Seventh Circuit Rules 2024 BIPA Damages Amendment Applies Retroactively
In a landmark decision that significantly reduces the financial risk for Illinois employers and businesses, the U.S. Court of Appeals for the Seventh Circuit ruled on April 1, 2026, that the 2024 amendment to the Illinois Biometric Information Privacy Act (BIPA) applies retroactively. The ruling in Clay v. Union Pacific Railroad Co. effectively ends the era of “per-scan” statutory damages for cases pending at the time of the amendment’s enactment.
The Complete of Per-Scan Liability
For years, BIPA defendants faced staggering potential liabilities due to the “per-scan” theory of damages. Under this interpretation, every single time a company collected or transmitted a person’s biometric data without consent, it counted as a separate violation. With statutory damages ranging from $1,000 to $5,000 per violation, the financial exposure became astronomical.
The Seventh Circuit’s decision reverses three district court rulings that had previously held the 2024 amendment applied only to future cases. The court now clarifies that defendants sued before August 2, 2024, cannot be held liable for per-scan or per-disclosure damages. Instead, the court upheld the legislative intent of P.A. 103-0769, which limits recovery to a single statutory damage award when the same biometric identifier is collected from the same person using the same method.
Remedial vs. Substantive: The Legal Reasoning
The core of the Seventh Circuit’s reasoning rests on whether the 2024 amendment changed the right to sue or merely the remedy for the violation. The court determined that the amendment to BIPA Section 20 is a remedial change. Because it modifies the available damages without altering the substantive standards of liability, it follows longstanding Illinois retroactivity principles.
By classifying the change as procedural and remedial, the court ensured that the limitation on damages applies to all pending cases, regardless of when the alleged violations occurred.
The “Cothron” Catalyst
This legal shift was a direct response to the 2023 Illinois Supreme Court decision in Cothron v. White Castle Sys., Inc., which had originally validated the per-scan theory. The financial implications of Cothron were immense; in that specific case, the defendant estimated class-wide damages could exceed $17 billion. Recognizing the potential for bankrupting businesses, the Illinois Supreme Court invited the legislature to clarify the law, leading to the August 2024 amendment.
What This Means for Businesses
The implications of Clay v. Union Pacific Railroad Co. are immediate and profound for hundreds of pending BIPA class actions. Key impacts include:
- Drastic Reduction in Exposure: Potential payouts are now capped at one recovery per person per method, rather than multiplying by every fingerprint or facial scan.
- Jurisdictional Reassessments: The reduction in potential damages may require courts to reassess federal subject-matter jurisdiction in some cases.
- Settlement Leverage: Defendants now possess significantly more leverage in settlement negotiations for pending litigation.
Key Takeaways
- The Ruling: The 2024 BIPA damages limitation is retroactive.
- The Case: Clay v. Union Pacific Railroad Co. (7th Cir. 2026).
- The Change: Plaintiffs are limited to one recovery of statutory damages per person, per collection method.
- The Impact: Eliminates the “per-scan” damage model that previously threatened businesses with billions in liability.
Looking Ahead
While this ruling provides a massive reprieve for businesses, it does not eliminate BIPA liability entirely. Companies must still ensure strict compliance with biometric data collection and disclosure requirements. However, the Seventh Circuit has effectively closed the door on the “staggering liability” that characterized BIPA litigation following the Cothron decision, bringing a level of predictability back to the Illinois regulatory landscape.
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