United States District Court, W.D. Pennsylvania
FIRST CHOICE FEDERAL CREDIT UNION, CREDIT UNION NATIONAL ASSOCIATION, MICHIGAN CREDIT UNION LEAGUE, WRIGHT-PATT CREDIT UNION, ENVISTA CREDIT UNION, GREENVILLE HERITAGE FEDERAL CREDIT UNION, FINANCIAL HORIZONS CREDIT UNION, INDIANA CREDIT UNION LEAGUE, GEORGIA CREDIT UNION AFFILIATES, FEDERAL DEPOSIT INSURANCE CORPORATION, Receiver for First NBC Bank, GREATER CINCINNATI CREDIT UNION, ALIGN CREDIT UNION, CENTRUE BANK, NUSENDA CREDIT UNION, NORTH JERSEY FEDERAL CREDIT UNION, ALCOA COMMUNITY FEDERAL CREDIT UNION, OHIO CREDIT UNION LEAGUE, KEMBA FINANCIAL CREDIT UNION, THE SEYMOUR BANK, ASSOCIATED CREDIT UNION, NAVIGATOR CREDIT UNION, and MEMBERS CHOICE CREDIT UNION, Plaintiffs,
THE WENDY'S COMPANY, WENDY'S RESTAURANTS, LLC, and WENDY'S INTERNATIONAL, LLC, Consolidated Defendants. VERIDIAN CREDIT UNION on behalf of itself and all others similarly situated, TECH CREDIT UNION on behalf of itself and all others similarly situated, SOUTH FLORIDA EDUCATIONAL FEDERAL CREDIT UNION, PREFERRED CREDIT UNION on behalf of themselves and all others similarly situated, and AOD FEDERAL CREDIT UNION on behalf of itself and all others similarly situated, Consolidated Plaintiffs,
Honorable Nora Barry Fischer, United States District Judge
REPORT AND RECOMMENDATION
MAUREEN P. KELLY, CHIEF UNITED STATES MAGISTRATE JUDGE
the Court is Plaintiffs' Motion for Application of Ohio
Law, ECF No. 131, in this class action stemming from a data
breach. For the reasons that follow, it is respectfully
recommended that the Motion for Application of Ohio Law be
granted in part and denied in part.
FACTUAL AND PROCEDURAL BACKGROUND
Plaintiffs initiated this class action
on behalf of a putative class of financial institutions that
“suffered, and continue to suffer, financial losses as
a direct result of Wendy's conscious failure to take
adequate and reasonable measures to protect its point-of-sale
and computer system.” ECF No. 32 ¶ 1. Defendants
are comprised of The Wendy's Company, Wendy's
Restaurants, LLC and Wendy's International, LLC
(collectively, “Defendants” or
“Wendy's”). Id. ¶¶ 43-45.
Complaint, Plaintiffs make the following factual allegations.
Plaintiffs are issuers of credit and debit cards to
customers. Id. ¶ 55. When such customers use
their cards to make purchases at Wendy's restaurants,
Wendy's stores customer payment card data in its computer
systems. Id. ¶ 58. Beginning in or about
October 2015, computer hackers used the credentials of
third-party vendors to install malware through which they
were able to steal the payment card data of Wendy's
customers from at least 1, 000 restaurants. Id.
¶ 62. Wendy's had knowledge of a data breach in
December 2015. Id. ¶ 63. By January 2016,
unauthorized charges to Wendy's customers' card were
underway. Id. ¶ 64.
First Choice Federal Credit Union, AOD Federal Credit Union,
Tech Credit Union, Veridian Credit Union, South Florida
Educational Federal Credit Union, Preferred Credit Union,
Alcoa Community Federal Credit Union, Associated Credit
Union, Envista Credit Union, Federal Deposit Insurance
Corporation, Receiver for First NBC Bank,
Navigator Credit Union, The Seymour Bank, Financial Horizons
Credit Union, Nusenda Credit Union, Greater Cincinnati Credit
Union, KEMBA Financial Credit Union, Wright-Patt Credit
Union, and Members Choice Credit Union, on behalf of
themselves and all others similarly situated, comprise a
sub-group designated in the Complaint as the “FI
Plaintiffs.” Id. ¶¶ 13-35.
Credit Union National Association, Georgia Credit Union
Affiliates, Indiana Credit Union League, Michigan Credit
Union League and Ohio Credit Union League, associations that
represent the interests of their member credit unions,
comprise a sub-group of Plaintiffs designated in the
Complaint as “Association Plaintiffs.”
Id. ¶¶ 36-42.
filed the operative Consolidated Amended Class Action
Complaint (“the Complaint”) on July 22, 2016. ECF
No. 32. In the sixty-five-page Complaint, Plaintiffs raise
claims of negligence, negligence per se, violation of the
Ohio Deceptive Trade Practices Act as well as seeking
declaratory and injunctive relief. Id.
filed a Motion to Dismiss on August 22, 2016. ECF No. 53.
Ultimately, that Motion to Dismiss was denied and the
choice-of-law dispute raised therein was deferred to a later
stage of the litigation. ECF No. 88.
Plaintiffs filed the instant Motion for Application of Ohio
Law and supporting documents on January 19, 2018, and January
23, 2018. ECF Nos. 131-134. Defendants filed a Response in
Opposition to the Motion for Application for Ohio Law and
supporting documents on February 19, 2018, and February 20,
2018. ECF Nos. 139-140. FI Plaintiffs filed a Reply Brief on
March 21, 2018. ECF No. 141. On April 11, 2018, Defendants
filed a Sur-Reply. ECF No. 145. The Motion for Application of
Ohio Law is now ripe for consideration.
determine whether Ohio law should be applied to the claims
raised in the instant case, the Court must apply the choice
of law rules of Pennsylvania, this Court's forum state.
See Auto-Owners Ins. Co. v. Stevens & Ricci,
Inc., 835 F.3d 388, 403 (3d Cir. 2016).
Court has recently explained:
"Pennsylvania applies the more flexible,
'interests/contacts' methodology to contract
choice-of-law questions." Hammersmith [v. TIG Ins.
Co.], 480 F.3d  at 226-27 [(3d Cir. 2007)](footnote
omitted). Under this approach, courts must analyze the
policies and interests underlying the particular issue before
it, and "apply the law of the forum with the 'most
interest in the problem, ' rather than the law of the
place of injury." Id. at 227 (quoting
Griffith v. United Air Lines, Inc., 416 Pa. 1, 203
A.2d 796, 805-06 (Pa. 1964)).
The first step in a choice-of-law analysis involves the
identification of the jurisdictions whose laws might apply.
Hammersmith, 480 F.3d at 230. … Next, the
court must examine the substance of the identified
states' laws, and look for actual, relevant differences
between them. Pacific Employers [Ins. Co. v. Global
Reinsurance Corp. of Am.], 693 F.3d  at 432 [(3d
Cir. 2012)] (citing Hammersmith, 480 F.3d at 230).
In conducting this examination:
If [the] two jurisdictions' laws are the same, then there
is no conflict at all, and a choice of law analysis is
unnecessary."[Hammersmith, 480 F.3d at 230].
(emphasis in original). If there are actual, relevant
differences between the laws, then we "examine the
governmental policies underlying each law, and classify the
conflict as a 'true, ' 'false, ' or an
'unprovided-for' situation." Id.
"A deeper [choice of law] analysis is necessary only if
both jurisdictions' interests would be impaired by the
application of the other's laws (i.e., there is a true
Id. at 432 (internal quotation marks, footnote, and
citations omitted) (emphasis in original). The court of
appeals further explained:
If a true conflict exists, the Court must then determine
which state has the "greater interest in the application
of its law." Cipolla [v. Shaposka], 267 A.2d
 at 856 [(Pa. 1970)]. In Melville, we described
the Griffith methodology as a combination of the
"approaches of both [the] Restatement II [of Conflicts
of Law] (contacts establishing significant relationships) and
'interests analysis' (qualitative appraisal of the
relevant States' policies with respect to the
controversy)." 584 F.2d at 1311. This analysis requires
more than a "mere counting of contacts."
Cipolla, 267 A.2d at 856. "Rather, we must
weigh the contacts on a qualitative scale according to their
relation to the policies and interests underlying the
[particular] issue." Shields v. Consol. Rail
Corp., 810 F.2d 397, 400 (3d Cir.1987).
Hammersmith, 480 F.3d at 231 (footnote omitted)
(emphasis in original).
Axiall Corp. v. Descote S.A.S., Civ. A. No. 15-250,
2018 U.S. Dist. LEXIS 15303, at *32-34 (W.D. Pa. Jan. 30,
the choice of law analysis is issue-specific. Berg
Chilling Sys. v. Hull Corp., 435 F.3d 455, 462 (3d Cir.
2006). In a single case, different states' laws may apply
to different ...