Federal Appeals Court Rules that Damages are Sufficient for Data Breach Class Action to Proceed Against Nieman Marcus


The rulings made by appellate courts can affect many decisions to come in rulings made by lower courts all over the country. In a recent data breach lawsuit against Neiman Marcus, the retailer argued the ruling made by the Seventh Circuit Court could have long-term effects on data breach law if the court failed to change its ruling.

The court denied Neiman Marcus’s appeal and let its initial decision stand.

The consumer lawsuit consists of a proposed class of about 350,000 plaintiffs who allegedly suffered financial damages as a result of a security breach of Neiman Marcus’s systems in 2013. The plaintiffs allege the retailer did not take all necessary precautions in preventing or mitigating a security breach that exposed customers’ payment card details. The data breach lawsuit also alleges Neiman Marcus did not notify its customers of the data breach in a timely manner, once the security attack had happened.

The plaintiffs allege they have incurred damages as a result of the data breach in the form of credit monitoring subscriptions and replacement card fees. The attack also exposed them to fraudulent charges on their cards, as well as an increased risk of identity theft.

Initially, U.S. District Judge James B. Zagel dismissed the suit, saying he didn’t think the plaintiffs’ injuries were sufficient to warrant a lawsuit. The plaintiffs appealed the decision and the Seventh Circuit Court overturned the district court’s decision.

In its ruling, the appellate court noted that Neiman Marcus had provided free credit monitoring to customers who had shopped at the retailer in 2013. The court pointed out the defendant would not have made such an offer if it had not expected repercussions from the data breach.

Neiman Marcus argued the Seventh Circuit Court’s decision contradicted the U.S. Supreme Court’s decision in Clapper v. Amnesty International, in which plaintiffs who took expensive steps to keep their conversations private from government interception were not granted standing.

The Seventh Circuit disagreed with this argument, saying that, unlike the suspected government spying in Clapper, identity fraud is a foreseeable consequence of a data breach.

As Neiman Marcus predicted, the court’s decision has already affected rulings in similar cases heard by other courts, including a case in Alabama in which a hospital employee stole patient data and used it to file tax returns.

Class action lawsuits exist for cases just like this one. Each plaintiff likely only suffered a small financial injury as a result of the data breach, but they were still expenses that could have been avoided. Although each individual claim was not enough to warrant the costs involved in filing a lawsuit, the class action lawsuit exists so plaintiffs who all suffered similar injuries as the result of one action or repeated similar actions, have an opportunity to combine their claims into one lawsuit.

Class actions also save time for the courts by allowing them to deal with matters that involve many plaintiffs quickly and efficiently, rather than hearing arguments for many lawsuits of a similar nature.

Our Des Plaines and Arlington Hts., Illinois consumer rights private law firm handles individual and class action data breach, privacy rights, deceptive advertising, predatory lending, unfair debt collection, lemon law and other consumer fraud cases that government agencies and public interest law firms such as the Illinois Attorney General may not pursue. Class action lawsuits our law firm has been involved in or spear-headed have led to substantial awards totalling over a million dollars to organizations including the National Association of Consumer Advocatesthe National Consumer Law Center, and local law school consumer programs. The Chicago consumer lawyers at Lubin Austermuehle are proud of our achievements in assisting national and local consumer rights organizations obtain the funds needed to ensure that consumers are protected and informed of their rights. By standing up to consumer fraud and consumer rip-offs, and in the right case filing consumer protection lawsuits and class-actions you too can help ensure that other consumers’ rights are protected from consumer rip-offs and unscrupulous or dishonest practices.

Our Mt. Prospect and Rolling Meadows consumer attorneys provide assistance in data breach, privacy violation, fair debt collection, consumer fraud and consumer rights cases including in Illinois and throughout the country. You can click here to see a description of the some of the many individual and class-action consumer cases our Chicago consumer lawyers have handled. A video of our lawsuit which helped ensure more fan friendly security at Wrigley Field can be found here. You can contact one of our Elk Grove Village and Wheeling privacy, consumer protection and data breach lawyers who can assist in consumer fraud, consumer rip-off, lemon law, unfair debt collection, predatory lending, wage claims, unpaid overtime and other consumer, or consumer class action cases by filling out the contact form at the side of this blog or by clicking here.  You can also call our toll free number at 630-333-0333.

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