Caudle v. Towers, Perrin, Forster & Crosby, _______ F. Supp. 2d ______, 2008 WL 4104035 (S.D.N.Y.).

Well, that is not actually what it said, but the Court did say that stolen laptops with personal information such as SSN’s can cause fear and anxiety sufficient to create injury-in-fact similar to eating beef that may be contaminated with mad cow disease.

In this case filed in the Southern District of New York, the plaintiff, Terrell Caudle, brought a class action against his employer’s pension consultant following the theft of some laptop computers that contained the personal information of the employees, including the plaintiff. The plaintiff sought to recover damages for breach of contract, breach of the duty of good faith and fair dealing, breach of fiduciary duty and to recover the costs of multi-year credit monitoring.

The plaintiff found out about the theft not because he actually suffered any damages due to the theft, but because Towers, Perrin sent him a letter informing him of the theft and letting him know that the plaintiff and all other potentially affected persons had been enrolled in a one-year credit monitoring program. The plaintiff was apparently stricken with greediness. . . . er, I mean fear. . . when learning of the theft, because he filed suit on behalf of himself and all the other employees whose information was stolen.

The defendant filed a 12(c) motion to dismiss and motion for summary judgment. The first issued raised by the defendant was that the plaintiff could not meet the amount in controversy under CAFA. The Court dismissed this issue out of hand finding that the $8.25 per year credit monitoring cost for 500,000 potential class members got the plaintiff past this hurdle.

Normally our inquiry would stop there, but hey, it is the new year, and we go the extra mile for you at the CAFA Law Blog. Anyway, what we found really interesting in this case was the discussion of injury-in-fact. And this is where the crazy cows come in.

The defendant argued that the plaintiff had not been injured by the theft of the laptops. Recalling a day in civil procedure when they had been paying attention, sharp defense attorneys argued the plaintiff did not have standing to bring suit. That little used document called the Constitution apparently requires that for a plaintiff to have Article III standing there must be the “irreducible, constitutional minimum” of an injury in fact. Said injury must be “concrete, particularized” as well as “actual or imminent” and not “conjectural or hypothetical.”

The defendant argued the plaintiff had not been injured (yet) and cited to cases in other jurisdictions that found that the risk of future identity theft or fraud is not enough to satisfy the standing requirement. The defendant cited to cases in the District Courts in New Jersey, Arkansas and D.C. The Court noted, however, that the 7th Circuit reached the opposite conclusion in Pisciotta v. Old Nat’l Bancorp, where the Court determined plaintiff had standing to bring claims against a web operator who had a security breach. (Editors’ Note: See the CAFA Law Blog analysis of Pisciotta posted on July 9, 2008). 

The Court in this case, perhaps having had his security breached while eating slightly gamey beef, found that the plaintiff had standing. The Court relied on the Second Circuit’s decision in Baur v. Veneman in which it was found that the potential risk of injury after eating beef infected with mad cow disease was injury enough to confer standing. The Court does not really explain how the fear of ID theft and the fear of mad cow disease are the same. Perhaps they both cause a rare neurological disease that result in memory loss and dementia. We don’t know. But in New York, they both confer standing on a plaintiff.

The rest of the case is not nearly as entertaining. The Court eventually granted the defendant’s summary judgment on the negligence and breach of fiduciary duty claims and allowed the breach of contract claim to go forward.

S. Tolson