Lochridge v. Quality Temp. Servs.
| Docket Number | 22-cv-12086 |
| Decision Date | 30 June 2023 |
| Parties | MICHAEL LOCHRIDGE, individually and on behalf of all others similarly situated, Plaintiff, v. QUALITY TEMPORARY SERVICES, INC. d/b/a QUALIFIED STAFFING, Defendant. |
| Court | U.S. District Court — Eastern District of Michigan |
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS THE SECOND AMENDED CLASS ACTION COMPLAINT (ECF No. 22)
This matter is before the court on Defendant Quality Temporary Services' Motion to Dismiss Plaintiff's Second Amended Class Action Complaint. (ECF No. 22). Plaintiff Michael Lochridge filed his Second Amended Class Action Complaint on March 31, 2023, alleging that his personal identifiable information (PII) was exposed as a result of Defendant's failure to properly safeguard their computer network. (ECF No. 20). Plaintiff brings claims on behalf of himself and all other similarly situated individuals for Negligence (Count I), Unjust Enrichment (Count II), and Breach of Implied Contract (Count III), and seeks a Declaratory Judgment (Count IV). (Id.). On April 14, 2023, Defendant filed a Motion to Dismiss Plaintiff's complaint pursuant to Federal Rule of Civil Procedure 12(b)(1) and 12(b)(6). (ECF No. 22). This case was initially before District Judge Paul D. Borman, but was reassigned to the undersigned on February 6, 2023. The court held a hearing on June 21, 2023 wherein both parties participated in oral argument. (See ECF No. 24). For the reasons stated below, the court GRANTS IN PART and DENIES IN PART Defendant's motion.
Defendant is a Michigan corporation providing job recruiting and staffing services across the United States. (ECF No. 20, PageID.198). To assist in placing individuals in employment opportunities, Defendant collects various PII from applicants. (Id., PageID.204). Plaintiff alleges he provided his PII to Defendant “with the reasonable expectation and mutual understanding that Defendant would comply with its obligations to keep such information confidential and secure from unauthorized access.” (Id.).
In October 2021, Defendant detected suspicious activity on its computer system and launched an investigation. (ECF No. 22, PageID.258). With the assistance of forensic computer specialists, Defendant determined they had been “the victim of a sophisticated cyberattack involving ransomware, and that an unauthorized actor may have accessed and/or acquired a limited amount of data stored on its systems between September 28, 2021 and October 13, 2021.” (See ECF No. 20-1, “Notice of Data Privacy Event”). The cyberattack resulted in hackers potentially gaining access to 81,355 individuals' PII, including their “names, addresses, Social Security numbers, driver's license or state identification card numbers, passport numbers, financial account information, payment card numbers, medical information, and health insurance information.” (Id.). Plaintiff alleges he received a notification letter from Defendant on or around June 14, 2022, informing him that various pieces of his PII had potentially been exposed. (ECF No. 20, PageID.201). The letter encouraged any affected individuals to “remain vigilant against incidents of identity theft and fraud by reviewing account statements, explanation of benefits, and monitoring free credit reports for suspicious activity and to detect errors,” but clarified that they were not aware of any actual or attempted misuse of information. (See ECF No. 20-1, “Notice of Data Privacy Event”).
Plaintiff alleges that, as a result of the breach, he and the other members of the proposed class have incurred, and will continue to incur, an increased risk of “harm, damaged credit, depravation of the value of their Private Information, loss of privacy, and/or additional damages...” (ECF No. 20, PageID.200). Additionally, Plaintiff alleges that he was directly injured when his personal information was used to fraudulently apply for a loan and to open a financial account in his name. (Id., PageID.204). Plaintiff argues that these injuries were all directly and proximately caused by the data breach. (Id., PageID.205).
A motion brought under Federal Rule of Civil Procedure 12(b)(1) alleges that the court does not have subject matter jurisdiction over the claims as presented. Fed.R.Civ.P. 12(b)(1). Allegations that a plaintiff lacks standing can be brought as a motion to dismiss for lack of subject matter jurisdiction. Stalley v. Methodist Healthcare, 517 F.3d 911, 916 (6th Cir. 2008) (). Motions brought under Rule 12(b)(1) fall into two categories: facial attacks and factual attacks. United States v. Ritchie, 15 F.3d 592, 598 (6th Cir. 1994). A facial attack is a “challenge to the sufficiency of the pleading itself” whereas a factual attack “is a challenge to the factual existence of subject matter jurisdiction.” Id. In this case, Defendant brings a facial attack challenging the sufficiency of Plaintiff's allegations that he suffered a concrete injury in fact. Id. Because this is a facial attack, the court must “accept[] the material allegations in the complaint as true and construe[] them in the light most favorable to the nonmoving party.” Id.
A motion to dismiss brought under Federal Rule of Civil Procedure 12(b)(6) alleges that a complaint fails to state a claim upon which relief may be granted. Fed.R.Civ.P. 12(b)(6). In reviewing a motion to dismiss under this section, the court must “construe the complaint in the light most favorable to the plaintiff, accept its allegations as true, and draw all reasonable inferences in favor of the plaintiff.” DirectTV v. Treesh, 487 F.3d 471, 476 (6th Cir. 2007). The court may not consider matters outside of the pleadings except for “the Complaint and any exhibits attached thereto, public records, items appearing in the record of the case and exhibits attached to defendant's motion to dismiss so long as they are referred to in the Complaint and are central to the claims contained therein.” Ashh, Inc. v. All About It, LLC, 475 F.Supp.3d 676, 679 (E.D. Mich. 2020) (citing Bassett v. Nat'l Coll. Athletic Ass'n, 528 F.3d 426, 430 (6th Cir. 2008)).
To survive a motion to dismiss under Rule 12(b)(6), a complaint must provide “‘a short and plain statement of the claim showing that the pleader is entitled to relief' in order to ‘give the defendant fair notice of what the...claim is and the grounds upon which it rests.'” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 545 (2007) (citing Conley v. Gibson, 355 U.S. 41, 47 (1957)). Although a plaintiff's factual allegations are assumed to be true, they must “do more than create speculation or suspicion of a legally cognizable cause of action; they must show entitlement to relief.” LULAC v. Bredsen, 500 F.3d 523, 527 (6th Cir. 2007). A complaint will not suffice if it offers only “a formulaic recitation of the elements of a cause of action” or if it “tenders naked assertion[s] devoid of further factual enhancement.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (citing Twombly, 550 U.S. at 557).
The court must first analyze whether Plaintiff has Article III standing to pursue his claims in federal court.[1]Defendant argues that Plaintiff has failed to plead facts showing he suffered a concrete injury in fact sufficient to give rise to Article III standing. Plaintiff responds by arguing he has suffered the following injuries: (1) he has “had a financial account fraudulently opened using his personal information and had a loan fraudulently applied for using his information;” (2) he has spent “numerous hours” responding to the data breach; (3) he has suffered “diminution in value of his PII;” (4) he has suffered “loss of the benefit of the bargain;” and (5) he has an “ongoing risk of identity theft.” (See ECF No. 23, PageID.292). Likewise, Plaintiff argues that he has sufficiently pled Article III standing to pursue his claims. (Id., PageID.294).
Article III of the Constitution limits the jurisdiction of federal courts to hear actual “cases” and “controversies.” U.S. Const. Art. III § 2 cl. 1. For there to be a case or controversy under Article III, a plaintiff must have a “personal stake” in the case, otherwise known as standing. TransUnion LLC v. Ramirez, 141 S.Ct. 2190, 2203 (2021). In a proposed class action matter, each named plaintiff must personally demonstrate standing independent of any claims brought on behalf of a putative class. See Lewis v. Casey, 518 U.S. 343, 357 (1996). To establish standing, a plaintiff bears the burden to show: “(i) that he suffered an injury in fact that is concrete, particularized, and actual or imminent; (ii) that the injury was likely caused by the defendant; and (iii) that the injury would likely be redressed by judicial relief.” Id. (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)). “Each element of standing ‘must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at successive stages of litigation.'” Fair Elections Ohio v. Husted, 770 F.3d 456, 459 (6th Cir. 2014). At the pleading stage of litigation, “the plaintiff must ‘clearly allege facts demonstrating' each element” and the court “must accept as true all material allegations and construe the complaint in favor of the complaining party.” Galaria v. Nationwide Mut. Ins. Co., 663 Fed.Appx. 384, 388 (6th Cir. 2016) (citations omitted).
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