Avila v. LifeLock, Inc.

Updated: July 10, 2019
Status: Ongoing Case

On March 23, 2015, Labaton Sucharow was appointed as co-lead counsel for lead plaintiffs in the securities class action against LifeLock, Inc. (“LifeLock”), an identity theft protection company, and certain of its officers. Lead plaintiffs allege that LifeLock made false and misleading statements and concealed material facts regarding the company’s business practices. Specifically, LifeLock repeatedly touted the real-time nature of its identity theft alerts, despite knowing that 70 percent of its Credit Check Alerts were sent more than one week late. 

The plaintiffs filed a second amended complaint on October 14, 2016. The court granted the defendants motion to dismiss the second amended complaint on August 21, 2017, which lead plaintiffs appealed to the Ninth Circuit Court of Appeals.  In a unanimous decision, the Ninth Circuit reversed in part and remanded for further proceedings.  The case is now in discovery.  

The case is Avila v. LifeLock, Inc., No. 15-cv-01398 (D. Ariz.). Labaton Sucharow represents co-lead plaintiff Oklahoma Firefighters Pension and Retirement System. The defendants are LifeLock, Inc.; Todd Davis, LifeLock's Founder and former CEO; and Hilary Schneider, LifeLock’s former President and CEO.

Background
In 2010, the FTC brought an action against LifeLock charging that the company made false representations about its products and services. Later that year, LifeLock reached a $12 million settlement with the FTC and 35 state attorneys general in one of the largest FTC-state coordinated settlements on record.

On February 19, 2014, the company reported in its 2013 Annual Report that it had met with the FTC regarding alleged non-compliance with the 2010 FTC settlement, after a “whistleblower claim relating to [LifeLock’s] compliance with the [2010] FTC [Settlement] Order.” The company further disclosed that it expected to receive a request from the FTC for documents or information and that it would be setting aside a $20 million legal reserve for the renewed FTC investigation.

A month later, on March 20, 2014, former LifeLock Chief Information Security Officer, Michael Peters, filed a whistleblower complaint against the company, alleging that he was wrongfully terminated for uncovering and bringing to the attention of the company serious deficiencies in its data protection services.

Then, on July 21, 2015, during the trading day, the FTC issued a press release asserting that LifeLock had “failed to live up to its obligations under the 2010 settlement,” and that it had filed an action under seal in the U.S. District Court for the District of Arizona requesting that the court “impose an order requiring LifeLock to provide full redress to all consumers affected by the company’s order violations.” The FTC alleges that LifeLock failed to establish a comprehensive security program, failed to meet record keeping requirements, and falsely advertised the level of security provided by its services.