The opinion of the court was delivered by: BLANCHE MANNING, District Judge
Bette Midler famously said, "Give a girl the correct footwear
and she can conquer the world." Innumerable women believe this is
true, or at the very least, simply enjoy hunting down the elusive
perfect pair of shoes. Many of these women shop at defendant
Designer Shoe Warehouse ("DSW"), which was victimized by the
theft of credit information of shoppers who paid for shoes using
a credit card or check between November of 2004 and February of
In this diversity case, which is styled as a class action and
was removed from state court, plaintiff Barbara Richardson
contends that DSW negligently permitted unauthorized access to
its computer system and raises claims based on implied contract
and bailment theories and the Illinois Consumer Fraud Act. DSW's
Rule 12(b)(6) motion to dismiss is before the court. For the
following reasons, Richardson's implied contract claim survives
DSW's motion to dismiss, but her bailment and Illinois Consumer
Fraud Act claims are dismissed.
The following facts are drawn from Richardson's complaint.
Richardson used a Visa credit card and a debit card to purchase
shoes from DSW on several occasions. She alleges that when she
bought shoes using her debit and credit cards, she provided
"personal information to DSW for the sole purpose of facilitating
transactions with DSW and with the understanding that DSW would take appropriate measures to prevent use of such
information for other purposes." Complaint at ¶ 9. In March of
2005, DSW issued a press release stating that credit card and
purchase information had been stolen from its computer system and
that DSW had notified law enforcement agencies as well as the
affected credit card companies and issuing banks. The press
release also encouraged DSW customers to monitor their credit
cards and advised them that DSW had set up a special help line to
assist them as necessary.
In April of 2005, DSW issued another press release that
identified the stores and dates of the transactions affected by
the theft and provided additional information regarding the type
of information that had been stolen. In June of 2005, Richardson
received a letter from DSW advising her that she was one of the
customers whose data had been stolen. Richardson closed her Visa
account and is monitoring her credit report. Her three-count
complaint raises claims based on implied contract and bailment
theories as well as the Illinois Consumer Fraud Act.
DSW removed this case based on diversity jurisdiction and the
parties conducted limited discovery regarding the amount in
controversy. The parties then agreed that it would cost well over
$75,000 to give Richardson the relief that she requests in her
complaint. See America's MoneyLine, Inc. v. Coleman,
360 F.3d 782, 786 (7th Cir. 2004) (the amount in controversy is determined
by the value to the plaintiff of the object of the litigation);
see also The Barbers Hairstyling for Men & Women, Inc. v.
Bishop, 132 F.3d 1203, 1205 (7th Cir. 1997) (actual damages
incurred by the members of a putative class cannot be aggregated
as at least one plaintiff must satisfy the jurisdictional
amount). This belief is supported by the record. Jurisdiction
being thus secure as the parties are also completely diverse, the
court turns its attention to DSW's motion to dismiss. Standard on 12(b)(6) Motion to Dismiss
In ruling on a motion to dismiss pursuant to Fed.R.Civ.P.
12(b)(6), the court must assume the truth of all facts alleged in
the complaint, construing the allegations liberally and viewing
them in the light most favorable to the plaintiff. See, e.g.,
McMath v. City of Gary, 976 F.2d 1026, 1031 (7th Cir. 1992).
Dismissal is properly granted only if it is clear that no set of
facts which the plaintiff could prove consistent with the
pleadings would entitle the plaintiff to relief. Conley v.
Gibson, 355 U.S. 41, 45-46 (1957). However, the court is neither
bound by the plaintiff's legal characterization of the facts, nor
required to ignore facts set forth in the complaint that
undermine the plaintiff's claims. Scott v. O'Grady,
975 F.2d 366, 368 (7th Cir. 1992).
Under Illinois law, "an implied-in-fact contract is a true
contract, containing all necessary elements of a binding
agreement; it differs from other contracts only in that it has
not been committed to writing or stated orally in express terms,
but rather is inferred from the conduct of the parties in the
milieu in which they dealt." Overseas Development Disc Corp. v.
Sangamo Construction Co., 840 F.2d 1319, 1330 (7th Cir. 1988).
To establish a breach of contract claim in Illinois, a plaintiff
must show: "(1) an offer and acceptance; (2) consideration; (3)
definite and certain terms of the contract; (4) plaintiff's
performance of all required contractual conditions; (5)
defendant's breach of the terms of the contract; and (6) damage
resulting from the breach." See, e.g., Barille v. Sears Roebuck
and Co., 682 N.E.2d 118, 121 (1st Dist. 1997).
The court begins with the premise that DSW's acceptance of
non-cash payments led to the creation of a contractual
relationship between DSW and its customers. As then Chief Justice Burger noted in a dissent that was premised on a legal argument
unconnected to his summary of how credit cards work, "bank credit
card systems . . . rely upon a three-way transaction between the
card issuer, the cardholder, and a subscribing retailer. This
tripartite credit card arrangement basically entails three
separate contractual agreements: (1) between the bank issuing the
credit card and the individual cardholder; (2) between one of the
banks in the system and a local merchant; and (3) between the
merchant and the cardholder." U.S. v. Maze, 414 U.S. 395, 413
n. 2 (1974) (Burger, CJ, dissenting). The court thus disagrees
with DSW's claim that its acceptance of non-cash methods of
payment does not lead to the creation of some sort of contractual
relationship between DSW and its customers. The contours of this
relationship are unclear at this point in the proceedings, but
the basic fact remains that DSW and its non-cash paying customers
have a contractual relationship.
This is true despite DSW's numerous arguments to the contrary.
First, DSW contends that Richardson had a subjective
understanding that DSW would take appropriate measures to keep
her credit card information secure, and that DSW did not share
this one-sided understanding so there was no meeting of the minds
as to definite contractual terms. In other words, DSW is
contending that it never agreed to secure customer information in
any way, shape, or form, and that customers knew and agreed to
this position when they purchased shoes using credit cards or
personal checks. This is not an appropriate argument to raise at
the motion to dismiss stage as the court cannot make any findings
of fact as to what the parties did or did not believe at this
point in the proceedings.
Second, DSW asserts that Richardson's complaint is deficient
because she does not allege that she gave DSW any additional
consideration in exchange for DSW's alleged separate agreement (above and beyond its agreement to sell her shoes) in
order to induce DSW to secure her credit and debit card
information. However, Richardson's complaint alleges that she and
DSW had an implied agreement that DSW would make reasonable
efforts to secure her credit information if she opted to pay for
shoes with a debit or credit card. See A.E.I. Music Network,
Inc. v. Business Computers, Inc., 290 F.3d 952, 956-57 (7th Cir.
2002) ("Suppose a person walks into a store and takes a newspaper
that is for sale there, intending to pay for it. The
circumstances would create a contract implied in fact. Were there
no basis for inferring an intention to pay, there would be no
contract . . ."). At the motion to dismiss stage, the court must
assume that the facts in Richardson's complaint are true. And if
they are, Richardson did not need to provide additional
consideration to induce DSW to provide something that it already
had agreed to provide.
Third, DSW argues that Richardson's complaint does not allege
that DSW breached the purported implied agreement for DSW to keep
her credit information safe from hackers. According to DSW, the
complaint, instead, only alleges that DSW agreed to use her
credit information to facilitate a credit transaction and DSW did
this by allowing her to purchase shoes with her debit and credit
cards. DSW asserts that it was itself the victim of hackers, but
nevertheless did what it promised ...