Fast food chain White Castle appears poised to pay about $9.4 million to current and former workers and their lawyers to end a long, high profile class action court fight over worker fingerprint scans.
While the settlement is significant, it is notable, as well, for being the legal battle that produced a landmark Illinois Supreme Court decision. That decision, in turn, appears to have at last spurred Illinois state lawmakers to take action to reform the state's stringent biometrics privacy law that has spawned a blizzard of no-injury, high payout class actions that have scourged businesses operating in Illinois for years.
On May 23, attorneys with the law firm of Stephan Zouras LLP, of Chicago, presented an Illinois federal judge with a motion to approve the deal with White Castle, to end the class action brought under the Illinois Biometric Information Privacy Act.
Andrew C. Ficzko
| stephanzouras.com
Under the deal, White Castle has agreed to pay $968 each to as many as 9,705 current and former workers.
Attorneys are expected to claim about 37.5% of the settlement funds, or about $3.5 million in fees.
A federal judge granted preliminary approval to the settlement two days later, on May 25, according to court records.
The deal would bring to a close a long and contentious legal fight that moved throughout the courts in Chicago and Springfield, ultimately reaching to the highest courts in Illinois.
The lawsuit landed first in Cook County Circuit Court in Chicago in 2019, when the Stephan Zouras firm first filed suit against the fast food chain on behalf of named plaintiff Latrina Cothron and more than 9,000 other current and former White Castle employees.
According to case documents, Cothron worked as a restaurant manager and had been employed by White Castle since 2004.
The lawsuit accused White Castle of improperly requiring workers to scan fingerprints to verify their identity when punching the clock or when accessing work computers, without first securing workers' written consent and without providing workers with notices concerning how the scanned prints might be used, stored, shared or ultimately destroyed.
White Castle moved the case to federal court and asked a federal judge to dismiss. In that motion, they argued the BIPA law should be read to require them to pay damages only for the first alleged violation of the BIPA law. If that interpretation had been upheld, it could have invalidated Cothron's claim, because she first scanned her fingerprint before BIPA was enacted in 2008.
Plaintiffs, however, argued the law should instead be interpreted to require White Castle to pay for every fingerprint scan obtained without notice or consent, which could potentially leave White Castle owing for multiple fingerprint scans from each worker every day that they they worked for White Castle.
And the differences in how to count the potential damages were stark and attention grabbing.
Under the BIPA law, plaintiffs are allowed to demand damages of $1,000 for each alleged negligent violation of the law, and $5,000 for every alleged intentional violation.
If plaintiffs' interpretation of the law were applied, and White Castle lost at trial, the company estimated it could face potential damages of $17 billion, which could put the chain out of business.
But if White Castle's interpretation of the law held sway, the company predicted it would owe about $9.5 million, even if they lost at trial - the amount for which they ultimately settled.
The question ultimately was sent by a federal appeals court in Chicago to the Illinois Supreme Court to settle.
In that case, dissenting judges blasted the majority, saying they did not believe lawmakers intended for the law to result in the prospect of "annihilative" damages that could destroy entire businesses, put people out of work and harm the state's economy.
Business groups noted such harm could come even though lawsuits under BIPA, to this point, have never claimed anyone was ever actually harmed by the alleged improper data collection in any real way. In 2019, the Illinois Supreme Court explicitly ruled that plaintiffs don't need to prove they suffered any real harm when bringing the potentially ruinous big money class actions under BIPA.
The series of pro-plaintiff decisions by the Illinois Supreme Court concerning BIPA has helped to encourage a mounting wave of thousands of lawsuits against employers and other businesses operating in Illinois. Faced with potential huge unknown risks at trial, to this point, every BIPA class action that closed has either been withdrawn or resolved in a settlement, rather than a trial.
The settlements have particularly benefited the growing cadre of trial lawyers who brought the lawsuits, generating hundreds of millions of dollars in fees for the lawyers who have brought the BIPA claims since the first such lawsuits landed in court in 2015.
However, after years of turning a largely deaf ear to the calls for reform from the business community, Illinois state lawmakers this spring have advanced legislation to cap the ability of lawyers to threaten businesses with ruinous judgments under BIPA. The legislation would specifically declare that it is in the intent of lawmakers to limit recovery under BIPA to only the first allegedly improper biometric scan, not every one that follows.
Lawmakers advancing the measure specifically said they were answering the call for reform issued by the Illinois Supreme Court in the White Castle decision, to avert the potential for catastrophic consequences for the state's employers and economy from the BIPA law.
That reform measure has passed the Illinois State Senate and remains pending in the Illinois House of Representatives.
White Castle declined comment on the settlement of the BIPA case against it.
White Castle has been represented in the case by attorneys Melissa A. Siebert, Erin Bolan Hines and Max Kaplan, formerly of the firm of Shook Hardy & Bacon, now of the firm of Cozen O'Connor, of Chicago.
Plaintiffs have been represented by attorneys Ryan F. Stephan, James B. Zouras and Andrew C. Ficzko and Danielle M. Sweet, of the Stephan Zouras, of Chicago.