This document relates to a class action lawsuit filed against Target Corporation following a 2013 data breach that compromised payment card data of Target customers. It provides an overview of the litigation, which involves over 80 consumer class action lawsuits consolidated in a multidistrict litigation, as well as several shareholder derivative and bank cases. Target outlines the plaintiffs' allegations and potential defenses. Target asserts that many plaintiffs lack standing, as they allege only hypothetical future injuries. Target also argues that many of the over 100 alleged causes of action fail to state a claim or properly allege causation between the data breach and claimed injuries. Target believes certification of nationwide or multi-state classes will be difficult given variations in applicable law.
This document relates to a class action lawsuit filed against Target Corporation following a 2013 data breach that compromised payment card data of Target customers. It provides an overview of the litigation, which involves over 80 consumer class action lawsuits consolidated in a multidistrict litigation, as well as several shareholder derivative and bank cases. Target outlines the plaintiffs' allegations and potential defenses. Target asserts that many plaintiffs lack standing, as they allege only hypothetical future injuries. Target also argues that many of the over 100 alleged causes of action fail to state a claim or properly allege causation between the data breach and claimed injuries. Target believes certification of nationwide or multi-state classes will be difficult given variations in applicable law.
This document relates to a class action lawsuit filed against Target Corporation following a 2013 data breach that compromised payment card data of Target customers. It provides an overview of the litigation, which involves over 80 consumer class action lawsuits consolidated in a multidistrict litigation, as well as several shareholder derivative and bank cases. Target outlines the plaintiffs' allegations and potential defenses. Target asserts that many plaintiffs lack standing, as they allege only hypothetical future injuries. Target also argues that many of the over 100 alleged causes of action fail to state a claim or properly allege causation between the data breach and claimed injuries. Target believes certification of nationwide or multi-state classes will be difficult given variations in applicable law.
DISTRICT OF MINNESOTA In re: Target Corporation Customer Data Security Breach Litigation, This document relates to all actions. MDL N. 14-2522 (PAM/JJK) Status ConIerence: May 14, 2014 Robert Kulla, PlaintiII, v. Gregg W. SteinhaIel, Beth M. Jacob, James A. Johnson, Solomon D. Trujillo, Anne M. Mulcahy, Roxanne S. Austin, Calvin Darden, Mary E. Minnick, Derica W. Rice, John G. StumpI, Douglas M. Baker, Jr., Henrique De Castro, and Kenneth L. Salazar, DeIendants, -and- Target Corporation, Nominal DeIendant. Lead Case No. 14-cv-00203 (PAM/JJK) (consolidated with 14-cv-00261 (PAM/JJK), 14-cv-00266 (PAM/JJK), and 14-cv-00551 (PAM/JJK)) DEFENDANTS CASE MANAGEMENT STATEMENT PURSUANT TO PRETRIAL ORDER NUMBER ONE Pursuant to Pretrial Order No. 1, DeIendants Target Corporation ('Target), Target Brands, Inc., Target Corporate Services, Inc. , Target Corporation oI Minnesota, CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page l of 26 2 Target.com, 1 and Gregg W. SteinhaIel, Beth M. Jacob, James A. Johnson, Solomon D. Trujillo, Anne M. Mulcahy, Roxanne S. Austin, Calvin Darden, Mary E. Minnick, Derica W. Rice, John G. StumpI, Douglas M. Baker, Jr., Henrique De Castro, and Kenneth L. Salazar (the 'Individual DeIendants and, collectively with Target, Target Brands, Inc., Target Corporate Services, Inc. , Target Corporation oI Minnesota, Target.com, and AIIiliated Computer Services (ACS), the 'DeIendants) 2 submit the Iollowing case management statement: 3 I. DESCRIPTION OF THE CASE A. Overview of the Data Breach Litigation On December 19, 2013, Target publicly announced that it had detected unauthorized access to Target payment card data (the 'Data Breach), potentially involving customers who made credit or debit card purchases in Target`s U.S. stores Irom November 27 to December 15, 2013. That same day, plaintiIIs began Iiling lawsuits (the 'Cases) against Target in Iederal courts across the country alleging various causes oI 1 Target`s position is that these other Target entities are improperly named deIendants. 2 Target, Target Brands, Inc., Target Corporate Services, Inc. , Target Corporation oI Minnesota, and Target.com are represented in MDL No. 14-2522 by Faegre Baker Daniels LLP and Morrison & Foerster LLP. Faegre Baker Daniels also represents Target and the Individual DeIendants in the Shareholder Cases. ACS is represented by Berens & Miller, P.A. 3 On April 30, 2014, counsel Ior deIendants met and conIerred telephonically with plaintiIIs` counsel in various Consumer and Bank Cases to discuss the issues set Iorth in Pretrial Order No.1. Counsel Ior deIendants suggested that it would be more eIIicient iI the parties jointly proposed that the Court Iirst appoint lead and liaison counsel and directed the parties to then meet and conIer and submit a single proposed case management order Ior the Court`s consideration. PlaintiIIs` counsel were unable to reach a consensus on that proposal. CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page 2 of 26 3 action arising Irom the Data Breach. As the Court observed in its Pretrial Order No. 1, the Cases can be grouped into three types: class actions brought by consumer plaintiIIs (the 'Consumer Cases), class actions brought by Iinancial institution plaintiIIs such as banks or credit unions (the 'Bank Cases), and the shareholder derivative actions that have already been consolidated in Civ. No. 14-203 (the 'Shareholder Cases). As oI May 7, 2014, there are 81 Consumer Cases, 28 Bank Cases, and 4 Shareholder Cases pending beIore the Court. 4 B. The Consumer Cases 1. Plaintiffs Allegations 5 PlaintiIIs in the 81 Consumer Cases, which were pending in 38 diIIerent Iederal district courts prior to transIer, are Target guests who allege that they used a debit or credit card at Target during the November 27 to December 15 time period. The Consumer Case plaintiIIs generally allege that Target Iailed to take adequate precautions to prevent the Data Breach and that Target Iailed to promptly notiIy potentially aIIected guests. Named plaintiIIs in the 81 Consumer Cases reside in more than two dozen states and have collectively asserted well over 100 diIIerent causes oI action. These include the Iollowing: 4 As the Court observed in Pretrial Order No. 1, the Schafer case is potentially both a Consumer Case and a Bank Case. For purposes oI counting the number oI cases, deIendants have counted the Schafer case as a Consumer Case. 5 This summary does not purport to be a perIect synthesis oI the allegations contained in all oI the 81 complaints Iiled in Consumer Cases. CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page 3 of 26 4 State common law causes oI action Ior bailment (9 diIIerent state laws), breach oI contract (10 diIIerent state laws), breach oI implied contract (11 diIIerent state laws), breach oI Iiduciary duty (6 diIIerent state laws), breach oI the implied covenant oI good Iaith and Iair dealing (2 diIIerent state laws), breach oI implied warranty (1 state law), concealment (2 diIIerent state laws), invasion oI privacy (9 diIIerent state laws), 'money had and received (1 state law), negligence (23 diIIerent state laws), negligence per se (11 diIIerent state laws), negligent misrepresentation or omission (7 diIIerent state laws), and unjust enrichment (3 state laws); State statutory causes oI action Ior violation oI data protection and data breach notiIication laws (3 diIIerent state laws), unIair or deceptive acts and practices (UDAP) laws (26 diIIerent state laws); and Federal statutory causes oI action under the Declaratory Judgment Act, Fair Credit Reporting Act, Federal Driver`s Privacy Act, and Federal Stored Communications Act. PlaintiIIs in more than 50 oI the Consumer Cases seek to represent similarly deIined nationwide classes. The Consumer Case PlaintiIIs also seek to represent numerous subclasses on behalI oI individuals who either live in, or shopped at Target stores, in 27 diIIerent states. The Consumer Case PlaintiIIs seek to recover (i) actual and compensatory damages in an unspeciIied amount; (ii) various statutory damages and penalties; (iii) punitive damages; (iv) various types oI injunctive and equitable relieI; (v) restitution; (vi) disgorgement; and (vii) an award oI attorneys` Iees, costs, and disbursements. CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page 4 of 26 5 2. Targets Defenses The Iollowing statement oI deIenses identiIies arguments that Target anticipates making but is not intended to be comprehensive. Target reserves the right to assert additional deIenses as necessary. TheConsumer Caseplaintiffslackstanding. The majority oI Consumer Case plaintiIIs assert only hypothetical Iuture injuries based on their asserted belieI that their personal or Iinancial inIormation was compromised by the Data Breach. Such speculative allegations oI possible injury are insuIIicient to satisIy the 'injury in Iact requirement oI Article III standing. Clapper v. Amnesty International USA, 133 S. Ct. 1138, 1147 (2013) ('we have repeatedly reiterated that threatened injury must be certainly impending to constitute injury in Iact, and that allegations oI possible Iuture injury are not suIIicient.) (internal quotation omitted); see also Polanco v. Omnicell, Inc., No. 13-1417 (NLH/KMW), 2013 WL 6823265, (D.N.J. Dec. 26, 2013) (dismissing Ior lack oI standing relying on Clapper); In re Barnes & Noble Pin Pad Litig., No. 12-cv- 8617, 2013 WL 4759588 (N.D. Ill. Sept. 3, 2013) (same). Other Consumer Case plaintiIIs allege injuries involving replacement oI their credit and debit cards or lost time spent monitoring their Iinances. But plaintiIIs 'cannot manuIacture standing merely by inIlicting harm on themselves based on their Iears oI hypothetical Iuture harm that is not certainly impending. Clapper, 133 S.Ct. at 1151. Moreover, Target has already oIIered one year oI Iree credit monitoring and identity theIt protection to all Target guests who shopped in U.S. stores. This service includes a complimentary credit report, daily credit monitoring, identity theIt insurance (except where prohibited by law), and access to CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page 5 of 26 6 personalized assistance Irom a Fraud Resolution Agent. Theallegationsfail tostateclaims. The Consumer Case plaintiIIs have asserted more than 100 diIIerent causes oI action, many oI which Iail to state claims under Rule 12(b)(6). Target will not attempt to explain how each oI these claims is deIective here, but will provide several examples. First, plaintiIIs` Iailure to allege suIIicient Iacts demonstrating a causal link between the Data Breach and their alleged injuries will be Iatal to many oI their causes oI action. 6 Second, the same standing deIects alleged above will also derail many oI plaintiIIs` claims under state UDAP laws, which require a showing oI monetary harm. See In re Sony Gaming Networks and Customer Data Security Breach Litig. 2014 WL 223677 at *35-41 ('Sony) (S.D. Cal. Jan. 21, 2014) (dismissing certain Florida, Michigan, New York, and Texas UDAP claims Ior Iailure to allege any actual damages). Third, many similarly pleaded claims Ior violation oI the Fair Credit Reporting Act (FCRA), bailment, breach oI contract, and unjust enrichment have all been dismissed at the pleading stage in other data breach cases Ior reasons that will be applicable here. See id. at *54 (dismissing FCRA claims); id. at 974 (dismissing bailment claims); In re Zappos.com, Inc., Customer Data Security Breach Litig., 2013 WL 4830497, at *3-4 (D. Nev. Sept. 9, 2013) ('Zappos) (dismissing breach oI contract and unjust enrichment claims). Plaintiffswill beunabletocertifyaclass. As in prior data breach cases, the 6 Even iI plaintiIIs survive a motion to dismiss directed at this issue, Target anticipates that plaintiIIs will be unable to produce evidence demonstrating causation, rendering their claims susceptible to summary judgment. CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page 6 of 26 7 Consumer Case plaintiIIs will be unable to certiIy a class. Among other things, individualized choice-oI-law issues 7 will preclude certiIication oI a nationwide class action, see Mazza v. Am. Honda Motor Co., 666 F.3d 581, 596 (9th Cir. 2012) (reIusing to certiIy nationwide consumer class action due to material diIIerence in state consumer protection laws), and individualized Iactual issues will predominate concerning causation, damages, reliance, and the named plaintiIIs` purported understanding and assumptions about Target`s data security. See, e.g., Hannaford, 293 F.R.D. 21 (D. Maine Mar. 20, 2013) (denying motion Ior class certiIication because individualized issues concerning damages predominated); In re TJX Companies Retail Sec. Breach Litig., 246 F.R.D. 389, 392 (D. Mass. Nov. 29, 2007) ('TJX) (denying motion Ior class certiIication because individualized issues concerning causation and reliance predominated). Individualized issues concerning plaintiIIs` alleged injuries will also prevent plaintiIIs Irom satisIying the commonality requirement oI Rule 23(a)(2) in light oI the Supreme Court`s clariIication oI the relevant standard in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 7 As outlined above, the Consumer Case plaintiIIs hail Irom dozens oI diIIerent states and allege numerous claims under diIIerent state laws. Here, as in other recent data breach cases, see, e.g., In re Sony Gaming Networks & Customer Data Sec. Breach Litig., 2014 U.S. Dist. LEXIS 7353, *75 (S.D. Cal. Jan. 21, 2014), litigation will entail extensive choice-oI-law analysis and interpretation oI diIIerent state laws. Eighth Circuit law will apply to procedural issues and to matters oI Iederal substantive law, including Article III standing. See, e.g., In re Temporomandibular Joint (TMJ) Implants Products Liab. Litig., 97 F.3d 1050, 1055 (8th Cir. 1996) ('When analyzing questions oI Iederal law, the transIeree court should apply the law oI the circuit in which it is located.); In re Medtronic, Inc., Implantable Defibrillators Litig., 465 F. Supp. 2d 886, 892 (D. Minn. 2006). When addressing matters oI substantive state law, however, the Court will have to apply the state law that would have applied to the individual cases had they not been transIerred, including applicable state choice-oI-law rules. See In re TMJ Implants Products Liab. Litig., 97 F.3d at 1055. CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page 7 of 26 8 2541, 2551 (2011). 3. Affiliated Computer Services [Related to Reynosov. Target andAffiliatedComputer Services, I nc., No. 14-cv-346 (D. Minn.)] ACS oIIers a debit card service in various states. The claims alleged in the Reynoso matter relate to a Consumer Case action against Target, described supra, and two claims asserted speciIically against ACS by a subclass oI Illinois residents who use the state beneIit debit card, the EPPICard MasterCard ('EPPICard). The Illinois subclass alleges that ACS acted in violation oI Illinois` Consumer Fraud and Deceptive Business Practices Act and Negligence. ACS will raise certain deIenses to those claims, including, without limitation, that the subclass oI such as plaintiIIs Iailed to state a claim upon which relieI can be granted, Iailed to mitigate their damages, and waived any claims. ACS also adopts the Target DeIendants` deIenses identiIied supra. In addition, ACS reserves the right to assert additional deIenses or claims as necessary. 4. Procedural Status Statusof Discovery. No discovery has occurred in any oI the Consumer Cases apart Irom the service oI several third-party subpoenas in the consolidated Northern District oI Illinois actions. Those subpoenas were issued Ior preservation purposes, and the return oI those subpoenas was immediately stayed by Judge Gettleman. In the Pietanza case, originally pending in the Eastern District oI New York, Judge Cogan directed the parties to exchange document requests and interrogatories on April 18, 2014. Target and the Pietanza plaintiIIs asked Judge Cogan to adjourn this deadline in light oI CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page 8 of 26 9 the impeding transIer to the District oI Minnesota, a request that was not ruled on prior to transIer. Neither Target nor the Pietanza plaintiIIs have exchanged discovery requests because, per Pretrial Order No. 1, all discovery is currently stayed. In addition to these matters, a number oI Consumer Case plaintiIIs also unsuccessIully sought preservation orders, 8 orders permitting expedited discovery, or discovery Irom third parties prior to transIer. Other MotionPractice. Consumer Case plaintiIIs in the consolidated Northern District oI Illinois actions also moved Ior a protective order regarding Target`s customer communications (denied); a preliminary injunction regarding credit monitoring (denied); to Iile a consolidated complaint (granted); to liIt the stay in order to Iile a second amended complaint (denied); and several placeholder motions Ior class certiIication, pursuant to Damasco v. Clearwire Corp., 662 F.3d 891 (7th Cir. 2011). 9 The plaintiII in the Rippy case in the Southern District oI Illinois unsuccessIully moved to remand her case back to the Circuit Court oI Clinton, County, Illinois, Ior lack oI Iederal subject matter jurisdiction. PartiesOpposingTransfer tothisDistrict. On April 4, 2014, the Judicial Panel 8 PlaintiIIs in the Due Fratelli obtained a preservation order Irom the Circuit Court oI Cook County, Illinois, on December 27, 2013, prior to the removal oI that case to the Northern District oI Illinois. That order expired, per its own terms, on January 6, 2014. Judge Gettleman in the Northern District oI Illinois denied plaintiIIs` attempt to reimpose a similar order Iollowing removal. 9 PlaintiIIs withdrew their placeholder motions Ior class certiIication based on Target`s stipulation that it would not make any oIIer oI judgment to the named plaintiIIs without giving Iive days` written notice to counsel in advance so that plaintiIIs could re-Iile their motions. CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page 9 of 26 10 on Multidistrict Litigation (JPML) issued a Conditional TransIer Order (CTO-1) concerning a number oI the Consumer and Bank Cases, indicating that those cases would be transIerred to this district iI the parties did not object within seven days. Visa Inc. and MasterCard Inc., co-deIendants in one oI these cases, Christensen v. Target Corp., N. 13 01136 (D. Utah), have opposed transIer. Visa and MasterCard Iiled a joint motion with the JPML on April 23, 2014, requesting that the claims against them be severed and allowed to remain in the District oI Utah or, in the alternative, that the JPML vacate its Conditional TransIer Order and allow the entire Christensen case to remain in the District oI Utah. Responses to that motion are due May 15, 2014. 5. Related State-Court Litigation Apart Irom several small claims court cases, there are not currently any related state court cases involving consumer plaintiIIs. 6. Predictions as to the Total Number of Cases There are currently 81 Consumer Cases. Consumer Cases were initially being Iiled at a rate oI one or two every day. In the past month, however, that pace has slowed to approximately one a week. Based on that rate, it is possible that an additional 5-10 Consumer Cases may be Iiled. C. The Bank Cases 1. Plaintiffs Allegations PlaintiIIs in the Bank Cases are banks and credit unions who allege some Iorm oI injury based on the theIt oI their customers` inIormation as part oI the Data Breach. The Bank Case plaintiIIs generally allege that the theIt oI their customers` credit and debit CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page l0 of 26 11 card inIormation has harmed them by (i) Iorcing them to reIund Iraudulent charges to their customers` accounts that may be connected to stolen card inIormation; (ii) causing them to close and re-open checking and savings accounts on behalI oI customers who believe that their card inIormation was stolen; and (iii) cancelling and re-issuing credit and debit cards to customers who believe that their card inIormation was stolen. Target has no contractual relationship with most, iI not all, oI the Bank Case plaintiIIs. Named plaintiIIs in the 27 Bank Cases have collectively asserted more than 30 diIIerent causes oI action. These include the Iollowing: State common law causes oI action Ior bailment (1 state law), breach oI implied contract (3 diIIerent state laws), breach oI implied contract (4 diIIerent state laws), conversion (1 state law), negligence (8 diIIerent state laws), negligence per se (4 diIIerent state laws), negligent misrepresentation or omission (4 diIIerent state laws), negligent perIormance oI services (1 state law), and unjust enrichment (1 state law); State statutory causes oI action Ior violation oI UDAP laws (7 diIIerent state laws); and Federal statutory causes oI action under the Gramm-Leach-Bliley Act and Racketeer InIluenced and Corrupt Organizations (RICO) Act. PlaintiIIs in 23 oI the Bank Cases seek to represent nationwide classes oI banks and other Iinancial institutions. The Bank Case plaintiIIs also seek to represent various subclasses oI Iinancial institutions located in seven states. The Bank Case plaintiIIs seek to recover (i) actual and compensatory damages in an unspeciIied amount; (ii) various statutory damages and penalties; (iii) speciIic perIormance, restitution, or rescission; (iv) CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page ll of 26 12 punitive damages and treble damages pursuant to the RICO Act; (v) various types oI injunctive and equitable relieI; (vi) restitution; (vii) disgorgement; and (viii) an award oI attorneys` Iees, costs, and disbursements. 2. Targets Defenses The Iollowing statement oI deIenses identiIies arguments that Target anticipates making but is not intended to be comprehensive. Target reserves the right to assert additional deIenses as necessary. Theallegationsfail tostateclaims. Like the Consumer Case plaintiIIs, the claims asserted by the Bank Case plaintiIIs contain a number oI pleading deIects. As in the TJX case, breach oI contract claims asserted by the Bank Case plaintiIIs should be dismissed Ior lack oI privity. See TJX, 524 F. Supp. 2d 83, 88 (D. Mass. 2007). Claims Ior negligence should be dismissed under the economic loss doctrine, and claims Ior unjust enrichment should be dismissed due to inadequate allegations oI wrongIulness or unconscionability. See Sovereign Bank v. BJs Wholesale Club, Inc., 533 F.3d 162, 179 (3rd Cir. 2007) (upholding dismissal oI negligence and unjust enrichment claims); TJX, 524 F. Supp. 2d at 91 (dismissing negligence claims). Plaintiffswill beunabletocertifyaclass. As in the TJX case, the Bank Case plaintiIIs will be unable to certiIy a class because individualized issues will predominate with regard to reliance (as to misrepresentation claims) and causation. As the court explained in TJX, '|p|roving the element oI reliance will necessarily involve individual questions oI Iact, and the issuing banks will be unable to invoke a presumption oI reliance on the part oI class members. TJX, 246 F.R.D. at 392. The TJX court CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page l2 of 26 13 elaborated that '|t|he problem Ior the plaintiIIs is that the liability oI |deIendants| will not hinge on whether the data breach caused Iraud-related losses; liability will depend on whether the breach caused a particular plaintiII`s loss. Given that there are a myriad oI ways in which Iraud losses can occur . . . evidence oI general causation will not suIIice . . . . Instead, causation will have to be determined loss-by-loss, bank-by-bank, Iurther rendering certiIication inappropriate. Id. at 396-97. Variations in their alleged injuries will also prevent the Bank Case plaintiIIs Irom showing the necessary commonality in light oI Dukes, 131 S. Ct. at 2551. Like the Consumer Cases, the Bank Cases also allege violations oI numerous state laws that will make certiIication oI a nationwide class inappropriate. See Mazza, 666 F.3d at 596. 3. Procedural Status No discovery has occurred in any oI the Bank Cases. 4. Related State-Court Litigation There are not any related state court cases involving bank or other Iinancial institution plaintiIIs. 5. Predictions as to the Total Number of Cases There are currently 28 Bank Cases. The rate at which new Bank Cases are being Iiled has increased in the past two months but that pace is still only about one new case a week. Based on that rate, it is possible that an additional 5-10 Bank Cases may be Iiled. D. The Shareholder Cases 1. Plaintiffs Allegations Four shareholders oI Target have Iiled these derivative actions purporting to assert CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page l3 of 26 14 claims belonging to Target. DeIendants in the actions are (i) the Individual DeIendants (Target`s 12 directors, 11 oI whom are independent outside directors, Target`s ChieI Financial OIIicer, and Target`s Iormer ChieI InIormation OIIicer); and (ii) Target, as a nominal DeIendant. The Shareholder Case plaintiIIs allege that the Individual DeIendants Iailed to properly oversee Target, Iailed to prevent the Data Breach, and Iailed to cause Target to announce the Data Breach as quickly as Target should have. Shareholder Case plaintiIIs allege that the Individual DeIendants` Iailures have caused or will cause injury to Target. Shareholder Case plaintiIIs assert claims against the Individual DeIendants Ior breach oI Iiduciary duty, waste oI corporate assets, gross mismanagement, and abuse oI control. Shareholder Case plaintiIIs seek (i) damages in an unspeciIied amount, (ii) unspeciIied improvements to Target`s corporate governance and internal procedures, (iii) restitution to Target oI the Individual DeIendants` compensation, and (iv) an award oI attorneys` Iees, costs, and disbursements. 2. Individual Defendants Defenses The Iollowing statement oI deIenses identiIies arguments that DeIendants anticipate making but is not intended to be comprehensive. DeIendants reserve the right to assert additional deIenses as necessary. TheactionsshouldbedismissedduetoPlaintiffs failuretomakepre-suit demand. Because the claims (iI they exist) belong to Target, the Shareholder Case plaintiIIs must Iirst plead via particularized Iacts that they made a demand Ior action upon Target`s board oI directors beIore Iiling suit, or that their Iailure to make a demand CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page l4 of 26 15 should be excused because demand would have been Iutile. See Fed. R. Civ. P. 23.1. Shareholder Case plaintiIIs have Iailed to meet these pleading requirements and have Iailed to satisIy Minnesota law (which governs because Target is a Minnesota corporation). See Winter v. Farmers Educ. & Co-operative Union, 107 N.W.2d 226, 234 (Minn. 1961) (demand is required unless a shareholder shows that 'it is plain Irom the circumstances that it would be Iutile). Shareholder Case plaintiIIs make only generic, conclusory allegations oI demand Iutility. In addition, even iI one assumed that none oI Target`s 12 directors could Iairly consider a demand, a demand would not be Iutile because the Minnesota Business Corporation Act ('MBCA) allows corporations involved in derivative actions to appoint a special litigation committee comprised oI independent outsiders to 'consider legal rights or remedies oI the corporation and whether those rights and remedies should be pursued. Minn. Stat. 302A.241, subd. 1. Because demand would not be Iutile, the actions should be dismissed due to plaintiIIs` Iailure to make a pre-suit demand. Thedirector defendantsareshieldedfromliabilitybyTargetsAmendedand RestatedArticlesof I ncorporation. Consistent with the MBCA, Target`s Amended and Restated Articles oI Incorporation provide that '|n|o director . . . shall be personally liable to |Target| Ior monetary damages Ior breach oI Iiduciary duty as a director, except with respect to breaches oI a director`s duty oI loyalty, or Ior acts or omission not in good Iaith or that involve intentional misconduct or a knowing violation oI law. See Art. IV and Minn. Stat. 302A.251, subd. 4. All oI the conduct alleged by the Shareholder Case plaintiIIs, even iI true, Ialls within the exculpation provision oI Article IV. ThereIore, the CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page l5 of 26 16 director deIendants cannot be held liable Ior damages. Theallegationsfail tostateclaims. The Individual DeIendants were required to discharge their duties in good Iaith, in a manner that they reasonably believed to be in Target`s best interests, and with the care an ordinarily prudent person in a like position would exercise under similar circumstances. See Minn. Stat. 302A.251, subd. 1. None oI the Iacts alleged by the Shareholder Case plaintiIIs (as opposed to Shareholder Case plaintiIIs` conclusory allegations, which must be ignored) state plausible claims that the Individual DeIendants Iailed to discharge these duties. One cannot assume or inIer that the Individual DeIendants breached their duties simply because the Data Breach occurred on their watch. 3. Procedural Status All deIendants have been served in all oI the Shareholder Cases, and these cases have been consolidated. No other activities have occurred. 4. Related State-Court Litigation There is one shareholder derivative action Iiled against deIendants in Hennepin County District Court, and entitled Beth Koeneke v. Roxanne S. Austin, et al., No. 27-cv- 14-1832 (Judge Laurie J. Miller, presiding). The complaint in the Koeneke action makes nearly identical allegations, raises identical claims, and seeks identical relieI, as in the Shareholder Cases. On April 11, 2014, deIendants Iiled a motion to stay the Koeneke action in Iavor oI proceedings in the Shareholder Cases in this Court, or in the alternative, to dismiss the Koeneke action. The hearing on DeIendants` motion is set Ior June 12, 2014. Pursuant to rules applicable in Minnesota state court, the state court will rule on CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page l6 of 26 17 the motion within 90 days oI the hearing date. DeIendants anticipate that any discovery or other proceedings in the Koeneke action will be deIerred until aIter Minnesota state court has decided deIendants` pending motion. 5. Predictions as to the Total Number of Cases It is possible that other Target shareholders will Iile 'tag-along derivative actions in either this Court, or in the Hennepin County District Court. However, deIendants have no inIormation about whether such suits actually might be Iiled, where they might be Iiled, or when they might be Iiled. Target has received a shareholder demand directed to its Board oI Directors that the Board is expected to consider at an upcoming meeting. The demand covers the same matters as the complaints in the Shareholder Cases. II. LEAD AND LIAISON COUNSEL A. Defendants Views as to Appropriate Lead and Liaison Counsel DeIendants take no position as to which plaintiIIs` counsel should be designated as interim lead or liaison counsel Ior the consolidated proceedings as a whole or Ior the Consumer Cases and Bank Cases. PlaintiIIs in the Shareholder Cases have conIerred and reached agreement on Lead Counsel and Liaison Counsel Ior those actions. DeIendants are amenable to the leadership structure agreed to by the Shareholder Case plaintiIIs. DeIendants suggest that the Court`s decision as to Lead Counsel and Liaison Counsel should be made as early as possible so that the parties can make Iurther progress with regard to the negotiation oI various procedural issues. To that end, DeIendants propose that within 14 days aIter the Court appoints Lead Counsel and Liaison Counsel in the MDL, the parties should meet and conIer and submit a single, joint proposed case CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page l7 of 26 18 management order in the MDL Ior the Court`s consideration. B. Guidelines Concerning Plaintiffs Counsel Timekeeping Concurrently with this Iiling, DeIendants are submitting a proposed methodology containing certain guidelines to monitor and document attorneys` Iees and expenses. The purpose oI these proposed guidelines is to limit duplicative and excessive litigation costs and expenses that may ultimately be sought in connection with any settlements or judgments relating to this action. The guidelines will also reduce the likelihood oI later disputes concerning whether plaintiIIs` counsel have adequately documented their time spent working on the Cases. Imposing guidelines on attorney timekeeping at the outset oI the case is a common practice in large multidistrict litigations, see, e.g., In re HardiePlank Fiber Cement Siding Litig., MDL File No. 12-md-02359-MJD-LIB (D. Minn. Oct. 3, 2012) (Davis, J.); Guidelines, ECF No. 417, In Re Idevice Address Book Litig., No. 3:13-cv-00453-JST (N.D. Cal. Nov. 22, 2013), including other data breach MDL proceedings. See Case Management Order No. 1, ECF No. 21, In re Heartland Payment Systems, Inc. Data Security Breach Litig., No. H-09-MD-02046 (S.D. Tex. Aug. 28, 2009); Further Procedural Order, ECF No. 22, In re Hannaford Bros. Co. Customer Data Security Breach Litigation, No. 2:08-MD-1954 (D. Me. July 25, 2008). Indeed, DeIendants` proposal is largely based on similar guidelines that were recently entered in the In re HardiePlank MDL currently pending in this District. These guidelines are also consistent with the Court`s prior instruction that counsel provide the Court with monthly reports on the amount oI time billed to the Cases. (Pretrial Order No. 1, ECF No. 4 at 5.) CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page l8 of 26 19 III. PLEADINGS A. Service Status Consumer Cases. PlaintiIIs have served Target with a summons (or Target has waived service) in all oI the Consumer Cases except Ior the Iollowing: Alvarez v. Target, No. 14-CV-129 (N.D. Cal.); Bess v. Target, N. 14-CV-262 (D. S.C.); Crawford v. Target, No. 14-CV-2071 (W.D. Tenn.); Ellison v. Target, No. 14-CV-209 (E.D. Penn.); Guzman v. Target, No. 13-CV-5953 (N.D. Cal.); Kirschenstein v. Target, N. 14-CV- 1450 (C.D. Cal.); Klein v. Target, No. 13-CV-1974 (C.D. Cal.); Marciniszyn v. Target, No. 14-CV-113 (D. Conn; removal Irom Conn. Superior Court); and Switzer v. Target, N. 13-CV-1319 (S.D. I.). PlaintiIIs in Reynoso v. Target and Affiliated Computer Services, Inc., No. 14-cv- 346 (D. Minn.) have served AIIiliated Computer Services. BankCases. PlaintiIIs have served Target with a summons (or Target has waived service) in all oI the Bank Cases except Ior the Iollowing: Animas Credit Union v. Target, N. 14-CV-292 (D. N.M.); Commercial Bancshares, Inc. v. Target, N. 14-CV- 4012 (W.D. Ark.); First NBC Bank v. Target, No. 14-CV-1012 (E.D. La.); and North Districts Community Credit Union v. Target, No. 14-CV-175 (W.D. Penn.). Shareholder Cases. All deIendants have been served in all oI the Shareholder Cases. B. Waiver of Service To eliminate disputes over service oI process and reduce the expense oI such service, DeIendants agree to waive service oI process Ior Cases Iiled in Iederal court, CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page l9 of 26 20 subject to the provisions oI Fed. R. Civ. P. 4(d). The notice required by that rule should be provided to counsel Ior the DeIendants. C. Consolidated Complaints In light oI the above waiver, deIendants do not anticipate any disputes concerning service and believe that the parties should move promptly to consolidate the cases. Given the similarity oI claims and allegations asserted by plaintiIIs in the various Cases, it is appropriate to combine those allegations into three consolidated complaints, one Ior the Consumer Cases, 10 one Ior the Bank Cases, and one Ior the Shareholder Cases. 11 PlaintiIIs should Iile these three consolidated complaints within 30 days aIter the Court`s appointment oI Consolidated Cases Lead Counsel and Consumer, Bank, and Shareholder Cases Lead Counsel. D. Deadline to Answer or Otherwise Respond DeIendants will answer or otherwise respond to each oI the three consolidated complaints within 45 days aIter plaintiIIs Iile each Consolidated Complaint. IV. PROPOSED MOTION SCHEDULE A. Motions to Dismiss DeIendants intend to Iile motions to dismiss the consolidated complaints and 10 Target proposes that the consumer plaintiIIs in Schafer should consolidate their claims with the other Consumer Case plaintiIIs and that the Iinancial institution plaintiIIs in Schafer should consolidate their claims with the other Bank Case plaintiIIs. 11 The Shareholder Case plaintiIIs have already agreed that Iiling a consolidated complaint is appropriate. See Stipulation Regarding Consolidation oI Related Actions, Appointment oI Lead Counsel, and Related Issues, ECF No. 32 14, Kulla v. Target Corp. et al., No. 14-cv-00203-PAM-JJK (Apr. 3, 2014). CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page 20 of 26 21 propose the Iollowing brieIing schedule: PlaintiIIs` oppositions to deIendants` motions to dismiss should be due within 30 days aIter such motions are Iiled. DeIendants` reply brieIs will be due within 21 days aIter plaintiIIs` opposition brieIs are Iiled. Prior to Iiling their motions to dismiss, plaintiIIs and deIendants should jointly contact the Court to reserve a mutually convenient hearing date to occur as soon as practicable Iollowing the deadline Ior deIendants Iiling any reply memorandum. In the event that any oI deIendants` motions to dismiss are denied, deIendants will Iile an answer to the relevant consolidated complaint within 30 days aIter denial oI their motion. B. Motions to Amend the Pleadings or Add Parties All motions which seek to amend the pleadings or add parties in the Consumer Cases should be served within 60 days aIter the date that DeIendants serve an answer in the Consumer Cases. All motions which seek to amend the pleadings or add parties in the Bank Cases should be served within 60 days aIter the date that Target serves an answer in the Bank Cases. All motions which seek to amend the pleadings or add parties in the Shareholder Cases should be served within 60 days aIter the date that deIendants serve an answer in the Shareholder Cases C. Other Motions The parties should discuss the need Ior other dispositive and non-dispositive motions at the Rule 26(I) meet and conIer conIerence reIerred to in Section V.C and CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page 2l of 26 22 propose deadlines Ior such motions Iollowing that conIerence. V. DISCOVERY A. Discovery Coordination In order to prevent duplication oI eIIort, discovery should proceed on the same general schedule in the Consumer Cases, Bank Cases, and Shareholder Cases. Consolidated Cases Lead Counsel and Consumer, Bank, and Shareholder Cases Lead Counsel should coordinate their discovery eIIorts and take reasonable steps to avoid making duplicate demands Ior inIormation on the deIendants. B. Discovery Stayed until Resolution of Motions to Dismiss All discovery and other pre-trial proceedings should remain stayed pending the Court`s resolution oI deIendants` motions to dismiss. C. Parties to Confer Regarding Discovery Following Resolution of Motions to Dismiss PlaintiIIs and deIendants should conduct a Rule 26(I) conIerence with regard to discovery within 14 days oI the date that deIendants Iile their answers and should jointly contact the Court to reserve a mutually convenient Rule 16 conIerence date to occur as soon as practicable thereaIter. It is appropriate to phase discovery with respect to the Consumer and Bank Cases so that the Iirst stage oI discovery would be limited to only those issues necessary to determine whether any oI the Cases should proceed as a class action. As such, discovery in this case should be phased into a Class CertiIication Discovery Phase and a Merits Discovery Phase. Discovery in the Class CertiIication Discovery Phase should be limited only to discovery concerning transactions between the named plaintiIIs and Target (in the CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page 22 of 26 23 Consumer Cases) and any other discovery necessary to brieI class certiIication. Discovery during the Merits Discovery Phasewhich will only occur in the event that the Court certiIies a class or classesshould be directed to issues relevant to the actual claims and deIenses oI the parties. All discovery oI third parties should remain stayed until the Merits Discovery Phase. The parties` Rule 26(I) conIerence and subsequent discovery plan should address the phasing oI discovery and set Iorth proposed schedules Ior both discovery phases, among other things. D. E-Discovery 1. Preservation of Electronically Stored Information Within 30 days aIter appointment oI Consolidated Cases Lead Counsel and Consumer, Bank, and Shareholder Cases Lead Counsel, the parties should Iile a joint proposed pretrial order documenting their agreement as to what reasonably accessible electronically stored inIormation (ESI) should be preserved. Given the size and complexity oI the litigation, this order should address reasonable limits on: (1) the time period Ior which ESI will be preserved; (2) the number and types oI custodians per party Ior whom ESI will be preserved; and (3) the type oI ESI that the parties believe should be preserved. The parties should also identiIy any data sources that are not reasonably accessible and that the parties agree do not need to be preserved. In determining what ESI to preserve, the parties should apply the proportionality standard set Iorth in Fed. R. Civ. P. 26(b)(2)(C) and 26(g)(1)(B)(iii). The parties should strive to deIine a scope oI preservation that is proportionate and reasonable and not disproportionately broad, expensive, or burdensome. CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page 23 of 26 24 2. Meet and Confer Regarding Document Search and Production Formats At the Rule 26(I) meet and conIer conIerence reIerred to in Section V.C, the parties should discuss and attempt to reach agreement on methods, such as the use oI keyword searches, to be used to identiIy discoverable ESI and Iilter out ESI that is not subject to discovery, as well as their preIerred Iormat(s) Ior production oI ESI. All ESI should be produced in a Iormat that preserves their ability to be searched. The parties should not degrade the searchability oI documents as part oI the document production process. 3. Document Production and Repositories DeIendants will produce documents to Consolidated Cases Lead Counsel (or his or her designee) Ior dissemination to other plaintiIIs. PlaintiIIs may, iI they so choose, maintain documents disclosed and produced by deIendants in a document repository to be established by Consolidated Cases Lead Counsel. VI. COORDINATION WITH STATE COURT LITIGATION There are no related consumer or bank cases pending in state court at this time. Target will notiIy the Court within a reasonable time iI any such cases are Iiled in state court that require coordination with this proceeding. Target will also notiIy the court oI any ruling on its motion to dismiss in the Koeneke action currently pending in Hennepin County District Court. VII. SETTLEMENT Prior to the JPML`s transIer order, a number oI plaintiIIs, via counsel, approached CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page 24 of 26 25 Target`s counsel about early settlement discussions. Target advised these plaintiIIs that it was open to such discussions but that those discussions should occur aIter the JPML had determined where the cases should be consolidated and the MDL court had appointed lead counsel. Target remains open to discussion oI settlement and anticipates exploring the possibility oI early resolution with lead counsel between now and a ruling on Target`s Iorthcoming motions to dismiss. VIII. TRIAL DATES. In light oI deIendants` anticipated motions to dismiss it is premature to set dates Ior the trial(s) oI those Cases that would be tried in this District. Date: May 7, 2014 s/Wendy J. Wildung Wendy J. Wildung, MN 117055 Michael A. Ponto, MN 203944 FAEGRE BAKER DANIELS LLP 2200 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402 (612) 766-7000 (612) 766-1600 wendy.wildungFaegreBD.com michael.pontoFaegreBD.com Local Counsel for Defendants Target Corporation, Target Brands, Inc., Target Corporate Services, Inc., Target Corporation of Minnesota, and Target.com in MDL No. 14-2522; Counsel for Defendants in Consolidated Proceeding No. 14-cv-203. Date: May 7, 2014 s/Rebekah KauIman Harold J. McElhinny, CA 66781* Jack W. Londen, CA 85776* Michael J. Agoglia, CA 154810* Rebekah KauIman, CA 213222* CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page 25 of 26 26 MORRISON FOERSTER LLP 425 Market Street San Francisco, CaliIornia 94105-2482 (415) 268-7000 (415) 268-7522 HMcElhinnymoIo.com JLondenmoIo.com MAgogliamoIo.com RKauImanmoIo.com David F. McDowell, CA 125806* MORRISON FOERSTER LLP 707 Wilshire Boulevard Los Angeles, CaliIornia 90017-3543 (213) 892-5200 (213) 892-5454 DMcDowellmoIo.com * Admitted pro hac vice per Pretrial Order N. 1 Counsel for Defendants Target Corporation, Target Brands, Inc., Target Corporate Services, Inc. , Target Corporation of Minnesota, and Target.com in MDL No. 14-2522. Date: May 7, 2014 s/Barbara P. Berens Barbara P. Berens, 209788 Justi Rae Miller, 387330 BERENS MILLER, P.A. 80 South Eighth Street, Suite 3720 Minneapolis, MN 55402 (612) 349-6171 (612) 349-6416 (Facsimile) bberensberensmiller.com jmillerberensmiller.com Attorneys for Defendant Affiliated Computer Services, Inc. sI-3406664 CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page 26 of 26
United States v. Max Pollack, Formerly D/B/A Max Pollack Co., and Shirley Mestel and Ida Mestel, D/B/A King Holding Company, 370 F.2d 79, 2d Cir. (1966)
IMERYS CHAPTER 11 - OBJECTION OF ARNOLD & ITKIN PLAINTIFFS TO MOTION OF DEBTORS FOR ENTRY OF ORDER (I) APPROVING DISCLOSURE STATEMENT AND FORM AND MANNER OF NOTICE OF HEARING THEREON, (II) ESTABLISHING SOLICITATION PROCEDURES, (III) APPROVING FORM AND MANNER OF NOTICE TO ATTORNEYS AND CERTIFIED PLAN SOLICITATION DIRECTIVE, (IV) APPROVING FORM OF BALLOTS, (V) APPROVING FORM, MANNER, AND SCOPE OF CONFIRMATION NOTICES, (VI) ESTABLISHING CERTAIN DEADLINES IN CONNECTION WITH APPROVAL OF DISCLOSURE STATEMENT AND CONFIRMATION OF PLAN, AND (VII) GRANTING RELATED RELIEF