injuries”).

                                                   11
      First, and most importantly, our sister circuits have consistently considered

whether the data at issue has been compromised as the result of a targeted attack

intended to obtain the plaintiffs’ data. See, e.g., In re U.S. Off. of Pers. Mgmt. Data

Sec. Breach Litig., 928 F.3d 42, 57–58 (D.C. Cir. 2019) (“OPM”); In re Zappos.com, Inc.,

888 F.3d 1020, 1029 n.13 (9th Cir. 2018) (“Zappos”); Galaria v. Nationwide Mut. Ins.

Co., 663 F. App’x 384, 388–90 (6th Cir. 2016). Where plaintiffs fail to present

evidence or make any allegations that an unauthorized third party purposefully

obtained the plaintiffs’ data, courts have regularly held that the risk of future

identity theft is too speculative to support Article III standing. See, e.g., Beck, 848

F.3d at 274–75; Katz, 672 F.3d at 80; Reilly v. Ceridian Corp., 664 F.3d 38, 44 (3d Cir.

2011). By contrast, where plaintiffs demonstrate that a malicious third party

intentionally targeted a defendant’s system and stole plaintiffs’ data stored on that

system, courts have been more willing to find that those plaintiffs have established

a likelihood of future identity theft or fraud sufficient to confer standing. As the

Seventh Circuit explained in the context of a targeted cyberattack of a department

store’s customer database: “Why else would hackers break into a store’s database

and steal consumers’ private information? Presumably, the purpose of the hack

                                          12
is, sooner or later, to make fraudulent charges or assume those consumers’

identities.” Remijas v. Neiman Marcus Grp., LLC, 794 F.3d 688, 693 (7th Cir. 2015).

      Second, while not a necessary component of establishing standing, courts

have been more likely to conclude that plaintiffs have established a substantial risk

of future injury where they can show that at least some part of the compromised

dataset has been misused – even if plaintiffs’ particular data subject to the same

disclosure incident has not yet been affected. For example, in the context of a data

breach into an online retailer’s customer database, the Ninth Circuit explained that

although the specific plaintiffs in that case had not experienced any fraudulent

activity, allegations that other customers whose data was compromised in the same

data breach had reported fraudulent charges on their credit cards helped establish

that the plaintiffs were at a substantial risk of future fraud. See Zappos, 888 F.3d at

1027, 1027 n.7; see also OPM, 928 F.3d at 58 (“[A] hacker’s ‘intent’ to use breach

victims’ personal data for identity theft becomes markedly less important where,

as here, several victims allege that they have already suffered identity theft and

fraud as a result of the breaches.”). Similarly, evidence that plaintiffs’ data is

already being misused, even if that misuse has not yet resulted in an actual or

attempted identity theft, can also support a finding that those plaintiffs are at a

                                          13
substantial risk of identity theft or fraud. As one court in this Circuit recently

recognized, allegations that the plaintiffs’ PII was available for sale on the

Dark Web 4 following a data breach – and could therefore be purchased by

cybercriminals at any moment to commit identity theft or fraud – provided strong

support for the conclusion that those plaintiffs had established an Article III injury

in fact. See Fero v. Excellus Health Plan, Inc., 304 F. Supp. 3d 333, 341, 344–45

(W.D.N.Y. 2018).

       Finally, courts have looked to the type of data at issue, and whether that

type of data is more or less likely to subject plaintiffs to a perpetual risk of identity

theft or fraud once it has been exposed. Naturally, the dissemination of high-risk

information such as Social Security numbers and dates of birth – especially when

accompanied by victims’ names – makes it more likely that those victims will be

subject to future identity theft or fraud. See, e.g., Attias v. CareFirst, Inc., 865 F.3d

620, 628 (D.C. Cir. 2017). By contrast, less sensitive data, such as basic publicly

4“The Dark Web is a general term that describes hidden Internet sites that users cannot access
without using special software.” Kristin Finklea, Cong. Rsch. Serv., 7-5700, Dark Web 2 (2017).
“Not surprisingly, criminals and other malicious actors . . . use the [D]ark [W]eb to carry out
technology-driven crimes, such as computer hacking, identity theft, credit card fraud, and
intellectual property theft.” Ahmed Ghappour, Searching Places Unknown: Law Enforcement
Jurisdiction on the Dark Web, 69 Stan. L. Rev. 1075, 1090 (2017).

                                              14
available information, or data that can be rendered useless to cybercriminals does

not pose the same risk of future identity theft or fraud to plaintiffs if exposed. So,

for example, where a plaintiff’s credit card number was stolen as part of a data

breach, but she promptly cancelled her credit card “and no other [PII] – such as

her birth date or Social Security number – [was] alleged to have been stolen,” we

have found that the plaintiff failed to allege “how she [could] plausibly face a

threat of future fraud.” Whalen v. Michaels Stores, Inc., 689 F. App’x 89, 90 (2d Cir.

2017) (summary order); see also Tsao, 986 F.3d at 1344 (explaining that the plaintiff

had “immediately cancelled his credit cards following disclosure of the [data]

breach, effectively eliminating the risk of credit card fraud in the future”).

      These factors are by no means the only ones relevant to determining

whether plaintiffs have shown an injury in fact based on an increased risk of future

identity theft or fraud. After all, determining standing is an inherently fact-specific

inquiry that “requires careful judicial examination of a complaint’s allegations to

ascertain whether the particular plaintiff is entitled to an adjudication of the

particular claims asserted.” Allen v. Wright, 468 U.S. 737, 752 (1984). Nevertheless,

these are the considerations that our sister circuits have most consistently

addressed in the context of data breaches and other data exposure incidents, and

                                          15
we agree that they provide helpful guidance in assessing whether plaintiffs have

adequately alleged an injury in fact.

      We therefore hold that courts confronted with allegations that plaintiffs are

at an increased risk of identity theft or fraud based on an unauthorized data

disclosure should consider the following non-exhaustive factors in determining

whether those plaintiffs have adequately alleged an Article III injury in fact:

(1) whether the plaintiffs’ data has been exposed as the result of a targeted attempt

to obtain that data; (2) whether any portion of the dataset has already been

misused, even if the plaintiffs themselves have not yet experienced identity theft

or fraud; and (3) whether the type of data that has been exposed is sensitive such

that there is a high risk of identity theft or fraud.

      In addition to the “increased-risk” theory of injury in fact, this case presents

a related question of standing: where plaintiffs take steps to protect themselves

following an unauthorized data disclosure, can the cost of those proactive

measures alone constitute an injury in fact? We agree with the district court that

the answer is “no.” See Carlos Lopez & Assocs., 422 F. Supp. 3d at 807. That is,

where plaintiffs have shown a substantial risk of future identity theft or fraud,

“any expenses they have reasonably incurred to mitigate that risk likewise qualify

                                           16
as injury in fact.” OPM, 928 F.3d at 59; see also Hutton v. Nat’l Bd. of Exam’rs in

Optometry, Inc., 892 F.3d 613, 622 (4th Cir. 2018); Lewert v. P.F. Chang’s China Bistro,

Inc., 819 F.3d 963, 966–67 (7th Cir. 2016). But where plaintiffs “have not alleged a

substantial risk of future identity theft, the time they spent protecting themselves

against this speculative threat cannot create an injury.” SuperValu, 870 F.3d at 771;

see also Tsao, 986 F.3d at 1344–45; Beck, 848 F.3d at 276–77; Reilly, 664 F.3d at 46.

This notion stems from the Supreme Court’s guidance in Clapper, where it noted

that plaintiffs “cannot manufacture standing merely by inflicting harm on

themselves based on their fears of hypothetical future harm that is not certainly

impending.” 568 U.S. at 416.

      With these principles in mind, this case presents a relatively straightforward

situation in which Plaintiffs have failed to show that they are at a substantial risk

of future identity theft or fraud sufficient to establish Article III standing. First,

Plaintiffs never alleged that their data was intentionally targeted or obtained by a

third party outside of CLA. While it is true that McMorris and the other Plaintiffs

claimed that their PII was disclosed in an unauthorized manner to then-current

CLA employees, they did not allege that anyone outside of CLA ever obtained

their PII. Far from being a “sophisticated” or “malicious” cyberattack “carried out

                                          17
to obtain sensitive information for improper use,” OPM, 928 F.3d at 52 (internal

quotation marks omitted), this case merely involves the inadvertent disclosure of

PII due to an errant email sent to approximately 65 employees.

      This case is therefore comparable to the exposure of data in Beck. There, the

Fourth Circuit considered two separate incidents in which the plaintiffs’ data was

exposed:    one in which an unencrypted laptop containing sensitive patient

information records was either misplaced or stolen from the defendant hospital,

and another in which four boxes of pathology reports (containing PII of over 2,000

patients) were also either misplaced or stolen. See Beck, 848 F.3d at 267–68.

Distinguishing those incidents from others in which plaintiffs alleged that “the

data thief intentionally targeted the personal information compromised in the data

breaches,” the Beck court held that the plaintiffs’ alleged risk of future identity theft

was “too speculative” because it required the court to “engage with the same

‘attenuated chain of possibilities’ rejected by the [Supreme] Court in Clapper.” Id.

at 274–75 (quoting Clapper, 568 U.S. at 410). Here, this “chain of possibilities” is

similarly attenuated: we would have to assume that then-current employees of

CLA (a company that, as the district court noted, regularly deals with the highly

sensitive personal information of its clients) would either misuse the data

                                           18
themselves or leak or expose the spreadsheet containing Plaintiffs’ PII to a

malicious third party, and, if the latter, that such a third party would then misuse

Plaintiffs’ PII. As in Beck, Plaintiffs’ allegations are simply insufficient to establish

even a “substantial risk” of such harm. Id. at 275 (quoting Clapper, 568 U.S. at 414

n.5).

        Second, Plaintiffs do not allege that their data (or the data of any other then-

current or former CLA employees) was in any way misused because of the

accidental email. Again, while plaintiffs need not show that they have already

experienced identity theft or fraud to adequately plead an Article III injury in fact,

Plaintiffs do not allege any facts suggesting that their PII was misused following

the accidental email here, which distinguishes this case from those in which

plaintiffs have shown that some part of the exposed dataset was compromised.

See, e.g., OPM, 928 F.3d at 58–59; Zappos, 888 F.3d at 1027; Galaria, 663 F. App’x at

389 n.1; Remijas, 794 F.3d at 692; Fero, 304 F. Supp. 3d at 341–42. 5

5For the first time on appeal, McMorris refers to allegations in a never-filed “Second Amended
Complaint” that a handful of CLA employees opened the mistaken email, that at least six
employees downloaded the spreadsheet, and that at least one of those employees forwarded the
email to a personal email address. McMorris does not dispute that these allegations were never
presented to the district court, and they are therefore not part of the “record on appeal.” See Fed.
R. App. P. 10(a). We also decline to supplement the record with these new allegations pursuant
to Federal Rule of Appellate Procedure 10(e), which “is not a device for presenting evidence to

                                                19
       Finally, while the information that was inadvertently disclosed by CLA

included the sort of PII that might put Plaintiffs at a substantial risk of identity

theft or fraud, in the absence of any other facts suggesting that the PII was

intentionally taken by an unauthorized third party or otherwise misused, this

factor alone does not establish an injury in fact. 6 To hold otherwise would allow

plaintiffs to string together a lengthy “chain of possibilities” resulting in injury.

Clapper, 568 U.S. at 410. Accordingly, we conclude that the sensitive nature of

McMorris’s internally disclosed PII, by itself, does not demonstrate that she is at a

substantial risk of future identity theft or fraud. 7

this Court that was not before the trial judge.” Natofsky v. City of New York, 921 F.3d 337, 344 (2d
Cir. 2019) (internal quotation marks omitted), cert. denied 140 S. Ct. 2668 (2020).

6Of course, there may be situations in which the nature of the data itself reveals that plaintiffs are
not substantially at risk of identity theft as a result of the exposure. See, e.g., SuperValu, 870 F.3d
at 770; Whalen, 689 F. App’x at 90 (finding no injury where the compromised data included credit
card numbers divorced from any PII). We simply note that plaintiffs do not necessarily suffer an
injury in fact any and every time there has been a disclosure involving more sensitive data.

7McMorris does not press the alternative theory of injury in fact suggested by her complaint –
namely, that she and the other Plaintiffs suffered an injury by means of the time and money spent
monitoring or changing their financial information and accounts. Accordingly, she has waived
any reliance on this alternative theory of harm. See Norton v. Sam’s Club, 145 F.3d 114, 117 (2d Cir.
1998). Nevertheless, such a theory would fail for the simple reason that McMorris has failed to
show that she is at a substantial risk of future identity theft, so “the time [she] spent protecting
[herself] against this speculative threat cannot create an injury.” SuperValu, 870 F.3d at 771 (citing
Clapper, 568 U.S. at 416).

                                                  20
                                  III. Conclusion

       Because McMorris did not allege that her PII was subject to a targeted data

breach or allege any facts suggesting that her PII (or that of any others) was

misused, the district court correctly dismissed her complaint for failure to establish

an Article III injury in fact.

       We have considered McMorris’s remaining arguments that are properly

before us and find them to be without merit. Accordingly, the district court’s

judgment is affirmed.

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