McKenzie v. Allconnect, Inc.

369 F. Supp. 3d 810
CourtDistrict Court, E.D. Kentucky
DecidedMarch 28, 2019
DocketCase No. 5:18-cv-359-JMH
StatusPublished
Cited by23 cases

This text of 369 F. Supp. 3d 810 (McKenzie v. Allconnect, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McKenzie v. Allconnect, Inc., 369 F. Supp. 3d 810 (E.D. Ky. 2019).

Opinion

Joseph M. Hood, Senior U.S. District Judge *813An unsuspecting employee of Defendant Allconnect, Inc., responded to a fraudulent phishing email, resulting in an unauthorized release of employee W-2 tax forms, including sensitive personal information contained within those forms. The named Plaintiffs are former employees of Allconnect who allege that they, and other similarly situated employees, were harmed by the unauthorized release of their personally identifiable information ("PII").

In response to this lawsuit, the Defendant argues that the Defendants lack standing because they have not alleged an actual injury in fact. Furthermore, the Defendant claims that the Plaintiffs have failed to properly plead claims upon which relief may be granted. Finally, and in the alternative, the Defendant moves to strike the class allegations from Plaintiffs' complaint. For the reasons that follow, Allconnect's motion to dismiss, and motion to strike the class allegations, [DE 5] is GRANTED IN PART and DENIED IN PART .

First, Allconnect's motion to dismiss for lack of Article III standing is denied because the Plaintiffs have provided sufficient factual information to demonstrate that they suffered financial loss, lost time, and emotional distress as a result of the unauthorized release of their personal information.

Second, Allconnect's motion to dismiss Plaintiffs' claims for negligence, invasion of privacy based on intrusion upon seclusion, and breach of implied contract is denied because the Plaintiffs have pleaded sufficient information to meet federal pleading standards for these claims. Still, Plaintiffs' claims for invasion of privacy based on unreasonable publicity and for breach of fiduciary duty must be dismissed for failure to state claims upon which relief may be granted based on Rule 12(b)(6).

Third, and finally, the Court does not have sufficient information to adequately address the class certification issue at present. As such, the Court will allow limited discovery on factual issues relevant to class certification and will address class certification when the Plaintiffs raise the issue in a proper motion to certify the class.

I. Procedural History and Factual Allegations

For the purposes of this motion to dismiss, the factual allegations in Plaintiffs' complaint are treated as true and viewed in the light most favorable to the Plaintiffs. Still, most of the relevant facts at this juncture do not appear to be in dispute.

Defendant Allconnect is a company that connects consumers with offers for internet services, television, home security, electricity, and other products. Allconnect operates multiple offices across the United States, including sales and customer care centers in Georgia, Kentucky, Texas, and Utah. [DE 1-1 at 5, Pg ID 13].

Plaintiffs Mettekjistine McKenzie and Chasity Combs are former employees of Allconnect. McKenzie is a resident of Arizona and was employed at Allconnect's Utah-based call center in 2016 and 2017. [Id. at 8, Pg ID 16]. Combs is a resident of *814Kentucky and worked at Allconnect's Kentucky-based call center from 2014 until 2018. [Id. at 9, Pg ID 17].

On February 14, 2018, an unknown individual impersonating Steven Sibley, the president of Allconnect, contacted an Allconnect employee through email and requested 2017 W-2 information for all Allconnect employees. [Id. at 6, Pg ID 14]. Likely believing that the email message was actually from Sibley, the Allconnect employee sent a data file containing Allconnect employees' W-2 information, including employees' names, addresses, social security numbers, and wage information. [Id. at 6, 11, Pg ID 14, 19].

Of course, it turns out that the email sent to the unsuspecting Allconnect employee was not from Allconnect's president and the data file sent in response was sent to cybercriminals perpetuating a fraud to gain the personal information of Allconnect's employees. On or around March 28, 2018, Allconnect discovered the unauthorized data disclosure. [Id. at 6, Pg ID 14]. In response, on April 2, 2018, Allconnect emailed former and current employees informing them about the data disclosure. [Id. at 5-6, Pg ID 13-14]. Additionally, Allconnect mailed letters to affected employees on April 2, 2018. [Id. ]. Finally, Allconnect agreed to provide affected employees with two years of complimentary identity protection services through Allclear ID. [Id. at 11, Pg ID 19].

Plaintiffs claim that they, and other similarly affected Allconnect employees have been damaged by the unauthorized disclosure of their personal data. The Plaintiffs argue that they must take measures to "both deter and detect identity theft." [Id. at 6, Pg ID 14]. For instance, Plaintiffs claim that time spent on efforts to mitigate the harm from the data disclosure would otherwise be dedicated to different professional and personal activities. [Id. ]. Moreover, the Plaintiffs argue that they have suffered lost time and damages as a result of having to place freezes and alerts on their credit reports with credit reporting agencies, have had to close or modify financial accounts, contact their financial institutions, and closely monitor their reports, among other mitigating activities. [Id. at 6-7, Pg ID 14-15].

As a result, the Plaintiffs filed a lawsuit in Fayette Circuit Court. [DE 1-1]. The action was removed to this Court by Allconnect based on minimal diversity of citizenship pursuant to the Class Action Fairness Act of 2005 ("CAFA"). [DE 1]. Subsequently, Defendant Allconnect moved to dismiss Plaintiffs' complaint for lack of standing, failure to state claims upon which relief may be granted, and, in the alternative, moved to strike the class allegations in the complaint. [DE 5]. The Plaintiffs responded in opposition [DE 20] and the Defendant replied [DE 22], making this matter ripe for review.

III. Analysis and Standard of Review

Plaintiffs bring four causes of action against Allconnect on behalf of the entire class, they are, (1) negligence, (2) invasion of privacy, (3) breach of implied contract, and (4) breach of fiduciary duty. The Defendant claims that the compliant must be dismissed. First, the Defendant argues that the Plaintiffs lack standing to bring this lawsuit because they have not alleged an injury in fact. Second, the Defendant argues that the Plaintiffs have failed to plead sufficient factual information upon which relief may be granted. Finally, and in the alternative, the Defendant asks the Court to strike the class allegations in the complaint if any of the claims survive.

A. Article III Standing

First, Allconnect claims that the Plaintiffs have failed to establish a sufficient *815injury in fact to establish a cognizable Article III injury. [DE 5-1 at 4-7, Pg ID 63-66]. More specifically, the Defendant argues that apprehension of future injury as a result of the data breach, without more, is insufficient to create standing. [Id. at 5-6, Pg ID 64-65].

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Bluebook (online)
369 F. Supp. 3d 810, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mckenzie-v-allconnect-inc-kyed-2019.