Mackey v. Belden, Inc.

• Decision Date: 03 August 2021
• Docket Number: 4:21-CV-00149-JAR
• Parties: KIA MACKEY, individually and on behalf of all others similarly situated, Plaintiffs, v. BELDEN, INC., Defendant.
• Court: U.S. District Court — Eastern District of Missouri

KIA MACKEY, individually and on behalf of all others similarly situated, Plaintiffs, v. BELDEN, INC., Defendant.

No. 4:21-CV-00149-JAR

United States District Court, E.D. Missouri, Eastern Division

August 3, 2021

MEMORANDUM AND ORDER

JOHN A. ROSS UNITED STATES DISTRICT JUDGE

This matter is before the Court on Defendant Belden, Inc.'s (“Belden”) Motion to Dismiss Plaintiff's First Amended Complaint. (Doc. 18). The motion is fully briefed and ready for disposition. For the reasons discussed below, the motion will be granted in part and denied in part.

I. FACTUAL BACKGROUND ^[1]

Belden is a large manufacturer in the electronics industry. Plaintiff Kia Mackey (“Mackey”) was a Belden employee from 2019 to 2020. On December 11, 2020, Mackey received a notice from Belden stating that her Personally Identifiable Information (“PII”) may have been exposed in a data breach. The letter indicated that on November 12, 2020, Belden information technology professionals detected unusual activity and determined that Belden had been the target of a sophisticated attack by an outside party (the “Data Breach”). A few days later, Belden learned that the outside party accessed servers containing certain current and former employees' PII including but not limited to social security numbers and bank account information. Belden offered 24 months of identity theft monitoring and protection services to the effected individuals.

Weeks after the Data Breach, TurboTax notified Mackey that individuals had attempted to file a tax return on her behalf using her social security number. Mackey, individually and on behalf of similarly situated individuals, seeks damages against Belden on various grounds including negligence breach of implied contract, and breach of fiduciary duty, among other claims. Belden has moved to dismiss each of these counts and broadly contends that Mackey lacks standing.

II. LEGAL STANDARD

When ruling on a motion to dismiss for failure to state a claim under Fed.R.Civ.P. 12(b)(6), this Court must “accept the allegations contained in the complaint as true and all reasonable inferences from the complaint must be drawn in favor of the nonmoving party.” Young v. City of St. Charles, 244 F.3d 623, 627 (8th Cir. 2001). To survive the motion to dismiss, the First Amended Complaint “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). While detailed factual allegations are not necessary at this stage, Mackey's obligation to provide the grounds of her entitlement to relief “requires more than labels and conclusions.” Twombly, 550 U.S. at 555. Dismissal is warranted, moreover, if the First Amended Complaint is “fatally flawed in [its] legal premises and designed to fail, thereby sparing litigants the burden of unnecessary pretrial and trial activity.” Young, 244 F.3d at 627 (citing Neitzke v. Williams, 490 U.S. 319, 326-27 (1989)).

III. CHOICE OF LAW

Mackey suggests that Missouri law governs this dispute because Belden is headquartered in Missouri and the “decisions or actions that gave rise to the underlying facts at issue . . . were presumably made or taken in Missouri.” (Doc. 16 at ¶ 22). Belden responds that each claim in the class action requires an individualized choice-of-law analysis, and Mackey's claims should be governed by the law of her home state of Indiana. See In re St. Jude Med., Inc., 425 F.3d 1116, 1120 (8th Cir. 2005) (citing Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 822-23 (1985)). Belden also argues that this is a false conflict because the claims fail under both Indiana and Missouri law. (Doc. 19 at 11). See Ronnoco Coffee, LLC v. Westfeldt Brothers, Inc., 939 F.3d 914, 920 (8th Cir. 2019) (citation omitted) (“[W]here the laws of the two jurisdictions would produce the same result on the particular issue presented, there is a ‘false conflict,' and the Court should avoid the choice-of-law question.”).

District courts sitting in diversity apply the choice-of-law rules of the forum state. Winter v. Novartis Pharms. Corp., 739 F.3d 405, 410 (8th Cir. 2014) (citation omitted); see also Cicle v. Chase Bank USA, 583 F.3d 549, 553 (8th Cir. 2009) (applying same rule in Class Action Fairness Act case). Missouri has adopted the Restatement (Second) of Conflict of Laws and this Court must accordingly apply the “most significant relationship” test in a tort action. See Perras v. H&R Block, Inc., No. 12-00450-CV-W-BP, 2013 WL 11541919, at *3 (W.D. Mo. Nov. 13, 2013) (“Missouri has generally adopted the Restatement (Second) of Conflict of Laws.”). The test requires consideration of four factors: the place where the injury occurred; the place where the conduct causing the injury occurred; the domicile, residence, nationality, place of incorporation and place of business of the parties; and the place where the relationship, if any, between the parties is centered. Winter, 739 F.3d at 410; see RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 145 (1971). Missouri courts have adopted a presumption that “the state with the most significant relationship is the state where the injury occurred.” Dorman v. Emerson Elec. Co., 23 F.3d 1354, 1358 (8th Cir. 1994); see RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 146 (1971). Mackey has also made certain claims which may sound in contract, requiring this Court to consider five factors: the place of contracting; the place of negotiating the contract; the place of performance; the location of the subject matter of the contract; and the domicile, residence, nationality, place of incorporation and place of business of the parties. Zafer Chiropractic & Sports Injs., P.A. v. Hermann, 501 S.W.3d 545, 551 (Mo.Ct.App. 2016) (citations omitted); see RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 188 (1971).

First, this Court finds that a genuine conflict between Missouri and Indiana law exists. The First Amended Complaint implicates various state law issues where Missouri and Indiana have adopted materially different rules. Belden contends, for example, that Indiana does not recognize employers and employees as having a special relationship. (Doc. 19 at 12). Though Indiana law does appear to recognize a duty of disclosure as to risks of physical harm or pecuniary loss. N. Ind. Pub. Serv. Co. v. Bloom, 847 N.E.2d 175, 187 (Ind. 2006); see RESTATEMENT (SECOND) OF AGENCY § 435 (1958). Missouri courts, however, routinely consider the employer-employee relationship among those special relationships creating a duty in tort. See, e.g., Hudson v. Riverport Performance Arts Ctr., 37 S.W.2d 261, 264 (Mo.Ct.App. 2000) (citation omitted). Indiana law also does not appear to recognize an exception to the economic loss doctrine for special relationships. See U.S. Bank, N.A. v. Integrity Land Title Corp., 929 N.E.2d 742, 745-46 (Ind. 2010) (recognizing certain exceptions to economic loss doctrine). These distinctions are central to the disposition of Mackey's negligence claim.

Mackey's claim that Belden violated the covenant of good faith and fair dealing would also fail under Indiana law because such a covenant would not necessarily be implied in a contract for the exchange of PII. Old Nat'l Bank v. Kelly, 31 N.E.3d 522, 531 (Ind.Ct.App. 2015) (citation omitted) (“Indiana law does not impose a generalized duty of good faith and fair dealing on every contract.”). Missouri law, as discussed further below, imposes such a covenant in every contract. Arbors Sugar Creek Homeowners Assoc. v. Jefferson Bank & Trust Co., Inc., 464 S.W.3d 177, 185 (Mo. banc 2015) (citation omitted) (“Under Missouri law, a duty of good faith and fair dealing is implied in every contract.”).

Second, this Court holds that Missouri law applies to Mackey's claims. This Court recognizes the presumption that the state where the injury occurred is typically the state with the most significant relationship. But this Court concurs with the various other courts who have concluded that such presumption can be overcome in the data breach context. See, e.g., Veridian Credit Union v. Eddie Bauer, LLC, 259 F.Supp.3d 1140, 1153 (W.D. Wash. 2017) (“[T]he location of the alleged harm was fortuitous, and the place of injury does not play an important role in the court's choice of law analysis here.”); Nat'l Union Fire Ins. Co. of Pittsburgh v. Tyco Integrated Sec., No. 13-CV-80371, 2015 WL 3905018, at *13 (S.D. Fla. June 25, 2015) (“Although the harm resulting from the injury manifested in Connecticut, the asserted cause of action and theory of liability did not.”).

Comments to the Restatement (Second) of Conflict of Laws specifically discuss situations in which the place of injury “will not play an important role”:

This will be so, for example, when the place of injury can be said to be fortuitous or when for other reasons it bears little relation to the occurrence and the parties with respect to the particular issue. This will also be so when . . . there may be little reason in logic or persuasiveness to say that one state rather than another is the place of injury, or when . . . injury has occurred in two or more states. RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 145, cmt. e (1971).

This case offers a quintessential example of when the location of the plaintiff's injury is fortuitous and the law of the place where the defendant's conduct occurred should be given more weight. Belden is headquartered in Missouri; the Data Breach occurred in Missouri; the allegedly negligent actions by Belden resulting in the Data Breach occurred in Missouri. Mackey's living in Indiana cannot overcome these clear, significant contacts to Missouri. Applying Missouri law is particularly appropriate given the Restatement (Se...