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July 22, 2014 | Blog Post| Florida Defines How Certain Commercial Entities Must Handle Personal Information

Effective July 1, 2014, Florida enacted what some have described as one of the country’s most detailed and comprehensive statutes governing the duties of commercial entities that acquire, maintain, store, or use personal information, including potential penalties related to the loss of such data. Rather than simply amending the previous provision, Florida Statute 817.5681, the Florida Legislature repealed the previous statute and replaced it with Florida Statute 501.171, entitled the “Florida Information Protection Act of 2014.” The new statute governs the storage and disposal of private information and sets out specific requirements in the event of the loss of such data, whether through inadvertence or through a “breach” of data storage systems.

Florida’s new statute begins with definitions clearly defining a “breach”, “customer records”, and “personal information.” These definitions are very specific, and will leave little room for argument as to whose and what information is protected by this statute. These requirements for securing confidential personal information apply to all “covered” entities which have now been defined as any “sole proprietorship, partnership, corporation, trust, estate, cooperative, association, or other commercial entity that acquires, maintains, stores, or uses personal information.”

While the definitions within the statute are precise, the new Florida statute’s standard for data storage and usage is vague. Section (2) of the statute merely states that “each covered entity, governmental entity, or third-party agent shall take reasonable measures to protect and secure data in electronic form containing personal information.” The “definition” creates a sliding standard of care that will put pressure on commercial entities to ensure their methods for acquisition, storage and use of such data keep pace with technological developments. When a commercial entity is sued over a data breach, the litigation will be expert intensive, and it will be for the jury of laypersons to decide whether the measures employed to protect the data were “reasonable.”

Also important is the statute’s extension of statutory requirements to the actions of third-party agents. Such an agent is defined as “an entity that has been contracted to maintain, store, or process personal information on behalf of a covered entity or governmental entity.” As a consequence, entities assessing their potential liability for data breaches need to include an assessment of the technology and methods of such vendors as well.

As in the previous statute, the entity holding personal information must notify all those potentially affected by a potential breach. However, under the new statute, if the breach affects more than 500 individuals, the “covered entity” must also notify the Department of Legal Affairs. The statute provides precise time period within which a “covered entity” must notify parties of a potential breach; how the notification is to be made; and what information must be contained in the notification. As in the prior statute, the new provision lists the penalties to a “covered entity” for failing to comply with statutory requirements.

The Florida Information Protection Act of 2014 is much broader than its prior version. Any company doing business within the State of Florida, as well as those insuring these companies, needs to be well aware of the requirements of this statute, and be fully prepared to respond when (unfortunately, not if) a breach occurs.

John Garaffa 

John devotes his practice to the analysis and defense of 1st and 3rd party disputes. He has written widely on the consequences and statutory environment governing data breaches, business interruption, first party bad faith, punitive damages, discovery disputes, and on the application of state valued policy laws to property losses in Florida and other Gulf Coast States.

Matt Peaire 

Matt is the Hiring Partner at Butler . Matt’s practice focuses on large, complex subrogation claims, where he represents both plaintiffs and defendants. In addition to subrogation matters, Matt handles claims relating to cyber losses involving both coverage and liability disputes. He is also a frequent lecturer and author on a variety of legal topics relating to both subrogation and cyber losses.