Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

RICHARDSON v. DSW

November 3, 2005.

BARBARA RICHARDSON, Plaintiff,
v.
DSW, INC., Defendant.



The opinion of the court was delivered by: BLANCHE MANNING, District Judge

MEMORANDUM AND ORDER

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 2005.

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.

  Background

  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).

  Implied Contract

  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 ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.