By: Derek Hawkins//April 23, 2018//
7th Circuit Court of Appeals
Case Name: Community Bank of Trenton, et al. v. Schnuck Markets, Inc.,
Case No.: 17-2146
Officials: WOOD, Chief Judge, HAMILTON, Circuit Judge, and BUCKLO, District Judge.
Focus: Economic Loss – Data Breach – Remedies
In late 2012, hackers infiltrated the computer networks at Schnuck Markets, a large Midwestern grocery store chain based in Missouri and known as “Schnucks.” The hackers stole the data of about 2.4 million credit and debit cards. By the time the intrusion was detected and the data breach was announced in March 2013, the financial losses from unauthorized purchases and cash withdrawals had reached into the millions. Litigation ensued.
The principal issues in this case present fairly new variations on the economic loss rule in tort law. The central issue is whether Illinois or Missouri tort law offers a remedy to card-holders’ banks against a retail merchant who suffered a data breach, above and beyond the remedies provided by the network of contracts that link merchants, card-processors, banks, and card brands to enable electronic card payments. The plaintiff banks assert claims under the common law as well as Illinois consumer protection statutes. Our role as a federal court applying state law is to predict how the states’ supreme courts would likely resolve these issues. We predict that both states would reject the plaintiff banks’ search for a remedy beyond those established under the applicable networks of contracts. Accordingly, we affirm the district court’s dismissal of the banks’ complaint.
Affirmed