McCombs v. Delta Group Electronics, Inc.

CourtDistrict Court, D. New Mexico
DecidedJune 9, 2023
Docket1:22-cv-00662
StatusUnknown

This text of McCombs v. Delta Group Electronics, Inc. (McCombs v. Delta Group Electronics, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. New Mexico primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McCombs v. Delta Group Electronics, Inc., (D.N.M. 2023).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW MEXICO ____________________

EVELINE MCCOMBS,

Plaintiff,

v. Case No.: 1:22-cv-00662-MLG-KK

DELTA GROUP ELECTRONICS, INC.,

Defendant.

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANT’S MOTION TO DISMISS PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(b)(1)

This matter comes before the Court on Defendant Delta Group Electronic, Inc.’s Motion to Dismiss Plaintiff Eveline McCombs’ First Amended Complaint. Doc. 15. The motion seeks dismissal of McCombs’ claims stemming from an alleged data breach of Delta’s computer systems. Following briefing and a motion hearing on the issue, the Court concludes McCombs has failed to allege that she has suffered an injury in fact that is fairly traceable to Delta, and therefore lacks standing to pursue her claims. Fed. R. Civ. P. 12(b)(1). The Court does not address Delta’s Federal Rule of Civil Procedure 12(b)(6) arguments. BACKGROUND1 A. Relevant Facts McCombs was employed by Delta from 2019 to 2022, and in connection with her employment, McCombs provided Delta with personal identifying information (PII)2 and financial information. Id. An unknown cybercriminal hacked Delta’s computer systems and accessed data

1 The following facts are drawn from McCombs’ amended complaint. Doc. 13.

2 McCombs’ amended pleading identifies this PII as “names, Social Security numbers, driver’s license numbers, and financial account numbers.” Doc. 13 ¶ 1. that included McCombs’, and other employees’, first and last names, Social Security numbers, driver’s license numbers, and financial account numbers. Id. ¶¶ 1, 33; Ex. A. Delta notified McCombs and other employees of the unauthorized access via e-mail on June 17, 2022. Doc. 13 ¶ 19; Ex. A. The letter reported that an “unauthorized actor accessed [Delta’s] systems and

acquired a limited number of files from certain servers between November 2, 2021, and November 5, 2021.” Ex. A at 1. Delta “promptly took steps” to secure the system, engaged a cybersecurity firm to assist, and completed an investigation. Doc. 13 ¶ 38. Delta offered McCombs (and the other affected employees) free credit and identity monitoring services for one year following the breach. Id. McCombs alleges that the compromise of the data will be an “omnipresent threat” for her and the proposed class “for the rest of their lives.” Id. ¶ 64. She avers that unauthorized attempts to access her bank account are likely related to the breach (id. ¶ 98) and that she has experienced a “deluge of spam calls, emails, and texts from cybercriminals seeking to defraud her” which has “induced a heightened level of stress and anxiety.” Id. ¶ 100.

B. McCombs’ Claims Based on the preceding facts, McCombs filed the instant matter. She, individually, and on behalf of each member of the putative class, brings three claims stemming from the alleged data breach. First, McCombs asserts Delta acted negligently in failing to promptly notify the employees of the breach and in failing to provide adequate computer systems and data security practices to safeguard the PII and financial information. Id. ¶¶ 73-100. Second, McCombs asserts Delta breached an implied contract which was created when McCombs and the class members provided Delta their PII and financial information in exchange for Delta’s implementation of adequate data security measures to safeguard the PII. Id. ¶¶ 101-109. Third, McCombs argues Delta was unjustly enriched “by unduly taking advantage of” McCombs and the class members and denying them “the ability to make a rational and informed purchasing decision.” Id. ¶¶ 111, 115. The thrust of this claim for relief is (apparently) that class members provided their PII to Delta in order to purchase products and services, but that these same consumers would not have undertaken these

transactions if they had been aware of claimed vulnerabilities in Delta’s cybersecurity. Id. ¶¶ 111- 18. McCombs seeks monetary damages and injunctive relief for herself and the proposed class. Id. at 24-25. McCombs’ claimed damages include the following: “out-of-pocket expenses associated with the prevention, detection, and recovery from identity theft, tax fraud, and/or unauthorized use” of her PII and financial information; id. ¶ 95, diminution of value of her PII; id. ¶ 21, “lost time, annoyance, interference, and inconvenience”; id. ¶ 22, and “anxiety and increased concerns for the loss of privacy.” Id. McCombs also points this Court to two instances of supposed realized harm: several unauthorized attempts to access her bank account by an unknown actor and a purported increase in spam communications. Id. ¶¶ 98, 100. McCombs argues that the lost time,

unauthorized attempts to access her bank account, and increased number of spam communications are all cognizable injuries.3 Id. at 6. McCombs also alleges general future risks of harm associated with identity theft, but these have yet to materialize. Id. ¶ 23. Indeed, McCombs concedes that the alleged fraudulent activity “may not come to light for years” and highlights “a generalized threat of future harm.” Id. ¶¶ 63,

3 McCombs does not address Delta’s arguments about her diminution in value claims or her annoyance, inconvenience, and anxiety claims. See Addams v. Applied Medico-Legal Sols. Risk Retention Grp., Inc., No. CV 21-952, 2022 U.S. Dist. LEXIS 72286, at *8 (D.N.M. Apr. 20, 2022) (noting that when a party files “an opposition to a dispositive motion and addresses only certain arguments raised by the defendant, a court may treat those arguments that the plaintiff failed to address as conceded” (alteration omitted)). See Doc. 24 at 2-3. 98. Nevertheless, McCombs believes her PII “may end up for sale on the dark web” or may lead to “targeted marketing,” and she is “left to speculate” about the possible future impacts of the breach. Id. ¶¶ 44-45. B. Delta’s Defenses

In its motion to dismiss, Delta first argues McCombs has not alleged an injury in fact to confer standing because she only alleges speculative future harm. Doc. 15 at 6-8. To the extent McCombs has identified some adverse impact resulting from the data breach, Delta argues that McCombs cannot “manufacture” standing by spending time attempting to mitigate harm following the data breach. Delta further claims that any alleged harm cannot be fairly traced to the data breach and McCombs therefore lacks standing to bring her claims. Id. at 2. Alternatively, Delta argues that if even if McCombs has standing, her complaint should be dismissed under Rule 12(b)(6) for failure to state a claim. Id. ANALYSIS A. McCombs’ Standing under Article III

Under Article III of the United States Constitution, a plaintiff is required to have standing to bring their claims. See TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2200 (2021); Brady Campaign to Prevent Gun Violence v. Brownback, 110 F.Supp.3d 1086, 1091 (D. Kan. 2015) (“One of several doctrines reflecting Article III’s case-or-controversy limitation on the judicial power is the doctrine of standing.”). “[T]he elements of standing are not mere pleading requirements but rather an indispensable part of the plaintiff's case.” Colo. Outfitters Ass’n v. Hickenlooper, 823 F.3d 537, 544 (10th Cir. 2016) (quoting Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992)). To demonstrate Article III standing, the plaintiff must establish three elements.

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McCombs v. Delta Group Electronics, Inc., Counsel Stack Legal Research, https://law.counselstack.com/opinion/mccombs-v-delta-group-electronics-inc-nmd-2023.