Following the Seventh Circuit’s holding that the named plaintiffs had standing to sue, Neiman Marcus has renewed its motion to dismiss the putative class action stemming from a 2013 data breach that compromised the credit card numbers of 350,000 shoppers, arguing that the plaintiffs’ amended complaint fails to state a claim for relief.
Neiman Marcus originally moved to dismiss plaintiffs’ amended complaint based on both a lack of standing and failure to state a claim. The district court for the Northern District of Illinois dismissed the class action in September 2014 based on the former theory. However, as we previously reported, in July 2015 the Seventh Circuit reversed the district court’s ruling, holding that fraudulent charges, fraud-prevention expenses, and credit monitoring were sufficient, concrete injuries that conferred standing on the plaintiffs.
As the pre-Clapper cases like Krottner and Pisciotta demonstrate, simply because a plaintiff has standing to bring a suit does not mean that the alleged harm rises to the level of compensable damages to support a cognizable claim. Consistent with this precedent, Neiman Marcus argues that alleged future fraudulent charges, fraud-prevention expenses, and credit monitoring do not constitute recoverable damages for any of the alleged claims. Likewise, as Neiman Marcus pointed out, the Seventh Circuit was skeptical as to the plaintiffs’ other theories of recovery, including their so-called “overpayment theory” – that is, that the plaintiffs had overpaid for products purchased from Neiman Marcus because Neiman Marcus should have allocated, but failed to allocate, a portion of the purchase price to pay for data security measures or because the plaintiffs allegedly purchased products that they would not have otherwise purchased. Neiman Marcus argues that this problematic “overpayment theory” is exactly what the plaintiffs base their negligence, breach of implied contract, and unjust enrichment claims on. “[E]ven if one were to accept that the Seventh Circuit reserved any comment on the Overpayment Theory, as plaintiffs suggest, then that would at a minimum mean the Seventh Circuit left undistributed this Court’s previous conclusion that this theory was without merit” and thus “all claims premised upon it, must fail,” argued Neiman Marcus.
The Court is expected to issue a decision on the motion to dismiss by early February 2016.