On July 16, 2020, the Court of Justice of the European Union (CJEU) published its decision in the matter of Data Protection Commissioner v. Facebook Ireland and Maximillian Schrems (“Schrems II”). The matter, arising from the transfer of Schrems’ personal data by Facebook Ireland to Facebook Inc. in the United States, presented questions concerning the transfer of personal data from the EEA to a third country without an adequacy determination. The decision declares the EU-US Privacy Shield program invalid and affirms the validity of standard contractual clauses (SCCs) as an adequate mechanism for transferring personal data from the EEA, subject to heightened scrutiny.

The CJEU invalidated the Privacy Shield program on grounds that it fails to provide an adequate level of protection to personal data transferred from the EEA to the U.S. In support, it points specifically to three U.S. national security laws: FISA 702, E.O. 12.333, and PPD 28. The CJEU found the breadth of these bulk surveillance and monitoring laws violates the basic minimum safeguards required by the GDPR for proportionality: the U.S. government’s processing of EEA personal data is not limited to what is strictly necessary. The CJEU further noted these surveillance programs fail to provide EEA data subjects with enforceable rights and effective legal review comparable to applicable EU law. As of the date of the decision, data exporters and U.S. data importers can no longer rely on EU-US Privacy Shield certification as an adequate mechanism to transfer personal data from the EEA to the U.S. There is currently no grace period. However, since a grace period was enacted shortly after the EU-US Safe Harbor was invalidated, it is conceivable one will be announced as the EU and U.S. assess the implications of this decision.

The CJEU affirmed the validity of controller-processor standard contractual clauses (SCCs) as an adequate mechanism for transferring personal data from the EEA to a third country lacking an EU adequacy decision. In affirming the validity of SCCs, the CJEU highlighted three stakeholder obligations:

  1. the data exporter’s responsibility to verify the importer’s ability to provide an essentially equivalent level of protection in the third country;
  2. the data importer’s responsibility to notify the exporter immediately if it cannot comply with the SCCs, including situations where it is compelled to produce EEA data at the request of law enforcement; and
  3. the data exporter’s responsibility to immediately suspend or terminate the transfer upon notice from the importer that it cannot comply with the SCCs.

Based on these requirements, the SCCs may not be an adequate transfer mechanism in every case, or may require the negotiation of additional provisions to satisfy these obligations.

The CJEU further highlighted the affirmative obligation of supervisory authorities to identify and suspend or terminate transfers based on SCCs where the importer cannot provide EEA data with an adequate level of protection.

Under the GDPR, an impermissible transfer can result in fines up to €20,000,000, or in the case of an undertaking, up to 4 % of the total worldwide annual turnover of the preceding financial year, whichever is higher. In addition, EEA data subjects may bring a private cause of action for an illegal transfer, either individually or as part of a class action.

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Photo of Joseph J. Lazzarotti Joseph J. Lazzarotti

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP)…

Joseph J. Lazzarotti is a principal in the Berkeley Heights, New Jersey, office of Jackson Lewis P.C. He founded and currently co-leads the firm’s Privacy, Data and Cybersecurity practice group, edits the firm’s Privacy Blog, and is a Certified Information Privacy Professional (CIPP) with the International Association of Privacy Professionals. Trained as an employee benefits lawyer, focused on compliance, Joe also is a member of the firm’s Employee Benefits practice group.

In short, his practice focuses on the matrix of laws governing the privacy, security, and management of data, as well as the impact and regulation of social media. He also counsels companies on compliance, fiduciary, taxation, and administrative matters with respect to employee benefit plans.

Privacy and cybersecurity experience – Joe counsels multinational, national and regional companies in all industries on the broad array of laws, regulations, best practices, and preventive safeguards. The following are examples of areas of focus in his practice:

  • Advising health care providers, business associates, and group health plan sponsors concerning HIPAA/HITECH compliance, including risk assessments, policies and procedures, incident response plan development, vendor assessment and management programs, and training.
  • Coached hundreds of companies through the investigation, remediation, notification, and overall response to data breaches of all kinds – PHI, PII, payment card, etc.
  • Helping organizations address questions about the application, implementation, and overall compliance with European Union’s General Data Protection Regulation (GDPR) and, in particular, its implications in the U.S., together with preparing for the California Consumer Privacy Act.
  • Working with organizations to develop and implement video, audio, and data-driven monitoring and surveillance programs. For instance, in the transportation and related industries, Joe has worked with numerous clients on fleet management programs involving the use of telematics, dash-cams, event data recorders (EDR), and related technologies. He also has advised many clients in the use of biometrics including with regard to consent, data security, and retention issues under BIPA and other laws.
  • Assisting clients with growing state data security mandates to safeguard personal information, including steering clients through detailed risk assessments and converting those assessments into practical “best practice” risk management solutions, including written information security programs (WISPs). Related work includes compliance advice concerning FTC Act, Regulation S-P, GLBA, and New York Reg. 500.
  • Advising clients about best practices for electronic communications, including in social media, as well as when communicating under a “bring your own device” (BYOD) or “company owned personally enabled device” (COPE) environment.
  • Conducting various levels of privacy and data security training for executives and employees
  • Supports organizations through mergers, acquisitions, and reorganizations with regard to the handling of employee and customer data, and the safeguarding of that data during the transaction.
  • Representing organizations in matters involving inquiries into privacy and data security compliance before federal and state agencies including the HHS Office of Civil Rights, Federal Trade Commission, and various state Attorneys General.

Benefits counseling experience – Joe’s work in the benefits counseling area covers many areas of employee benefits law. Below are some examples of that work:

  • As part of the Firm’s Health Care Reform Team, he advises employers and plan sponsors regarding the establishment, administration and operation of fully insured and self-funded health and welfare plans to comply with ERISA, IRC, ACA/PPACA, HIPAA, COBRA, ADA, GINA, and other related laws.
  • Guiding clients through the selection of plan service providers, along with negotiating service agreements with vendors to address plan compliance and operations, while leveraging data security experience to ensure plan data is safeguarded.
  • Counsels plan sponsors on day-to-day compliance and administrative issues affecting plans.
  • Assists in the design and drafting of benefit plan documents, including severance and fringe benefit plans.
  • Advises plan sponsors concerning employee benefit plan operation, administration and correcting errors in operation.

Joe speaks and writes regularly on current employee benefits and data privacy and cybersecurity topics and his work has been published in leading business and legal journals and media outlets, such as The Washington Post, Inside Counsel, Bloomberg, The National Law Journal, Financial Times, Business Insurance, HR Magazine and NPR, as well as the ABA Journal, The American Lawyer, Law360, Bender’s Labor and Employment Bulletin, the Australian Privacy Law Bulletin and the Privacy, and Data Security Law Journal.

Joe served as a judicial law clerk for the Honorable Laura Denvir Stith on the Missouri Court of Appeals.