Operations

White Castle says a recent court decision could cost the chain $17B

The potential damages would cover all the instances that 9,500 employees used a biometric security system to access their store's computer.
The lawsuit pivots on Illinois' biometrics regulations. / Photo: Shutterstock

White Castle is facing potential lawsuit damages of up to $17 billion as a result of a decision that was handed down last week by the Supreme Court of Illinois.

The court ruled that the burger chain might have violated Illinois’ controversial biometric identification law thousands of times with its system for screening access to a store’s computer system. Employees enter the system by placing a fingertip on a touchpad that functions like the one used to activate an iPad or some ATMs.

Illinois law requires that companies using a fingerprint reader or other biometric device seek permission from an employee before transmitting the data to a third party for verification of the worker’s identity. The 15-year-old law is intended to protect individuals’ privacy and personal info.

A manager of an Illinois White Castle sued the chain, alleging she wasn’t asked for an OK to transmit her data to a processor until she’d been using the system for 10 years, or until 2018. The suit was granted class-action status to include anyone who’s worked in one of White Castle’s Illinois restaurants since the biometric law took effect in 2008.

The lawsuit contends that the restaurant operator should be penalized for each and every time any employee used the fingerprint reader without being asked beforehand for permission for the data to be sent to a processor. White Castle countered that staff members only had to be asked once under the Illinois statute, and that lead plaintiff Latrina Cothron had indeed given her OK, albeit not until 2018.

But, by a vote of 4-3, the seven-justice Supreme Court sided with the plaintiffs, interpreting the law as requiring permission each and every time a biometric system is used. The majority decision noted that the tally of violations could be astronomical, given that one employee might access the computer system of his or her store many times during a shift, and the suit represents what White Castle estimates are 9,500 current and former employees.

But, the majority stressed, there’s little doubt about the biometric law’s intent.

“This court has repeatedly held that, where statutory language is clear, it must be given effect, even though the consequences may be harsh, unjust, absurd or unwise,” the Supreme Court decision reads, quoting from one of its earlier, unrelated decisions.

The court quotes White Castle as estimating the potential liability of $17 billion.

White Castle’s domestic systemwide sales for 2021 were estimated by Technomic as $626 million.

“Respectfully, we are deeply disappointed with the court’s decision and the significant business disruption that will be caused to Illinois businesses, which now may face potentially huge damages,” White Castle said in a prepared statement.

“We are reviewing our options to seek further judicial review, given the strong dissenting opinion, which included the Court’s Chief Justice. This dissent justifiably raises serious concerns about the opinion.”

Because of the implications for any company that uses biometric identification technology in Illinois, 13 business groups filed “friends of the court” briefs supporting White Castle’s contention that employees need only be asked once for permission to relay their data. The parties ranged from the Restaurant Law Center, the litigation arm of the National Restaurant Association, to the U.S. Chamber of Commerce.

Five parties submitted amicus curiae briefs in support of the plaintiffs.

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