United States District Court, N.D. Illinois, Eastern Division
OPINION AND ORDER
L.ELLIS, UNITED STATES DISTRICT JUDGE
Trans Union LLC and TransUnion Interactive Inc.
(collectively, “TransUnion”) have filed suit
against Defendants Equifax Information Services LLC
(“EIS”), Equifax Inc., and Equifax Consumer
Services LLC (“ECS”), formerly known as Equifax
Consumer Services, Inc., (collectively,
“Equifax”) over a dispute regarding contract
interpretation. The parties have contracted to share data at
a certain price, which they amend from time to time, and they
disagree over whether a specific pricing amendment applies to
data sharing resulting from the major breach that Equifax
suffered in the summer of 2017. Unsurprisingly, Equifax's
interpretation of the amendment results in it paying
TransUnion less money that it would under TransUnion's
interpretation of the amendment. Equifax moves to dismiss,
arguing that the plain language of their agreement precludes
TransUnion's suit and that Equifax Inc. is not a proper
defendant. Because the Court finds that, at least for the
purposes of this motion, the plain language of the agreement
allows TransUnion's suit to proceed, it denies
Equifax's motion to dismiss the complaint overall.
However, the Court agrees that TransUnion's claims do not
apply to Equifax Inc., and so it grants Equifax's motion
to dismiss Equifax Inc. from the suit.
and TransUnion are two of the three major credit reporting
agencies. The agencies provide consumer credit reports and
identity theft protection products, including
“3-in-1” or “Tribureau” reports that
pull information from all three of the national credit
reporting bureaus. When a company is the victim of a data
breach, it may contract with one of the credit reporting
agencies to provide “3-in-1” monitoring to the
company's affected consumers. To facilitate this
monitoring, EIS and TransUnion entered into a Reciprocal Data
Supply Agreement, effective October 1, 2011 (the
“Agreement”). The Agreement set forth pricing
terms for various data products supplied between the two
credit bureaus. One of the products covered by the Agreement
is credit monitoring, which the parties supply to each other
at an agreed and occasionally amended price on a per
subscriber per month basis (the “Standard Rate”).
parties negotiated an amendment to the Agreement (the
“Amendment”) that became effective on July 9,
2017. In the Amendment, the parties added a new product to
the Agreement for credit monitoring specifically. The new
product applied only for “subscriptions resulting from
new breach events occurring after July 1, 2017.” Doc.
25 ¶ 5. The parties agreed to provide the new product at
a significantly reduced price per subscriber per month (the
“New Breach Rate”) for credit monitoring
contracts with companies offering credit monitoring services
to their customers or consumers after a data breach event.
According to the Amendment, the New Breach Rate is “not
to be retroactively applied nor applied to existing
the parties were negotiating and executing the Amendment,
Equifax was in the midst of a massive data breach (the
“Equifax Breach”) that lasted from mid-May
through July 2017. On September 7, 2017, Equifax publicly
announced that the breach occurred and that it first
discovered the breach on July 29, 2017. Equifax also
announced that it would offer all U.S. consumers a free
one-year subscription to its TrustedID Premier monitoring
product. Because the TrustedID Premier product includes
3-in-1 monitoring, Equifax must purchase credit monitoring
from TransUnion to provide the service.
days after Equifax's announcement, TransUnion informed
Equifax that the New Breach Rate did not apply to credit
monitoring used as a result of the Equifax Breach because the
breach commenced prior to July 1, 2017. As a result,
TransUnion has billed credit monitoring services obtained for
the Equifax Breach at the Standard Rate. Prior to the
execution of the Amendment, Equifax used two Customer IDs for
purchasing credit monitoring from TransUnion, one ending in
22 (the “22 Account”) and one ending in 26 (the
“26 Account”). Additionally, prior to the
execution of the Amendment, Equifax paid for TrustedID credit
monitoring under the 26 Account. After announcing its free
year-long subscription to TrustedID, Equifax began paying the
New Breach Rate for all credit monitoring services incurred
through the 26 Account, which included services other than
those related to the Equifax Breach. In a phone call between
TransUnion's Vice President of Indirect Sales and
Equifax's Enterprise Alliance Manager, Equifax expressed
that it intended to apply the New Breach Rate to credit
monitoring services derived through the Equifax Breach.
Equifax Inc. reaffirmed this intent in a letter dated
November 20, 2017. In spite of the dispute between the credit
bureaus over the proper rate, TransUnion has continued to
provide credit monitoring services to Equifax.
motion to dismiss under Rule 12(b)(6) challenges the
sufficiency of the complaint, not its merits. Fed.R.Civ.P.
12(b)(6); Gibson v. City of Chicago, 910 F.2d 1510,
1520 (7th Cir. 1990). In considering a Rule 12(b)(6) motion
to dismiss, the Court accepts as true all well-pleaded facts
in the plaintiff's complaint and draws all reasonable
inferences from those facts in the plaintiff's favor.
AnchorBank, FSB v. Hofer, 649 F.3d 610, 614 (7th
Cir. 2011). To survive a Rule 12(b)(6) motion, the complaint
must not only provide the defendant with fair notice of a
claim's basis but must also be facially plausible.
Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct.
1937, 173 L.Ed.2d 868 (2009); see also Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d
929 (2007). “A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Iqbal, 556 U.S.
Interpretation of the Amendment
question at the heart of this motion is how to interpret a
relatively short phrase in the Amendment: “for
subscriptions resulting from new breach events occurring
after July 1, 2017.” Equifax is emphatic that this
phrase includes data breaches that began occurring before July
1 but continued occurring after July 1; TransUnion is equally
emphatic that the phrase only includes data breaches that
commenced after July 1.
parties agree that disputes regarding the Agreement and the
Amendment are governed by Delaware law. Under Delaware law,
the proper construction of a contract is purely a question of
law. Rhone-Poulenc Basic Chems. Co. v. Am. Motorists Ins.
Co., 616 A.2d 1192, 1195 (Del. 1992). In light of this,
courts may properly address the meaning of contract language
on a motion to dismiss. See Allied Capital Corp. v.
GC-Sun Holdings, L.P., 910 A.2d 1020, 1030 (Del. Ch.
2006). “[W]hen interpreting a contract, the role of a
court is to effectuate the parties' intent. In doing so,
[the courts] are constrained by a combination of the
parties' words and the plain meaning of those words where
no special meaning is intended.” AT&T Corp. v.
Lillis, 953 A.2d 241, 252 (Del. 2008) (citation omitted)
(internal quotation marks omitted). Delaware law requires
that courts consider “what a reasonable person in the
position of the parties would have thought the language of a
contract means.” Lorillard Tobacco Co. v. Am.
Legacy Found., 903 A.2d 728, 738 (Del. 2006).
“‘Clear and unambiguous language . . . should be
given its ordinary and usual meaning.'”
Id. at 739 (quoting Rhone-Poulenc, 616 A.2d
dispute here is whether a breach event that the parties agree
(for the purposes of this motion) commenced before July 1,
2017 but continued to occur after July 1, 2017 could be
considered a “new breach event occurring after July 1,
2017.” Under the plain language of the Amendment, the
Court finds that the Equifax Breach could not be considered a
“new breach event occurring after July 1, 2017.”
The answer to this question turns on the application of the
word “new” in the relevant language. A reasonable
person in the position of the parties would interpret this to
mean a breach event that does not occur until after July 1,
2017. Otherwise, it would be unnecessary for the parties to
include the word “new.” See Zimmerman v.
Crothall, 62 A.3d 676, 691 (Del. Ch. 2013)
(“Courts . . . attempt to give meaning and effect to
each word in a contract, assuming that the parties would not
include superfluous ...