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Lord & Taylor Data Breach Lawsuit Moved to Manhattan Federal Court

Lord & Taylor department store. Photo: Andriy Blokhin/Shutterstock.com

A class action lawsuit stemming from a data breach that exposed the personal information of up to 5 million Lord & Taylor customers is heading to Manhattan federal court, where it could be consolidated with a similar case against the Hudson's Bay Co. subsidiary, a Delaware federal judge ruled Thursday.

U.S. District Judge Maryellen Noreika granted Lord & Taylor's request to transfer the suit to the U.S. District Court for the Southern District of New York, which is home to the high-end retailer's corporate headquarters and all of its corporate records.

Both suits, Noreika said, included the same claims for breach of implied contract, negligence and unjust enrichment, and the transfer would allow litigation to proceed more quickly and at a lesser cost to the parties.

"The denial of defendant’s motion to transfer would result in at least two suits, involving the same legal and factual issues, to continue simultaneously in different courts," Noreika wrote in a 12-page memorandum opinion. "Transfer, on the other hand, provides an opportunity for the Southern District of New York to consolidate these cases and decide the issues in a more expeditious and inexpensive manner."

"Without transfer, these considerations would greatly increase the cost of litigating this case and create inconveniences for many, if not all, of the parties," she said.

Delaware plaintiff Bernadette Beekman sued Lord & Taylor last April, just days after the company announced that it had been the target of a massive data breach in its North American stores.

According to the filing, a criminal syndicate known as Joker Stash accessed more than 5 million credit and debit cards that were used at Lord & Taylor and Saks Fifth Avenue stores between May 2017 and March 2018, with plans to sell customers' personal data on the dark web.

Attorneys for the proposed class later amended the complaint to add 10 more plaintiffs from New York, Connecticut, Illinois, Kentucky, New Jersey, Georgia and Texas. According to the revised suit, all had overpaid Lord & Taylor for privacy protection services that weren’t provided and had been forced to spend time and energy monitoring their accounts for fraudulent activity. Lord & Taylor’s failure to protect confidential data, the attorneys said, had exposed its customers to increased risk of identity theft and fraud in the future.

Saks, which is also owned by Hudson’s Bay, was not named in the lawsuit.

Lord & Taylor in October moved to transfer the suit to the Southern District, arguing that there was no substantial connection to the First State. The New York action, captioned Rudolph v. Hudson’s Bay Co., also named Saks and the firms' parent company as defendants, eliminating the possibility of what Lord & Taylor said could be "piecemeal and duplicative" litigation.

"The Southern District of New York is the only court that could more broadly resolve this dispute, whereas this court could only resolve claims against Lord & Taylor," the company's Morgan, Lewis & Bockius attorneys said.

In her opinion, Noreika said it would be more expensive and complicated to try the case in Delaware, and agreed that matters of judicial economy supported the transfer. All of the claims, she said, arose in New York, and most of the plaintiffs had made their ill-fated purchases in New York.

"On the record before the court, it appears that most, if not all, of the alleged conduct relating to security failures and knowing violations of obligations to abide by best practices and industry standards concerning the security of its payment systems concerns the actions by defendant in and around New York," Noreika said. "Given this, and that six of the named plaintiffs made their purchases in New York, this factor weighs in favor of transfer to the Southern District of New York."

An attorney for Lord & Taylor declined to comment on the ruling and directed press inquiries to representatives from Hudson's Bay. The company's press shot did not immediately respond Thursday to an email seeking comment on the case.

An attorney for the Delaware plaintiffs was not immediately available to comment.

The plaintiffs and proposed class were represented by Ralph N. Sianni of Andersen Sleater Sianni in Wilmington; Janine Pollack of the Sultzer Law Group in New York; Daniel Tepper of Wolf Haldenstein Adler Freeman & Herz in New York; Ben Barnow and Erich P. Schork of Barnow And Associates in Chicago; Howard L. Longman and Melissa R. Emert of Stull, Stull & Brody in New York; Charles E. Schaffer of Levin Sedran & Berman in Philadelphia; Jeffrey S. Goldenberg of Goldenberg Schneider in Cincinnati; Gary Mason of Whitfield Bryson & Mason in Washington, D.C.; Laurence D. King and David A. Straite of Kaplan Fox & Kilsheimer in New York; John A. Yanchunis and Ryan Mcgee of Morgan & Morgan in Tampa, Florida; Jean Sutton Martin of the Law Office of Jean Sutton Martin in Wilmington; and Lynda J. Grant of The Grant Law Firm in New York.

Lord & Taylor was represented by Gregory T. Parks, Ezra D. Church, Kristin M. Hadgis and Jody C. Barillare of Morgan Lewis.

The case, in the U.S. District Court for the District of Delaware, was captioned Beekman v. Lord & Taylor.