Illinois Court Declines to Certify Class in Kmart Data Breach Dispute
A federal judge in Illinois in October refused to certify a class of financial institutions that accused Kmart of negligence and violations of consumer protection statutes related to a breach in the merchant’s network last year by hackers. Kmart had urged the court to deny the financial institutions’ class certification motion, arguing that the financial institutions were attempting to circumvent an established contractual process that assesses the recovery from merchants for fraud and other expenses relating to a data breach. Kmart further argued that the financial institutions’ claims for negligence and violations of consumer protection statutes were inappropriate because the financial institutions were not themselves consumers.
The federal court in Illinois denied the financial institutions’ motion for class certification without prejudice and without comment, stating only that the financial institutions’ motion for class certification was being struck in light of the Seventh Circuit’s recent decision in Damasco v. Clearwire Corp., which overturned circuit court precedent by ruling that a defendant’s offer of full relief does not render a plaintiff’s claims moot, and thereby revived a plaintiff’s individual claims in a suit involving the Telephone Consumer Protection Act.
The issue of whether cases and class actions are mooted by offers of complete relief is the current subject of a circuit split and is scheduled to be decided by the Supreme Court later this year.
