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Sacklow v. Saks Inc.

United States District Court, M.D. Tennessee, Nashville Division

May 6, 2019

JEANNE SACKLOW, et al., individually and on behalf of all others similarly situated, Plaintiffs,



         This putative class action arises out of a data breach concerning payment cards used at Saks' stores. Fourteen named plaintiffs have brought claims for negligence; negligence per se; breach of implied contract; unjust enrichment; and violation of various state unfair competition, data breach, consumer protection, and consumer fraud statutes. (Doc. No. 51.) Before the Court is Saks' Motion to Transfer Venue (Doc. No. 55) to the Southern District of New York pursuant to 28 U.S.C. § 1404(a), to which Plaintiffs have responded in opposition (Doc. No. 57) and Saks has replied (Doc. No. 58). The parties have also submitted supplemental authority. (Doc. Nos. 87, 89, 90.) For the following reasons, the motion will be granted.

         I. Factual Allegations and Background

         A. Allegations

         On April 1, 2018, Saks announced that it “became aware of a data security issue involving customer payment card data.” (Doc. No. 51 at ¶ 3.) On April 27, 2018, Saks disclosed that hackers had placed malware on Saks' retail systems in order to collect customer payment card information, including cardholder name, payment card number and expiration dates, when shoppers used their credit and debit cards at its stores. (Id. at ¶ 4.) The Amended Complaint alleges that this data breach was enabled by Saks security failures and failure to abide by best practices and industry standards concerning the security of payment systems. (Id. at ¶¶ 6-7.)

         Saks is a Tennessee corporation. (Id. at ¶ 11.) However, Saks has no offices or employees in Tennessee. (Doc. No. 56-9 at ¶¶ 5-6.) Saks does not own or operate any of its Saks Fifth Avenue or Saks OFF 5TH stores in Tennessee. (Id. at ¶ 7.) There is no Saks Fifth Avenue store within 100 miles of Nashville, Tennessee. (Id. at ¶ 8.) There is one Saks OFF 5TH store in Tennessee, but it is not owned or operated by Saks (rather, by another entity not party here and not itself incorporated in Tennessee). (Id. at ¶ 9.) The headquarters and principal place of business of Saks and its corporate parent, Hudson's Bay Company, is in New York. (Doc. Nos. 2 at ¶ 5; 56-9 at ¶ 3.) Saks operates 29 Saks Fifth Avenue and Saks OFF 5TH stores in New York. (Doc. No. 56-9 at ¶¶ 10-11.)

         There are fourteen named plaintiffs in this action. None of them reside in Tennessee or within 100 miles of Nashville. None of the named plaintiffs is alleged to have shopped at the one Saks OFF 5TH store in Tennessee. (Doc. No. 51.) Five of the named plaintiffs live in New York and are alleged to have shopped at Saks stores in New York. (Id. at ¶¶ 18, 19, 20, 21, 22.) Two additional named plaintiffs reside nearby in New Jersey. (Id. at ¶¶ 16-17.) The remaining named plaintiffs reside in Arizona, California, Florida, Illinois, Georgia, Pennsylvania, and Texas. (Id. at ¶¶ 12, 13, 14, 15, 23, 24, 25.) The named plaintiffs seek to represent a national class of persons who used a credit or debit card at a Saks store from May 1, 2017 to April 1, 2018, or, in the alternative, sub-classes of those persons across eight different states, none of which is Tennessee. (See id. at ¶¶ 66-67.)

         B. Background

         The Saks data breach incident led to multiple lawsuits. Two of the named plaintiffs filed suit here in the Middle District of Tennessee. At the same time, five similar actions were filed in the Southern District of New York. Four of those actions were filed by seven current named plaintiffs in this action (Vains, Lefkowitz, Tafet, Carthan, Levitt-Raschella, Joseph, and Wade). On April 18, 2018, Vains - now a plaintiff in this action - filed a motion with the Judicial Panel on Multi-District Litigation (“JPML”) to transfer the then-pending (and any subsequent) data breach cases to a single judge in the Southern District of New York pursuant to 28 U.S.C. § 1407. (Doc. No. 56-2.) The motion argued that consolidation in the Southern District of New York was appropriate because that was where the defendants “maintain their headquarters and central operations in the United States.” (Id. at ¶ 10.) The motion highlighted that the actions all sought national classes for Saks and Lord & Taylor shoppers based on the data breach incident under the common law and state statutory theories of liability. (Id.) Further, the Motion stated: “Absent transfer and consolidation, there is a substantial risk of inconsistent rulings on issues ranging from discovery to class certification in each case. Centralization would eliminate that risk, conserve judicial resources, reduce litigation costs, and permit the cases to proceed to trial in a more efficient manner.” (Id. at ¶ 9.) Eight other plaintiffs in this action supported that motion for consolidation in the Southern District of New York. (See Doc. Nos. 56-3, 56-4.) In one filing, some of those plaintiffs said that the Southern District of New York is “the most appropriate forum” and “the preferable court” because it is accessible, the defendants maintained their headquarters there, and witnesses and evidence were present. (Doc. No. 56-4 at 5.) Those eight plaintiffs noted that the Middle District of Tennessee might “also be appropriate” in the alternative. (Id.; see also Doc. No. 56-3 at 3.)

         On August 1, 2018, the JPML declined to centralize the cases under § 1407. (Doc. No. 56-1.) It did so because “centralization under Section 1407 should be the last solution after considered review of all other options.” (Id. at 1.) The JPML explained, “where ‘a reasonable prospect' exists that the resolution of a Section 1404 motion or motions could eliminate the multidistrict character of a litigation, transfer under Section 1404 is preferable to Section 1407 centralization.” (Id.) After specifically noting that one California district court had already transferred a Saks data breach case to the Southern District of New York under § 1404, the JPML observed that “although no Section 1404 motion has yet been filed in the Middle District of Tennessee action, those plaintiffs also are New York residents and support centralization in either the Southern District of New York or the Middle District of Tennessee.” (Id. at 2.) But the likely future for these cases in New York that the JPML seems to have anticipated never came. Within two weeks of the JPML's decision, four of the Saks data breach actions pending in the Southern District of New York were voluntarily dismissed. (Doc. No. 56 at 7 (collecting cases).) All but one of the plaintiffs from those dismissed New York actions were added to this action in Tennessee, and they now resist transfer to the Southern District of New York.

         While this case has been pending, several other Saks data breach cases have been transferred. In a case similar to this in the Central District of California, Mekerdijian v. Saks Fifth Avenue LLC, et al., the court considered a similar motion to transfer under § 1404(a) and was presented essentially the same declarations that now accompany the motion before this Court. The court concluded that, despite the fact that the complaint alleged extensive violations of California law, transfer to the Southern District of New York was clearly warranted under the relevant considerations. (See Doc. No. 56-7.) After Mekerdijian was transferred to New York, the plaintiffs dismissed the case. (Doc. No. 56 at 8.)

         Three months later, another case from California was transferred by stipulation under § 1404(a) to the Southern District of New York. (See Doc. No. 56-8); Rudolph v. Hudson's Bay Co., et al. (S.D.N.Y. No. 1:18-cv-8472 (PKC)). The plaintiffs in this action recently attempted to intervene in the Rudolph case so they could move to dismiss, stay, or transfer it. Their motion was denied. (Doc. No. 87-1.) As the Court considers this § 1404(a) motion, the Rudolph putative class action based on the same data breach actively proceeds in the Southern District of New York.

         Finally, there is an additional case against a related entity arising from the data breach that has been proceeding outside of the Middle District of Tennessee. Up until very recently, a putative class action against Lord & Taylor has been pending in the District of Delaware.[1] See Harris, et al., v. Lord & Taylor LLC (D. Del. No. 1:18-cv-00521). Indeed, Harris involves some of the very same named plaintiffs as this case against Saks. On April 25, 2019, the District of Delaware granted the § 1404(a) motion of Lord & Taylor, which is incorporated in Delaware, to transfer the Harris case to the Southern District of New York. (Doc. No. 90-1.) After noting that none of the named plaintiffs lived or were alleged to have shopped in Delaware, the court found that there was “no indication that any of the claims arose in Delaware” and rejected the named plaintiffs' argument that this action arose outside of New York.[2] (Id. at 6-7.) The court also found that the convenience of the parties weighed in favor of transfer because “the substantial majority of the parties “ are in and around New York and “all would have to travel” to Delaware for litigation purposes. (Id. at 7-8.) Finally, the court concluded that transfer was appropriate so one district court could resolve similar claims arising from the same underlying events. ( 10-11.)

         Accordingly, the Southern District of New York is now home to two putative class actions arising from the data breach incident.

         II. Relevant

         Law Saks seeks transfer of this action pursuant to 28 U.S.C. § 1404(a), which provides that, “[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.” With this statute, “Congress intended to give district courts the discretion to transfer cases on an individual basis by considering convenience and fairness.” Kerobo v. Sw. Clean Fuels Corp., 285 F.3d 531, 537 (6th Cir. 2002). “The onus of showing that a plaintiff's choice of forum is unnecessarily burdensome falls on the defendant, ” and it is a substantial one. Heffernan v. Ethicon Endo-Surgery Inc., 828 F.3d 488, 498 (6th Cir. 2016); Smith v. Kyphon, Inc., 578 F.Supp.2d 954, 958 (M.D. Tenn. 2008). Unless the balance is strongly in favor of the defendant, a plaintiff's choice of forum should rarely be disturbed. Reese v. CNH America LLC, 574 F.3d 315, 320 (6th Cir. 2009); Dowling v. Richardson-Merrell, Inc., 727 F.2d 608, 612 (6th Cir. 1984). A defendant ...

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