Leonard v. McMenamins Inc

District Court, W.D. Washington·Decided September 2, 2022·No. 2:22-cv-00094·Unknown

Opinion

UNITED STATES DISTRICT COURT AT SEATTLE

DEGRASSE, JAMES FRAZIER, AND No. 2:22-cv-00094-BJR CHARLES FRYE, individually and on behalf of all others similarly situated, ORDER DENYING DEFENDANT’S MOTION TO DISMISS Plaintiffs, v. MCMENAMINS, INC., Defendant.

I. INTRODUCTION Plaintiffs Andrew Leonard, Nicholas deGrasse, James Frazier, and Charles Frye (“Plaintiffs”) bring this putative class action against Defendant McMenamins, Inc. (“Defendant” or “McMenamins”), asserting various causes of action arising from a data breach McMenamins experienced in December 2021. Presently before the Court is Defendant’s motion to dismiss Plaintiffs’ Amended Complaint (“Motion” or “Mot.,” Dkt. 19) pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure. Plaintiffs oppose the Motion. Having reviewed the pleadings, the record of the case, and the relevant legal authorities, the Court DENIES the Motion. The Court’s reasoning is set forth below.

ORDER - 1 II. BACKGROUND1 A. Factual Background Plaintiffs’ allegations relevant to the present motion are straightforward. On December 30, 2021, McMenamins2 posted a notice on its website announcing that, on December 12, 2021, it had suffered a ransomware attack in which cybercriminals “installed malicious software on the company’s computer systems” that temporarily prevented the company from accessing the information contained in those systems. Id. ¶ 29. According to the notice, the attack also enabled the hackers to steal the company’s human resources and payroll data files, which contained a variety of personally identifiable information (“PII”) belonging to past and present employees. Id. The compromised PII included the following information: “name, address, telephone number, email address, date of birth, race, ethnicity, gender, disability status, medical notes, performance and disciplinary notes, Social Security number, health insurance plan election, income amount, and retirement contribution amounts.” Id. Plaintiffs are current and former employees of McMenamins who provided the company with PII as a condition of their employment. AC ¶¶ 8, 12, 16, 20.3 In January 2020, deGrasse detected several unauthorized charges to his credit card account. Id. ¶ 14. Although deGrasse’s credit card company ultimately never billed him for those fraudulent charges, he spent approximately one-and-a-half hours disputing them and activating a new credit card. Id.

1 The facts recited below are taken from Plaintiffs’ Amended Complaint (“AC,” Dkt. 18). For the purposes of the present motion, the Court takes the factual allegations in the Amended Complaint as true. 2 McMenamins owns a chain of brewpubs, breweries, music venues, historic hotels, and theater pubs in Oregon and Washington, employing tens of thousands of people throughout those states. AC ¶ 28. 3 Leonard, deGrasse, and Frazier are former employees (AC ¶¶ 8, 12, 16), and Frye is a current employee (id. ¶ 20). ORDER - 2 B. Procedural Background On August 9, 2021, Leonard filed this lawsuit as a class action “on behalf of individuals employed by McMenamins between January 1, 1998 and December 12, 2021 who had their sensitive PII accessed by unauthorized parties due to inadequate network security in a ransomware attack on McMenamins’ IT systems on or around December 12, 2021.” Dkt. 1 ¶ 2. In the Amended Complaint, which adds deGrasse, Frazier, and Frye as plaintiffs, Plaintiffs assert numerous causes of action arising from what Plaintiffs allege was Defendant’s failure to maintain adequate network security measures as necessary to protect Plaintiffs’ PII. See generally AC. Specifically, Plaintiffs assert claims for (1) negligence, (2) breach of contract, (3) breach of implied contract, (4) unjust enrichment, (5) breach of fiduciary duty, (6) breach of confidence, (7) bailment, (8) violation of the Washington Consumer Protection Act (“CPA”), RCW § 19.86 et seq., and (9) declaratory relief. AC ¶¶ 130-234. On May 27, 2022, Defendant moved to dismiss the Amended Complaint on the ground that Plaintiffs lack Article III standing to assert their claims. Plaintiffs opposed the Motion (“Opposition” or “Opp.,” Dkt. 20), and Defendant replied (“Reply” or “Rep.,” Dkt. 23). “[T]hose who seek to invoke the jurisdiction of the federal courts must satisfy the threshold requirement imposed by Article III of the Constitution by alleging an actual case or controversy.” City of Los Angeles v. Lyons, 461 U.S. 95, 101 (1983). “[T]o satisfy Article III’s standing requirements, a plaintiff must show (1) it has suffered an ‘injury in fact’ that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.” Friends of the Earth, Inc.

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