Pisciotta v. Old Nat. Bankcorp, 499F. 3d 629 ( 7^th Cir. (Ind.) August 23, 2007).

The plaintiffs filed suit in federal district court under CAFA against Old National Bankcorp (ONB) when it was discovered that personal information of customers and potential customers of ONB was “compromised” by a third-party hacker. It seems you can’t read the newspaper without running across an article about someone’s personal information being “compromised.” The plaintiffs filed suit against ONB, not for actual damages suffered as a result of the security breach, but for potential damages, including the cost of monitoring their credit in the future. Importantly, the plaintiffs did not allege any direct loss as a result of the breach of security.

The plaintiffs sought to certify a class consisting of all persons whose personal information had been compromised, including residents of Indiana, Illinois, Kentucky, Missouri, Ohio and Tennessee under CAFA’s rules for diversity jurisdiction. 

In the district court, ONB filed a motion for judgment on the pleadings under Fed. R. Civ. Proc. 12(c). Note: ONB did not file a motion to remand. The district court granted ONB’s motion, and it denied the plaintiffs’ motion to certify the class as moot.

On appeal to the 7^th Circuit, the Court reviewed its jurisdiction sua sponte.   Don’t you hate that when the court does that? The Court recognized that there was a split of authority in the district courts throughout the country whether federal courts have Article III jurisdiction over cases in which a plaintiffs’ personal financial information is compromised but no actual damages had been suffered at the time the case was filed. The 7^th Circuit in Pisciotta took the “side” of the consumer determining that such potential damages establish an injury, at least for the purposes of standing.

Although the plaintiffs got their foot in the courthouse door, that door was slammed shut once the Court reviewed the law, or lack thereof, of Indiana. The issue became whether under the Indiana law of negligence and contracts, the plaintiffs pled a compensable injury. After reviewing applicable authority, including a state statute the plaintiffs claimed would allow for such damages, the Court found that there was no compelling authority to allow for the plaintiffs’ claims of damages under Indiana law. The 7^th Circuit affirmed the district court’s ruling dismissing the case.