Data Breach Class Action Dismissal Shows Two Grounds for Dismissing Data Breach Cases

by Faegre Baker Daniels

Faegre Baker Daniels

On March 7, 2018, the United States District Court for the District of Minnesota dismissed a putative data breach class action against SuperValu, Inc., because the plaintiffs did not have standing and could not state claims upon which relief could be granted. The Court’s opinion in In re SuperValu, Inc. Customer Data Security Breach Litigation identifies a successful path for companies seeking to dismiss data breach class actions: seek dismissal not only for defects in standing, but also for failure to state a claim.

Case Background

In June 2014, hackers installed malicious software on SuperValu’s payment processing network. Sixteen SuperValu customers subsequently brought or joined putative class actions, alleging that they had used credit or debit cards at SuperValu and that their personal identifying information (PII), including their account numbers, expiration dates, and card verification value codes, had been stolen. Plaintiffs brought a number of claims, including for negligence, breach of contract, and under state consumer protection statutes.

The Hon. Ann D. Montgomery, United States District Judge for the District of Minnesota, first granted a motion to dismiss the case in January 2016. Judge Montgomery dismissed the case at that time because Plaintiffs had not alleged facts sufficient to establish standing under Article III of the Constitution. In particular, Plaintiffs had failed to allege that their PII had been misused, and had not alleged facts that plausibly suggested a substantial risk of future harm.

On appeal, the United States Court of Appeals for the Eighth Circuit affirmed in part and reversed in part. It affirmed dismissal of the lawsuits of 15 of the 16 Plaintiffs because none of them had alleged that their PII had been misused; they had only alleged a “mere possibility,” rather than a “substantial risk,” of future injury. The Eighth Circuit reversed as to one remaining plaintiff, David Holmes, because he had alleged that his PII was stolen and misused in a single fraudulent charge. The Eighth Circuit remanded so Judge Montgomery could consider whether Holmes’s allegations satisfied more rigorous standards under Rule 12(b)(6).

The Court’s Reasoning

On remand, SuperValu renewed its motion to dismiss, alleging that Holmes had not alleged that he shopped at SuperValu during the operative period or that he had suffered economic injury as required under governing law. Judge Montgomery agreed and granted SuperValu’s motion to dismiss each of Holmes’s claims:

  1. Holmes’s negligence claim did not survive dismissal because under governing law, a plaintiff must allege actual out-of-pocket loss, not just an unauthorized charge. Holmes did not allege the date he shopped at a SuperValu store, the amount of the unauthorized charge, or that the charge was not reimbursed by his credit card company. Because he didn’t do any of those things, he did not establish the requisite elements of causation or injury for his claim to survive dismissal. In the alternative, the Court also concluded that the economic loss doctrine, which prohibits recovery for purely economic claims sounding in negligence, barred Holmes’s negligence claim.
  2. Holmes’s breach-of-contract claim failed because Holmes never alleged that he was a party to a contract with SuperValu, and also did not allege that he had suffered an actual injury.
  3. Holmes’s claims under Illinois consumer protection statutes failed because Holmes did not allege that he suffered actual monetary loss. Thus, similar to Holmes’s negligence claim, the allegation of an unauthorized charge was insufficient to survive dismissal.
  4. Holmes’s unjust enrichment claim failed because Holmes did not allege that the goods he purchased from SuperValu were defective or that their value was somehow diminished by the data breach.

Finally, Judge Montgomery denied the Plaintiffs’ request to amend their complaint, both because it was untimely, and because it would have been futile. As to the latter reason, Judge Montgomery held that new allegations did not establish the substantial risk of future harm as required to establish standing under Article III of the Constitution.

Defense Strategy: Move to Dismiss for Both Lack of Standing and Failure to State a Claim

This case shows the benefit of a multi-front attack to data breach class actions: motions to dismiss (1) for lack of standing; and (2) for failure to state a claim. Both approaches attack allegations of a plaintiff’s injury, but a motion to dismiss for failure to state a claim can be particularly valuable, because even where an alleged injury will establish standing under the Constitution (for example, an allegation that the plaintiff incurred an unauthorized charge), the law governing the merits of the claims might require more (as it did here, where it required actual, out-of-pocket loss, and allegations linking that monetary loss to the data breach).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Faegre Baker Daniels | Attorney Advertising

Written by:

Faegre Baker Daniels

Faegre Baker Daniels on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.