The speed and clarity with which institutions detect, escalate, investigate, and disclose cyber incidents directly influence the trajectory of litigation and regulatory scrutiny. Delays, ambiguities, or false or even incomplete notifications often become focal points in class-action claims, undermining institutional credibility.
In the November 26, 2025 edition of The Legal Intelligencer, Edward Kang writes, “From Vulnerability to Liability: Understanding Today’s Cyber Claims and Enforcement.”
On Oct. 31, mass spam emails were sent from multiple university-affiliated accounts to members of the University of Pennsylvania community. The messages, sent from compromised “@upenn.edu” addresses, criticized the university’s data security practices and its institutional purpose, and suggested that internal systems had been infiltrated. Although UPenn’s Office of Information Security quickly disabled the compromised accounts and initiated a forensic investigation, the extent of any unauthorized access to personal information remained uncertain.
Only three days later, a class action was filed in the U.S. District Court for the Eastern District of Pennsylvania by a putative class of students, applicants, alumni and employees. The complaint alleges that UPenn failed to maintain reasonable cybersecurity measures despite collecting and storing personally identifiable information. Plaintiffs further allege that UPenn disregarded known cyber risks, failed to implement adequate monitoring and intrusion-detection systems, and did not act with sufficient urgency once the unauthorized access was discovered. The lawsuit seeks damages and injunctive relief, requiring UPenn to strengthen its data security practices. Several other class action lawsuits soon followed within a few days.
While the factual investigation is ongoing, the speed with which the lawsuits followed the incident illustrates how rapidly cybersecurity events now trigger litigation and how strongly plaintiffs view institutional cybersecurity as an affirmative legal obligation rather than a technical aspiration.
When a Cybersecurity-Related Claim May Be Brought
Whether a cybersecurity incident becomes actionable depends on when plaintiffs can demonstrate that a lapse in these duties resulted in a concrete injury or created a substantial risk of imminent harm. Recent U.S. Court of Appeals for the Third Circuit and U.S. Supreme Court decisions provide a clear framework for this threshold.
The Supreme Court’s decision in TransUnion v. Ramirez, 594 U.S. 413 (2021), reshaped the standing landscape for data-related harm. In Ramirez, the putative class action against TransUnion alleged violations of the Fair Credit Reporting Act, including the defendant’s failure to follow reasonable procedures to ensure credit files were accurate. The court held that the plaintiffs seeking damages must demonstrate a concrete injury. Without demonstrating the likelihood that their information would be disseminated, that the risk of harm materialized, or that the risk of harm itself independently harmed them, the plaintiffs whose information was not disseminated, therefore, did not meet the concrete injury requirement. Although the case did not involve a cyber breach, its reasoning has become the foundation for evaluating modern data-security claims.
The Third Circuit has built on this framework in Clemens v. ExecuPharm, 48 F.4th 146 (3d Cir. 2022), which clarifies how the concreteness of a data-related injury can be assessed and when cyber-related harms become actionable within the circuit. Clemens involved a ransomware attack in which a criminal hacking group exfiltrated a trove of highly sensitive information, including Social Security numbers, bank-account details, and tax records, and then posted that information publicly on the dark web. The trial court dismissed the plaintiff’s complaint, reasoning that allegations of any speculative identity theft due to a data breach are insufficient to establish standing. The Third Circuit reversed, holding that the plaintiff had standing to sue because the publication of her data created a substantial risk of identity theft. The court emphasized that the nature of the compromised information, its availability to criminal actors, and the plaintiff’s mitigation efforts together satisfied the requirement of injury-in-fact.
Importantly, misuse is not always required. Plaintiffs may also pursue claims where an institution has made specific cybersecurity commitments, such as promises in admissions materials, donor communications, privacy policies, research data management plans, or federal grant certifications, and has failed to honor them. In these circumstances, claims based on breach of contract, negligent misrepresentation, or deceptive practices can attach even in the absence of confirmed misuse. The key question becomes whether the institution represented that it would implement certain controls and whether its actual practices fell short of these representations.
In practice, a cybersecurity claim becomes viable when unauthorized access is paired with any combination of: actual misuse or publication of data; demonstrable, nonspeculative mitigation efforts; emotional or reputational harm resulting from the breach; or the breach of specific, identifiable promises regarding cybersecurity practices. Courts are increasingly sophisticated in evaluating these elements, treating cybersecurity duties as enforceable components of institutional governance.
The False Claims Act and Cybersecurity: An Expanding Enforcement Frontier
While private plaintiffs increasingly turn to negligence and consumer-protection theories in the wake of cyber incidents, federal enforcement trends indicate that cybersecurity lapses are increasingly carrying implications far beyond private civil litigation. In particular, the Department of Justice’s civil cyber-fraud initiative has brought cybersecurity to the forefront of False Claims Act (FCA) enforcement—a development with significant implications for universities that receive federal funding.
Formally launched to address systemic underinvestment in cybersecurity among government contractors and grantees, the civil cyber-fraud initiative targets entities that knowingly misrepresent their cybersecurity practices or compliance with federal requirements; fail to implement cybersecurity controls that are express conditions of payment; or fail to report cyber incidents as required by federal regulations or contract terms.
Crucially, a breach is not required for there to be an FCA violation. Under the DOJ’s theory, the core wrong is the misrepresentation: if an institution certifies compliance with cybersecurity requirements, such as NIST SP 800-171 for controlled unclassified information or federal reporting requirements for cyber incidents, but has not actually implemented those measures, the certification itself may be a false claim.
Recent cases illustrate how this theory is applied in practice. In 2025, Illumina, Inc. paid nearly $10 million to resolve allegations that it had misrepresented compliance with federal cybersecurity requirements for medical device software, despite no breach having occurred. Earlier cases involving defense contractors similarly turned not on the theft of data but on failures to implement required controls under Department of Defense contracts.
This enforcement posture has sweeping implications. Any organization that contracts with the federal government or receives federal funds, whether in healthcare, defense, manufacturing, research, technology, or public services, may be subject to cybersecurity-related FCA scrutiny. Even complex, decentralized organizations must ensure that their internal practices align with the cybersecurity commitments outlined in contracts, bids, compliance certifications, or grant submissions. A gap between policy and practice, or between what is certified and what is actually implemented, can expose the organization to significant financial penalties and reputational harm.
Unlike class actions, which are made public, an FCA action is filed under seal. Such an action is kept under seal for months and sometimes years. That means, given the number and speed of class actions filed against the University of Pennsylvania, it would not be surprising that an FCA action has already been filed against the university.
Conclusion
Viewed together, the UPenn incident, the court’s standing jurisprudence, and DOJ’s expanding FCA enforcement signal that cybersecurity is now a critical legal and governance obligation. Underinvestment can quickly translate into legal exposure.
Incident response has also taken on heightened legal significance. The speed and clarity with which institutions detect, escalate, investigate, and disclose cyber incidents directly influence the trajectory of litigation and regulatory scrutiny. Delays, ambiguities, or false or even incomplete notifications often become focal points in class-action claims, undermining institutional credibility.
Ultimately, these developments underscore the need for proactive oversight. Effective cybersecurity now requires coordinated action across IT, legal, compliance, and administrative domains. Budgeting, staffing, vendor management, and periodic audits are no longer technical concerns; they are components of an institution’s legal risk profile.
Edward T. Kang is the managing member of Kang Haggerty. He devotes the majority of his practice to business litigation and other litigation involving business entities. Contact him at ekang@kanghaggerty.com.
Reprinted with permission from the November 26, 2025 edition of “The Legal Intelligencer” © 2025 ALM Global, LLC. All rights reserved. Further duplication without permission is prohibited. Request academic re-use from www.copyright.com. All other uses, submit a request to asset-and-logo-licensing@alm.com. For more information visit Asset & Logo Licensing.