A recent federal court decision has significantly expanded the litigation landscape for companies handling sensitive personal data. In Baker v. Index Exchange, Inc. , No.…
A recent federal court decision has significantly expanded the litigation landscape for companies handling sensitive personal data. In Baker v. Index Exchange, Inc., No. 25-cv-10517 (N.D. Ill. June 16, 2026), a federal district court became the first to allow a putative class claim predicated on an alleged violation of the Department of Justice's Bulk Sensitive Data Rule to survive a motion to dismiss. The ruling marks a watershed moment, opening the door to private class action liability where previously only regulatory enforcement was anticipated.
At the heart of the decision, the court found that the plaintiff plausibly alleged that a supply-side advertising platform violated the Federal Wiretap Act by transmitting sensitive personal data to a Chinese-owned company in contravention of the Bulk Data Rule. By tying the alleged Rule violation to a statute that provides a private right of action, the court effectively created a viable pathway for class plaintiffs to pursue damages for conduct that the DOJ's framework was designed to prohibit. The decision does not itself create a new private cause of action under the Rule, but it demonstrates how existing federal statutes can be leveraged to convert regulatory noncompliance into a foundation for private litigation.
The implications for companies engaged in data transfers are substantial. Businesses that process, share, or otherwise transmit sensitive personal dataΓÇöparticularly to countries of concern or entities linked to themΓÇömust now recognize that noncompliance with the Bulk Data Rule carries dual exposure: DOJ enforcement on one hand, and significant private class action liability on the other. This bellwether ruling is likely to encourage plaintiffs' counsel to explore similar theories in other jurisdictions and industries, particularly those involving digital advertising, adtech intermediaries, and cross-border data flows.
In light of Baker, companies should undertake an immediate and thorough review of their data transfer practices, vendor relationships, and downstream data recipients. Contractual safeguards, technical controls, and diligence procedures should be reassessed to identify potential exposure under the Rule. Documentation of compliance efforts may prove critical in defending against both regulatory scrutiny and putative class claims that follow this newly opened litigation avenue.
This newsletter is intended for general informational purposes only and does not constitute legal advice. Clients should consult counsel for guidance tailored to their specific circumstances.