In re Target Corp. Data Security Breach Litig., MDL No. 14–2522 PAM/JJK.

66 F.Supp.3d 1154

In re TARGET CORPORATION CUSTOMER DATA SECURITY BREACH LITIGATION.

This document relates to: Consumer Cases.

MDL No. 14–2522 PAM/JJK.

United States District Court, D. Minnesota.

Signed Dec. 18, 2014.

Charles S. Zimmerman, Brian C. Gudmundson, Zimmerman Reed, PLLP, Karl L. Cambronne, Bryan L. Bleichner, Chestnut Cambronne, PA, Vincent J. Esades, Heins Mills & Olson, PLC, Minneapolis, MN, Felipe J. Arroyo, Robbins Arroyo LLP, San Diego, CA, James J. Pizzirusso, Hausfeld LLP, Washington, DC, Jennifer J. Sosa, Jennifer J. Sosa, Milberg LLP, New York, NY, Christopher R. Walsh, Walsh Law Firm, E. Michelle Drake, Nichols Kaster, PLLP, Karen Hanson Riebel, Lockridge Grindal Nauen PLLP, Amanda R. Cefalu, Anderson, Helgen, Davis & Nissen, LLC, Minneapolis, MN, Garrett D. Blanchfield, Jr., Reinhardt Wendorf & Blanchfield, St. Paul, MN, for Plaintiffs.

Douglas H. Meal, Ropes & Gray LLP, Boston, MA, Michael A. Ponto, Wendy J. Wildung, Faegre Baker Daniels LLP, Minneapolis, MN, David F. McDowell, Nancy R. Thomas, David Frank McDowell, Morrison & Foerster LLP, Los Angeles, CA, Fred B. Burnside, Davis Wright Tremaine, Seattle, WA, Harold J. McElhinny, Jack W. Londen, Michael John Agoglia, Rebekah Kaufman, Samuel James Boone Lunier, Morrison & Foerster LLP, San Francisco, CA, Michelle L. Visser, Ropes & Gray LLP, San Fransisco, CA, Patrick J. Kenny, Armstrong Teasdale, LLP, St. Louis, MO, Robert G. Flanders, Jr., Hinckley, Allen & Snyder LLP, Providence, RI, Sterling Arthur Brennan, Mashoff Brennan, Irvine, CA, for Defendants.

MEMORANDUM AND ORDER

PAUL A. MAGNUSON, District Judge.

Target Corporation's Motion to Dismiss the Consumer Plaintiffs' First Amended Consolidated Class Action Complaint (Docket No. 258) in the Consumer Cases. For the reasons that follow, the Motion is granted in part and denied in part.

BACKGROUND

This case arises out of one of the largest breaches of payment-card security in United States retail history: over a period of more than three weeks during the 2013 holiday shopping season, computer hackers stole credit- and debit-card information and other personal information for approximately 110 million customers of Target's retail stores. Plaintiffs are a putative class¹ of consumers who used their credit or debit cards at Target stores during the period of the security breach, and whose personal financial information was compromised as a result of the breach. Indeed, many of the 114 named Plaintiffs allege that they actually incurred unauthorized charges; lost access to their accounts; and/or were forced to pay sums such as late fees, card-replacement fees, and credit monitoring costs because the hackers misused their personal financial information.

The Judicial Panel on Multidistrict Litigation consolidated all federal litigation into this case, which is divided into two tracks: one for cases brought by financial institutions and one for cases brought by consumers. In this Motion, Target asks the Court to dismiss the First Amended Consolidated Class Action Complaint² filed in the consumer cases.

Plaintiffs' Complaint raises seven claims. Count One contends that Target violated the consumer protection laws of 49 states (all states save Alaska) and the District of Columbia. Count Two alleges a similar violation with respect to the data breach statutes of 38 states. Count III asserts that Target was negligent in failing to safeguard its customers' data. Count IV raises a claim for breach of an implied contract as to Plaintiffs who were not Target REDcard cardholders, and Count V claims a breach of contract as to Plaintiffs who were Target REDcard cardholders. Count VI claims a bailment, and Count VII claims unjust enrichment. Target seeks dismissal of all claims, contending that the 121–page, 356–paragraph Complaint lacks sufficient detail to support Plaintiffs' allegations. Cf. Fed.R.Civ.P. 8(a)(2) (requiring a “short and plain statement of the claim”).

DISCUSSION

When evaluating a motion to dismiss under Rule 12(b)(6), the Court assumes the facts in the Complaint to be true and construes all reasonable inferences from those facts in the light most favorable to Plaintiffs. Morton v. Becker, 793 F.2d 185, 187 (8th Cir.1986). However, the Court need not accept as true wholly conclusory allegations, Hanten v. Sch. Dist. of Riverview Gardens, 183 F.3d 799, 805 (8th Cir.1999), or legal conclusions that Plaintiffs draw from the facts pled. Westcott v. City of Omaha, 901 F.2d 1486, 1488 (8th Cir.1990).

To survive a motion to dismiss, a complaint must contain “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 545, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Although a complaint need not contain “detailed factual allegations,” it must contain facts with enough specificity “to raise a right to relief above the speculative level.” Id. at 555, 127 S.Ct. 1955. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements,” will not pass muster under Twombly. Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citing Twombly, 550 U.S. at 555, 127 S.Ct. 1955 ). In sum, this standard “calls for enough fact[s] to raise a reasonable expectation that discovery will reveal evidence of [the claim].” Twombly, 550 U.S. at 556, 127 S.Ct. 1955.

A. Standing

1. Injury

Target's primary argument is that Plaintiffs do not have standing to raise any of their claims because Plaintiffs cannot establish injury. A plaintiff invoking the Article III jurisdiction of the federal courts must establish that he or she has standing to do so. That is, the plaintiff “must have suffered an ‘injury in fact’—an invasion of a legally protected interest which is (a) concrete and particularized ... and (b) actual or imminent, not conjectural or hypothetical.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (internal citations and quotation marks omitted). Target contends that Plaintiffs' claimed injuries are not actual or imminent, and as such do not suffice to give them standing to sue.

But Plaintiffs have alleged injury. Indeed, paragraphs 1.a through 1.g and 8 through 94 of the Complaint are a recitation of many of the individual named Plaintiffs' injuries, including unlawful charges, restricted or blocked access to bank accounts, inability to pay other bills, and late payment charges or new card fees. Target ignores much of what is pled, instead contending that because some Plaintiffs do not allege that their expenses were unreimbursed or say whether they or their bank closed their accounts, Plaintiffs have insufficiently alleged injury. These arguments gloss over the actual allegations made and set a too-high standard for Plaintiffs to meet at the motion-to-dismiss stage. Plaintiffs' allegations plausibly allege that they suffered injuries that are “fairly traceable” to Target's conduct. Allen v. Wright, 468 U.S. 737, 753, 104 S.Ct. 3315, 82 L.Ed.2d 556 (1984), abrogated on other grounds, Lexmark Int'l, Inc. v. Static Control Components, Inc., –––U.S. ––––, 134 S.Ct. 1377, 188 L.Ed.2d 392 (2014). This is sufficient at this stage to plead standing. Should discovery fail to bear out Plaintiffs' allegations, Target may move for summary judgment on the issue.

2. State Claims

Target also argues that because none of the 114 named Plaintiffs hails from five jurisdictions—Delaware, Maine, Rhode Island, Wyoming, or the District of Columbia—claims under the laws of those jurisdictions should be dismissed for lack of standing. Plaintiffs contend that this determination is premature, but ask in the alternative that the Court permit them to amend to add Plaintiffs from these jurisdictions if the Court is inclined to agree with Target.

There is a significant split of authority as to whether a court should address the standing of named plaintiffs at the motion-to-dismiss stage or at the class-certification stage. Another Judge in this District recently decided that the issue is best addressed at the motion-to-dismiss stage, and she dismissed for lack of standing state-law claims for states in which no named plaintiff resided. Insulate SB, Inc. v. Advanced Finishing Sys., Inc., Civ. No. 13–2664, 2014 WL 943224 (D.Minn. Mar. 11, 2014) (Montgomery, J.). Target urges the Court to follow this opinion and dismiss the claims from jurisdictions in which there is currently no named Plaintiff.

Insulate was an antitrust putative class action with a single named plaintiff, a California-resident corporation. Insulate's complaint raised claims for violations of other state's laws, and the defendants moved to dismiss contending that Insulate lacked standing to assert state-law claims for states other than California. Id. at *10. Insulate argued, as Plaintiffs do here, that the standing issue was not ripe for decision until after the class-certification stage. Id.

Judge Montgomery noted that the split among courts regarding the proper time to evaluate a named plaintiff's standing

stems from the two Supreme Court cases of Amchem Prods., Inc. v. Windsor, 521 U.S. 591 [117 S.Ct. 2231, 138 L.Ed.2d 689] (1997), and Ortiz v. Fibreboard Corp., 527 U.S. 815 [119 S.Ct. 2295, 144 L.Ed.2d 715] (1999). Both cases concern global settlements of class actions, address the standing of absent class members (rather than named plaintiffs) and involve situations in which the court was simultaneously presented with class certification issues and Article III issues. In each case, the Supreme Court resolved class certification issues prior to resolving Article III standing, because the class certification issues were dispositive in those cases and thus were “logically antecedent to the existence of Article III issues.”

Id. (quoting Amchem, 521 U.S. at 591–92, 117 S.Ct. 2231 ) (internal citations omitted). Although some courts interpreted these decisions to require deferral of the Article III standing determination until after class...