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Lewert v. PF Chang's China Bistro, Inc.

United States District Court, N.D. Illinois, Eastern Division

December 10, 2014

JOHN LEWERT, Plaintiff,
v.
P.F. CHANG'S CHINA BISTRO, INC., Defendant. LUCAS KOSNER, Plaintiff,
v.
P.F. CHANG'S CHINA BISTRO, INC., Defendant.

MEMORANDUM OPINION AND ORDER

JOHN W. DARRAH, District Judge.

Plaintiff John Lewert ("Lewert") filed a class-action Complaint against Defendant P.F. Chang's ("Defendant") arising from a data breach involving the theft of customers' credit-card and debit-card data. Count I is a breach of implied contract claim on behalf of a national class. Count II is an Illinois Consumer Fraud and Deceptive Business Practices Act.[1] Plaintiff Lucas Kosner ("Kosner") filed a class-action Complaint against Defendant alleging the same. Kosner's case was related to and consolidated with Lewert's. Defendant moves to dismiss the Complaints pursuant to Federal Rule of Civil Procedure 12(b)(6).

BACKGROUND

The following facts are taken from the Complaints, which are taken as true for the purposes of a motion to dismiss. Defendant operates restaurants serving Chinese-inspired food. (Lewert at ¶ 12.)[2] Defendant is a Delaware corporation with its principal place of business in Arizona. ( Id. at ¶ 11.) Lewert is a citizen of Illinois who made purchases with his debit card at a P.F. Chang's restaurant in Northbrook, Illinois, on or about April 3, 2014. ( Id. at ¶ 6.) Kosner is an Illinois citizen who made purchases with his debit card at a P.F. Chang's restaurant in Cook County, Illinois, on April 21, 2014. (Kosner at ¶ 11). Defendant failed to comply with reasonable security standards. (Lewert at ¶ 15.) On June 12, 2014, Defendant disclosed a data breach involving the theft of customers' credit-card and debit-card data for an unknown number of accounts (the "Security Breach"). (Lewert at ¶ 2.) One report estimates that nearly 7 million cards were compromised as a result of the breach and that the breach dated back to at least September 18, 2013. ( Id. at ¶ 14.) On June 17, 2014, Visa issued a Compromised Account Management System alert that included a list of compromised payment cards, containing what was represented to be card data obtained from the Security Breach. (Kosner at ¶ 15.)

Identity thieves use personal identifying data to steal individual's identities and open financial accounts, receive government benefits, and incur charges and credit in a person's name. ( Id. at ¶ 17.) Individuals may not see signs of identity theft for years. ( Id. at ¶ 19.) Personal identifying information ("PII") is often traded on the "cyber black-market" and is occasionally posted to publicly available Internet websites. ( Id. at ¶ 20.) Consumers also place value on PII and the privacy of that information. ( Id. at ¶ 25.)

Plaintiffs incurred several types of damages from the Security Breach. Plaintiffs claim that a portion of the services purchased from Defendant included compliance with industry-standard measures with respect to the collection and safeguarding of PII. ( Id. at ¶ 32.) Thus, Plaintiffs overpaid for the products and services purchased from Defendant. ( Id. ) Plaintiffs claim that they have suffered actual damages from monetary losses arising from unauthorized bank account withdrawals and/or related bank fees. ( Id. at ¶ 33.) Plaintiffs also claim additional damages arising from costs associated with identity theft and the increased risk of identity theft. ( Id. at ¶ 34.) Further, Plaintiffs claim opportunity cost and value of time spent monitoring financial and bank accounts, including the cost of obtaining replacement cards. ( Id. at ¶ 36.)

LEGAL STANDARD

Rule 12(b)(6) permits a defendant to move to dismiss a complaint for "failure to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). A complaint must allege enough facts to support a claim that is "plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 547 (2007). Facial plausibility exists when the court can "draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). All well-pleaded allegations are presumed to be true, and all inferences are read in the light most favorable to the plaintiff. Lavalais v. Village of Melrose Park, 734 F.3d 629, 632 (7th Cir. 2013). This presumption is not extended to legal conclusions, or threadbare recitals of the elements of a cause of action, supported by mere conclusory statements.' Alam v. Miller Brewing Co., 709 F.3d 662, 666 (7th Cir. 2013) (quoting Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009)). The complaint must provide a defendant "with fair notice' of the claim and its basis." Tamayo v. Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008) (quoting Fed.R.Civ.P. 8(a)(2) and Twombly, 550 U.S. at 555).

ANALYSIS

Defendant brings its motion pursuant to 12(b)(6), but one of its arguments is that there is no standing, which is properly brought pursuant to 12(b)(1). See Fed.R.Civ.P. 12(b)(1).

To establish standing, a plaintiff must demonstrate: "(1) a concrete and particularized injury in fact that is (2) fairly traceable to the defendant's alleged unlawful conduct and (3) likely to be redressed by a favorable decision." Hein v. Freedom From Religion Found., Inc., 551 U.S. 587, 619 (2007) (internal quotation marks omitted) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-561 (1992)). A district court may examine Article III standing and dismiss a case sua sponte if it finds that the plaintiff has not suffered injury-in-fact. Johnson v. Allsteel, 259 F.3d 885, 887-88 (7th Cir. 2001). The plaintiff bears the burden of alleging facts sufficient to establish standing; there is no burden on the defendant to show standing does not exist. Lujan, 504 U.S. at 561. An injury that is "certainly impending" can establish injury in fact for the purposes of standing, but "[a]llegations of possible future injury are not sufficient." Clapper v. Amnesty Int'l USA, 133 S.Ct. 1138, 1147 (2013) (citation and internal quotation marks omitted).

Overpayment

Plaintiffs claim they overpaid for the products and services purchased from Defendant. Plaintiffs argue that the cost of the food they purchased implicitly contained the cost of sufficient protection of PII. As this Court has held before, this argument is unpersuasive. "Plaintiffs have not pled that [P.F. Chang's] charged a higher price for goods whether a customer pays with credit, and therefore, that additional value is expected in the use of a credit card." In re Barnes & Noble Pin Pad Litig., No. ...


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