Doe v. Avid Life Media Inc

Filing 1

COMPLAINT WITH JURY DEMAND against Avid Life Media Inc filed by John Doe. (Filing fee $400; Receipt number 0539-7011420) Clerk to issue summons(es). In each Notice of Electronic Filing, the judge assignment is indicated, and a link to the Judges Copy Requirements is provided. The court reminds the filer that any required copy of this and future documents must be delivered to the judge, in the manner prescribed, within three business days of filing. Unless exempted, attorneys who are not admitted to practice in the Northern District of Texas must seek admission promptly. Forms, instructions, and exemption information may be found at www.txnd.uscourts.gov, or by clicking here: Attorney Information - Bar Membership. If admission requirements are not satisfied within 21 days, the clerk will notify the presiding judge. (Attachments: # 1 Cover Sheet) (Kirtley, John)

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
JOHN DOE (a pseudonym)
)
On behalf of himself and all others similarly )
situated
)
)
)
Plaintiff,
)
)
vs.
)
)
AVID LIFE MEDIA, INC.
)
a corporation,
)
)
Defendant.
)

Case Number:3:15-cv-2750
JURY TRIAL DEMANDED

CLASS ACTION COMPLAINT
NOW COMES the Plaintiff John Doe (a pseudonym), on behalf of himself and all
others similarly situated, and for his class action complaint states as follows:
NATURE OF THE ACTION
1.

Plaintiff bring this class action as a result of a breach of the security system

of Defendant AVID LIFE MEDIA INC. (“ALM” or “Defendant”) governing electronic
transactions, resulting in compromised security of Plaintiff’s and Class Members’ personal
financial and oth er information. Upon information and belief such personal information
included, but was

not limited to, the putative Class Members’ (hereafter “Class

Members”) names, addresses, credit or debit card number, the card’s expiration date,
and/or the card’s CVV (a three-digit security code), credit card transactions, users’ sexual
preferences and fantasies, and email addresses (“Personal Information”).
2.

On or about July 15 of this year, and at times prior, ALM’s databases

were compromised, with the result that Personal Information of Plaintiff and Class Members’
Personal Information was used or is at risk of use in fraudulent transactions around the world,
1

as well as other invidious exposure.

Upon information and belief, Defendant maintains or

maintained information, including Personal Information, regarding nearly 37 million
subscribers, and Defendant’s security failures affected the credit and debit card of millions
of customers, including Plaintiff and Class Members.

One of the primary purposes of

Defendants product and services was confidentiality and anonymity.
3.

Upon information and belief, the security breach and theft of Personal

Information was caused by Defendant’s violations of its obligations to abide by the best
practices and industry standards concerning the security of its payment processing systems and
the computers associated therewith as set forth, for example, in Payment Card Industry
Security Standards Council Data Security Standards (“PCI DSS”) and the decisions of the
Federal Trade Commission (“FTC”) concerning protection of consumer financial information.
Upon information and belief, hackers deliberately targeted Defendant’s servers and collected
names, usernames, passwords, email addresses, phone numbers, mailing addresses, and credit
card numbers and expiration dates, credit card transactions, and other information.

Upon

information and belief, Defendant was also warned that the Personal Information would be
released:

2

4.

After learning of the security breach, Defendant failed to notify Plaintiff and

the putative Classes in a timely manner and failed to take other reasonable steps to inform
them of the nature and extent of the breach. As a result, Defendant prevented Plaintiff and the
putative Class Members from protecting themselves from the breach and caused Plaintiff
and Class Members to suffer financial loss and emotional distress.
5.

On or about August 18 of this year, the Personal Information of Plaintiff and

Class Members was actually released to the public and was put on several websites. On or about
August 20 of this year, additional Personal Information of Plaintiff and Class Members was
similarly released. Despite being told that it could prevent the release of Personal Information of
Plaintiff and Class Members, Defendants allowed such Personal Information to be released to the
public and did not notify Plaintiff and Class Members about the threat of the release of Personal
Information or the actual release of Personal Information.

Upon information and belief, in an

internal company file called “Areas of concern – customer data.docx,” an unnamed employee at
the company lists technical issues that could lead to a data breach occurring, as well the legal
problems that may come with that. Under a section called “Data leak/threft issues [sic],” the
author lists customer data being exposed by phishing or SQL injection being a possible
problem, when malicious requests are punched into an entry field, typically in order to dump the
site database. Another employee worried about remote code execution—when an attacker can
run code on a victims computer over the internet—and yet another employee pointed to
employees being infected with malware, “allowing hackers access to our user data.”
6.

Plaintiff, on behalf of himself and all others similarly situated, asserts the

following claims: Violations of the Stored Communications Act (“SCA”), 18 U.S.C. § 2702;
negligence; breach of implied contract; breach of contract, violations of the Texas Deceptive
3

Trade Practices-Consumer Protection Act (“DTPA”), under Section 17.45(4) of the Texas
Business and Commerce Code and the substantially similar statutes of the other states in which
Defendant conducts business, the Texas Identity Theft Enforcement Protection Act (TITEPA)
because it is a “tie-in” statute as provided under Section 521.152 of the Texas Business and
Commerce Code and the substantially similar statutes of the other states in which Defendant
conducts business, and intentional infliction of emotional distress and the substantially similar
statutes of the other states in which Defendant conducts business.
JURISDICTION AND VENUE
7.

This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1331,

which confers upon the Court original jurisdiction over all civil actions arising under the
laws of the United States, and pursuant to 18 U.S.C. § 2707. This Court has supplemental
jurisdiction over Plaintiff’s and Class Members’ state law claims under 28 U.S.C. § 1367.
8.

In addition, this Court has subject matter jurisdiction pursuant to 28 U.S.C.

§ 1332(d)(2)(A) because this case is a class action where the aggregate claims of all
Members of the putative Classes are in excess of $5,000,000.00, exclusive of interest and
costs, and many of the Members of the putative Classes are citizens of different states than
Defendant. This Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332(d).
9.

Venue is properly set in this District pursuant to 28 U.S.C. § 1391(b)

since Defendant transacts business within this judicial district. Likewise, a substantial part
of the events giving rise to the claim occurred within this judicial district.
PARTIES
10.

Plaintiff John Doe (a pseudonym) is an adult male domiciled in Austin, Texas

and is a citizen of Texas. Plaintiff and Class members provided Personal Information to
Defendant with a heightened expectation of privacy due to the nature of Defendant’s products
4

and services. Additionally, Class Members provided Personal Information to Defendant in
order to effectuate a “paid-delete” of any of their personal information in Defendant’s
possession, including Personal Information, as promised by Defendant. On information and
belief Doe’s Personal Information was compromised as a result of Defendant’s security
failures. As a result of such compromise, Doe suffered losses and damages in an amount
yet to be completely determinable as such losses and damages are ongoing.
11.

On information and belief Defendant is a corporation organized under

Canadian law with its headquarters and principal place of business in Toronto, Canada.
FACTUAL BACKGROUND
12.

Plaintiff repeats, realleges, and incorporates paragraphs 1-11 in this Complaint as

if fully set forth herein.
13.

Defendant is a merchant that owns, operates, and controls social networking

services, including a site on the Internet branded as “Ashley Madison”.
14.

Upon information and belief, Defendant’s data breach has impacted millions of

its customers nationwide within the United States.
15.

Hackers accessed a database owned, operated, or controlled by ALM that

processes, stores, or utilizes information regarding Personal Information, including ALM
transactions, with account numbers, expiration dates, card holder names, credit card
transactions, users’ sexual preferences and fantasies, email addresses, and/or other information,
on information and belief. Hackers publicly exposed such personal information on both August
16.
delete”

any

Class Members contacted Defendant to accept Defendant’s offer to “paidpersonal

information,

including

Personal Information,

in

Defendant’s

possession; in other words, Defendant promised to delete such information for a fee ($19,
on information and belief).
5

17.

Defendant broke such promise to the Class Members, who also sought a

“paid-delete.”
18.

Upon information and belief, the Defendant accepts customer payments for

services through credit and debit cards issued by members of the payment card industry
(“PCI”) such as Visa or MasterCard.
19.

In 2006, the PCI members established a Security Standards Counsel (“PCI

SSC”) as a forum to develop PCI Data Security Standards (“PCI DSS”) for increased
security of payment processing systems.
20.

The PCI DSS provides, “If you are a merchant that accepts payment cards,

you are required to be compliant with the PCI Data Security Standard.” Defendant, or
course, is a merchant that accepts payment cards.
21.

The PCI DSS requires a merchant to:
a.

Assess—identify cardholder data, take inventory of IT assets and

business processes for payment card processing, and analyze them for vulnerabilities that
could expose cardholder data.
b.

Remediate—fix vulnerabilities and do not store cardholder data

c.

Report—compile and submit required remediation validation records

unless needed.

(if applicable) and submit compliance reports to the acquiring bank and card brands with
which a merchant does business.
22.

Additionally, since 1995, the FTC has been studying the manner in which

online entities collect and use personal information and safeguards to assure that online data
collection practice is fair and provides adequate information privacy protection. The result of
this study is the FTC Fair Information Practice Principles. The core principles are:
6

a.

Notice/Awareness--Consumers should be given notice of an entity’s

information practices before any personal information is collected from them. This requires that
companies explicitly notify of some or all of the following:
•

Identification of the entity collecting the data;

•

Identification of the uses to which the data will be put;

•

Identification of any potential recipients of the data;

•

The nature of the data collected and the means by which it is

collected;
•

Whether the provision of the requested data is voluntary or required; and

•

The steps taken by the data collector to ensure the confidentiality,

integrity and quality of the data.
b.

Choice/Consent--Choice and consent in an online information-

gathering sense means giving consumers options to control how their data is used with respect
to secondary uses of information beyond the immediate needs of the information collector
to complete the consumer’s transaction.
c.

Access/Participation--Access as defined in the Fair Information

Practice Principles includes not only a consumer’s ability to view the data collected, but also to
verify and contest its accuracy. This access must be inexpensive and timely in order to be
useful to the consumer.
d.

Integrity/Security--Information collectors should ensure that the data

they collect is accurate and secure. They should improve the integrity of data by crossreferencing it with only reputable databases and by providing access for the consumer to
verify it. Information collectors should keep their data secure by protecting against both
internal and external security threats. They should limit access within their company to
7

only necessary employees to protect against internal threats, and they should use encryption
and other computer- based security systems to stop outside threats.
e.

Enforcement/Redress--In order to ensure that companies follow the

Fair Information Practice Principles, there must be enforcement measures. The FTC identifies
three types of enforcement measures: self-regulation by the information collectors or an
appointed regulatory body; private remedies that give civil causes of action for individuals
whose information has been misused to sue violators; and government enforcement, which can
include civil and criminal penalties levied by the government.
23.

On information and belief, Defendant failed to adequately analyze its

computer systems for vulnerabilities that could expose cardholder data. Defendant further
failed to fix the vulnerabilities in its computer systems which allowed Plaintiff’s and Class
Members’ Personal Information to become compromised.
24.

Additionally, on information and belief, Defendant unlawfully collected

consumer financial data for marketing purposes beyond the needs of specific transactions,
in order to accrue financial benefit at the risk and likelihood of compromising consumers’
Personal Information.
25.

On or about July 15 of this year, and at times prior, ALM’s databases

were compromised, with the result that Personal Information of Plaintiff and Class Members’
Personal Information was used or is at risk of use in fraudulent transactions around the world,
as well as other invidious exposure.

Upon information and belief, Defendant maintains or

maintained information, including Personal Information, regarding nearly 37 million
subscribers, and Defendant’s security failures affected the credit and debit card of millions
of customers, including Plaintiff and Class Members.

One of the primary purposes of

Defendants product and services was confidentiality and anonymity.
8

26.

Upon information and belief, the security breach and theft of Personal

Information was caused by Defendant’s violations of its obligations to abide by the best
practices and industry standards concerning the security of its payment processing systems and
the computers associated therewith as set forth, for example, in Payment Card Industry
Security Standards Council Data Security Standards (“PCI DSS”) and the decisions of the
Federal Trade Commission (“FTC”) concerning protection of consumer financial information.
Upon information and belief, hackers deliberately targeted Defendant’s servers and collected
names, usernames, passwords, email addresses, phone numbers, mailing addresses, and credit
card numbers and expiration dates, credit card transactions, and other information.

Upon

information and belief, Defendant was also warned that the Personal Information would be
released:

27.

After learning of the security breach, Defendant failed to notify Plaintiff and

the putative Classes in a timely manner and failed to take other reasonable steps to inform
them of the nature and extent of the breach. As a result, Defendant prevented Plaintiff and the
putative Class Members from protecting themselves from the breach and caused Plaintiff
9

and Class Members to suffer financial loss and emotional distress.
28.

On or about August 18 of this year, the Personal Information of Plaintiff and

Class Members was actually released to the public and was put on several websites. On or about
August 20 of this year, additional Personal Information of Plaintiff and Class Members was
similarly released. Despite being told that it could prevent the release of Personal Information of
Plaintiff and Class Members, Defendants allowed such Personal Information to be released to the
public and did not notify Plaintiff and Class Members about the threat of the release of Personal
Information or the actual release of Personal Information.

Upon information and belief, in an

internal company file called “Areas of concern – customer data.docx,” an unnamed employee at
the company lists technical issues that could lead to a data breach occurring, as well the legal
problems that may come with that. Under a section called “Data leak/threft issues [sic],” the
author lists customer data being exposed by phishing or SQL injection being a possible
problem, when malicious requests are punched into an entry field, typically in order to dump the
site database. Another employee worried about remote code execution—when an attacker can
run code on a victims computer over the internet—and yet another employee pointed to
employees being infected with malware, “allowing hackers access to our user data.”
29.

As a result, Defendant allowed Personal Information connected with millions of

consumers’ credit cards and debit cards, including credit cards and debit cards of Plaintiff
and Class Members and personal information related to the same, to become compromised for a
period prior to July 15 of this year.
30.

Additionally, Defendant was provided with Personal Information to in order

to effectuate a “paid-delete” of any of their personal information in Defendant’s possession,
including Personal Information, as promised by Defendant. In fact, the amount of Personal
Information was increased because Defendant retained Personal Information related to the “paid10

delete” transaction itself.

On information and belief Doe’s Personal Information was

compromised as a result of Defendant’s security failures.
31.

Plaintiff and Class Members are subject to continuing damage from having

their Personal Information comprised as a result of Defendant’s inadequate systems and
failures. Such damages include, among other things, the amount paid to Defendant to
perform a “paid-delete” which Defendant did not perform or performed inadequately; outof-pocket expenses incurred to mitigate the increased risk of identity theft and or fraud;
credit, debit, and financial monitoring to prevent and/or mitigate theft, identity theft, and/or
fraud incurred or likely to occur as a result of Defendant’s security failures; the value of their
time and resources spent mitigating the identity theft and/or fraud; the cost of and time spent
replacing credit cards and debit cards and reconfiguring automatic payment programs with
other merchants related to the compromised cards; and irrecoverable financial losses due to
unauthorized charges on the credit/debit cards of Defendant’s customers by identity thieves
who wrongfully gained access to the Personal Information of Plaintiff and the Classes, the
embarrassment of having Personal Information disclosed, the damage to marital relationships due
to the breach, and the emotional distress of such breach. Plaintiff is in immediate danger of
sustaining these direct injuries as the result of Defendants’ actions and inactions.
CLASS ACTION ALLEGATIONS
32.

Plaintiff repeats, realleges, and incorporates paragraphs 1-31 in this Complaint as

if fully set forth herein.
33.

Plaintiff brings this action on his own behalf and, pursuant to Rule 23 of

the Federal Rules of Civil Procedure, on behalf of the following three (3) multi-state classes:
All persons in the United States who paid Defendant for “paid-delete” services
which were improperly performed.

11

All persons in the United States whose Personal Information was subject to
Defendant’s security failures and who suffered damages and anticipate and/or
are in immediate danger of suffering damages in the amount of fraudulent
charges / unauthorized withdrawals made to their credit and/or debit cards or
suffered damages and anticipate and/or are in immediate danger of suffering
damages in the amount of overdraft charges made to their credit and/or debit
cards.
All persons in the United States whose Personal Information was subject to
Defendant’s security failures and who have suffered or anticipate and/or are in
immediate danger of suffering damages, loss, and/or expenses accruing due to
Defendant’s security failures.

Excluded from the Classes are Defendant and its affiliates, parents, subsidiaries,
employees, officers, agents, and directors.
34.

The Members of the Classes are so numerous that joinder of all Members

is impracticable. On information and belief, millions of credit and/or debit cards may have
been compromised, and the Members of the Classes are geographically dispersed.
Disposition of the claims of the proposed Classes in a class action will provide substantial
benefits to both the parties and the Court.
35.

The rights of each member of the proposed Classes were violated in a

similar fashion based upon Defendant’s uniform wrongful actions and/or inaction.
36.

The following questions of law and fact are common to each proposed

Class Member and predominate over questions that may affect individual Class Members:
a.

Whether Defendant failed to use reasonable care and

commercially reasonable methods to secure and safeguard its customers’ private financial and
personal information;
b.

Whether Defendant properly implemented its purported security

measures to protect consumers’ private financial and personal information from unauthorized
12

capture, dissemination and misuse;
c.

Whether Defendant took reasonable measures to determine the extent

of the security breach after it first learned of the same;
d.

Whether Defendant’s delay in informing consumers of the security

breach was unreasonable;
e.

Whether Defendant’s method of informing consumers of the security

breach and its description of the breach and potential exposure to damages as a result of the
same was unreasonable;
f.

Whether Defendant’s conduct violated the Stored Communications

Act, 18 U.S.C. § 2702;
g.

Whether Defendant breached an implied contract with Class Members;

h.

Whether Defendant’s conduct violated the Texas Deceptive Trade

Practices-Consumer Protection Act (“DTPA”), under Section 17.45(4) of the Texas Business and
Commerce Code, and the substantively similar statutes of the other states where Defendant
conducts business;
i.

Whether Defendant’s conduct violated the Texas Identity Theft

Enforcement Protection Act (TITEPA) as a “tie-in” statute as provided under Section 521.152 of
the Texas Business and Commerce Code and the substantially similar statutes of the other states
in which Defendant conducts business;
j.

Whether Defendant’s intentionally inflicted emotional distress upon

Plaintiff and Class Members, and the substantively similar statutes of the other states where
Defendant conducts business; and
k.

Whether Plaintiff and others Members of the Classes are entitled to

compensation, monetary damages, equitable relief and injunctive relief, and, if so, the nature
13

and amount of such relief.
37.

Plaintiff’s claims are typical of the claim of absent Class Members. If

brought individually, the claim of each Class Member would necessarily require proof of
the same material and substantive facts, and seek the same remedies.
38.

The Plaintiff is willing and prepared to serve the Court and the proposed

Classes in a representative capacity. The Plaintiff will fairly and adequately protect the interest
of the Classes and have no interests adverse to, or which directly and irrevocably conflicts
with, the interests of other Members of the Classes. Further, Plaintiff has retained counsel
experienced in prosecuting complex class action litigation.
39.

Defendant has acted or refused to act on grounds generally applicable to

the proposed Classes, thereby making appropriate equitable relief with respect to the Classes.
40.

A class action is superior to other available methods for the fair and

efficient adjudication of this controversy because individual claims by the Class Members are
impractical, as the costs of prosecution may exceed what any Class Member has at stake.
41.

Members of the Classes are readily ascertainable through Defendant’s records

of the transactions it undertook.
42.

Prosecuting separate actions by individual Class Members would create a risk

of inconsistent or varying adjudications that would establish incomparable standards of conduct
for Defendant. Moreover, adjudications with respect to individual Class Members would,
as a practical matter, be dispositive of the interests of other Class Members.
CAUSES OF ACTION
COUNT I – VIOLATION OF THE FEDERAL STORED
COMMUNICATIONS ACT, 18 U.S.C. § 2702
43.

Plaintiff repeats, realleges, and incorporates paragraphs 1-42 in this Complaint

14

as if fully set forth herein.
44.

The Stored Communications Act (“SCA”) contains provisions that provide

consumers with redress if a company mishandles their electronically stored information. The
SCA was designed, in relevant part, “to protect individuals’ privacy interests in personal
and proprietary information.” S. Rep. No. 99-541, at 3 (1986), reprinted in 1986 U.S.C.C.A.N.
3555 at 3557.
45.

Section 2702(a)(1) of the SCA provides that “a person or entity providing

an electronic communication service to the public shall not knowingly divulge to any
person or entity the contents of a communication while in electronic storage by that service.”
18 U.S.C. § 2702(a)(1).
46.

The SCA defines “electronic communication service” as “any service which

provides to users thereof the ability to send or receive wire or electronic communications.” Id.
at
§ 2510(15).
47.

Through

its

payment

processing

equipment,

Defendant

provides

an

“electronic communication service to the public” within the meaning of the SCA because it
provides consumers at large with credit and debit card payment processing capability that
enables them to send or receive wire or electronic communications concerning their private
financial information to transaction managers, card companies, or banks.
48.

By failing to take commercially reasonable steps to safeguard sensitive

private financial information, even after Defendant was aware that customers’ Personal
Information had been compromised, Defendant has knowingly divulged customers’ private
financial information that was communicated to financial institutions solely for customers’
payment verification purposes, while in electronic storage in Defendant’s payment system.
15

49.

Section 2702(a)(2)(A) of the SCA provides that “a person or entity

providing remote computing service to the public shall not knowingly divulge to any person
or entity the contents of any communication which is carried or maintained on that service on
behalf of, and received by means of electronic transmission from (or created by means of
computer processing of communications received by means of electronic transmission from), a
subscriber or customer of such service.” 18 U.S.C. § 2702(a)(2)(A).
50.

The SCA defines “remote computing service” as “the provision to the public

of computer storage or processing services by means of an electronic communication system.”
18 U.S.C. § 2711(2).
51.

An “electronic communications systems” is defined by the SCA as “any

wire, radio, electromagnetic, photooptical or photoelectronic facilities for the transmission of
wire or electronic communications, and any computer facilities or related electronic
equipment for the electronic storage of such communications.” 18 U.S.C. § 2510(4).
52.

Defendant provides remote computing services to the public by virtue of its

computer processing services for consumer credit and debit card payments, which are used
by customers and carried out by means of an electronic communications system, namely the
use of wire, electromagnetic, photooptical or photoelectric facilities for the transmission of
wire or electronic communications received from, and on behalf of, the customer concerning
customer private financial information.
53.

By failing to take commercially reasonable steps to safeguard sensitive

private financial information, Defendant has knowingly divulged customers’ private financial
information that was carried and maintained on Defendant’s remote computing service solely
for the customer’s payment verification purposes.
54.

As a result of Defendant’s conduct described herein and its violations of
16

Section 2702(a)(1) and (2)(A), Plaintiff and putative Class Members have suffered injuries,
including lost money and the costs associated with the need for vigilant credit monitoring to
protect against additional identity theft. Plaintiff, on her own behalf and on behalf of the
putative Classes, seek an order awarding themselves and the Classes the maximum statutory
damages available under 18 U.S.C. § 2707 in addition to the cost for 3 years of credit
monitoring services.
WHEREFORE Plaintiff and Class Members pray for Judgment in their favor and
against Defendant on this Count I of their Complaint; for actual and compensatory damages;
for punitive or exemplary damages; for punitive or exemplary damages; for punitive or
exemplary damages; for injunctive relief; for costs, expenses and attorney fees as allowed by
law; and for such other and further relief as this Court deems just and proper.
COUNT II – NEGLIGENCE
55.

Plaintiff repeats, realleges, and incorporates paragraphs 1-54 in this Complaint as

if fully set forth herein.
56.

Upon coming into possession of Plaintiff’s and Class Members’ Personal

Information, i.e., private, non-public, sensitive financial information, Defendant had (and
continues to have) a duty to exercise reasonable care in safeguarding and protecting the
information from being compromised and/or stolen.
57.

Defendant also had a duty to timely disclose to Plaintiff and Class Members that

a breach of security had occurred and their Personal Information pertaining to their credit
cards and/or debit cards had been compromised, or was reasonably believed to be
compromised.
58.

Defendant also had a duty to put into place internal policies and

procedures designed to detect and prevent the theft or dissemination of Plaintiff’s and
17

Class Members’ Personal Information.
59.

Defendant, by and through its above negligent acts and/or omissions, breached

its duty to Plaintiff and Class Members by failing to exercise reasonable care in protecting
and safeguarding their Personal Information which was in Defendant’s possession, custody,
and control.
60.

Defendant, by and through its above negligent acts and or omissions,

further breached its duty to Plaintiff and Class Members by failing to put into place internal
policies and procedures designed to detect and prevent the unauthorized dissemination of
Plaintiff and Class Members’ Personal Information.
61.

Defendant, by and through its above negligent acts and or omissions, breached

its duty to timely disclose the fact that Plaintiff and Class Members’ Personal Information had
been or was reasonable believed to be have been compromised.
62.

Defendant’s negligent and wrongful breach of its duties owed to Plaintiff

and Class Members, their Personal Information would not have been compromised.
63.

Plaintiff’s and Class Members’ Personal Information was compromised

and/or stolen as a direct and proximate result of Defendant’s breach of its duties as set forth
herein.
64.

Plaintiff and Class Members have suffered actual damages including, but

not limited to, having their personal information compromised, incurring time and expenses in
cancelling their debit and/credit cards, activating new cards and re-establishing automatic
payment authorizations from their new cards, and other economic and non-economic
damages, including irrecoverable losses due to unauthorized charges on their credit/debit cards.
WHEREFORE Plaintiff and Class Members pray for Judgment in their favor and
against Defendant on this Count II of their Complaint; for actual and compensatory damages;
18

for punitive or exemplary damages; for punitive or exemplary damages; for punitive or
exemplary damages; for injunctive relief; for costs, expenses and attorney fees as allowed by
law; and for such other and further relief as this Court deems just and proper.
COUNT III -- BREACH OF IMPLIED CONTRACT
65.

Plaintiff repeats, realleges, and incorporates paragraphs 1-64 in this Complaint as

if fully set forth herein.
66.

Plaintiff and Class Members were required to provide Defendant with their

Personal Information in order to facilitate their credit card and/or debit card transactions.
67.

Implicit in this requirement was a covenant requiring Defendant to take

reasonable efforts to safeguard this information and promptly notify Plaintiff and Class
Members in the event their information was compromised.
68.

Similarly, it was implicit that Defendant would not disclose Plaintiff’s and

Class Members’ Personal Information.
69.

Notwithstanding its obligations, Defendant knowingly failed to safeguard

and protect Plaintiff’s and Class Members’ Personal Information. To the contrary, Defendant
allowed this information to be disseminated to unauthorized third parties.
70.

Defendant’s above wrongful actions and/or inaction breached its implied

contracts with Plaintiff and Class Members, which in turn directly and/or proximately caused
Plaintiff and Class Members to suffer substantial injuries.
WHEREFORE Plaintiff and Class Members pray for Judgment in their favor and
against Defendant on this Count III of their Complaint; for actual and compensatory
damages; for punitive or exemplary damages; for punitive or exemplary damages; for
punitive or exemplary damages; for injunctive relief; for costs, expenses and attorney fees as
allowed by law; and for such other and further relief as this Court deems just and proper.
19

COUNT IV – VIOLATION OF TEXAS DECEPTIVE TRADE PRACTICESCONSUMER PROTECTION ACT (“DTPA”), OF THE TEXAS BUSINESS AND
COMMERCE CODE, AND SIMILAR STATUTES OF
THE OTHER STATES WHERE DEFENDANT DOES BUSINESS
71.

Plaintiff repeats, realleges, and incorporates paragraphs 1-70 in this Complaint as

if fully set forth herein.
72.

Defendant violated the Texas Deceptive Trade Practices-Consumer Protection

Act (“DTPA”), under Section 17.45(4) of the Texas Business and Commerce Code, and the
substantially similar statutes of the other states in which it conducts business by failing to
properly implement adequate, commercially reasonable security measures to protect
customers’ private financial information, and by failing to immediately notify affected
customers of the nature and extent of the security breach.
73.
regarding

Defendant’s fraudulent and deceptive omissions and misrepresentations
the company’s security measures to protect customers’ private financial

information and the extent of the breach of those security measures were intended to
deceive and induce Plaintiff and the putative Class Members’ reliance on Defendant’s
misrepresentations that their financial information was secure and protected when using
debit and credit cards to shop at Defendant stores.
74.

Defendant’s unlawful misrepresentations and omissions occurred in the course

of conduct involving trade or commerce.
75.

Defendant’s unlawful misrepresentations and omissions were material

because Plaintiff and the other putative Class Members, if they had known the truth, would
not have risked compromising their private financial information by using their debit or
credit cards at Defendant stores. Plaintiff and the other putative Class Members would
consider the omitted and misrepresented material facts important in making their purchasing

20

decisions.
76.

Defendant’s unlawful misrepresentations and omissions damaged Plaintiff

and the other putative Class Members because Plaintiff and Class Members would not have
chosen to expose their private financial information to a security breach and subsequent
exploitation by the defrauders.
77.

Plaintiff, therefore, prospectively asserts that by its above-described wrongful

actions, inaction and/or omissions and the resulting data breach of Personal Information,
Defendant knowingly and intentionally violated Section 17.50(a)(3) of the Texas Business and
Commerce Code by engaging in the above-described unconscionable actions and/or
unconscionable course of action; to wit, despite knowing of the security issues present in
Defendants systems, failing to identify, implement, maintain and monitor the proper data
security measures, policies, procedures, protocols, and software and hardware systems to
safeguard and protect Plaintiff’s and Class Members’ Personal Information data which, as a
direct and/or proximate result, was stolen and compromised in the Data Breach.
78.

Defendant’s above-described wrongful actions, inaction and/or omissions and the

resulting Data Breach unfairly took advantage of the lack of knowledge, ability, and experience
of Plaintiff and Class Members to a grossly unfair degree regarding Defendant’s computer
system and servers and Defendant’s inability to safeguard and protect their Personal Information
data; to wit, at the time Plaintiff and Class Members gave Defendants their Personal Information
data in connection with purchasing of access and services, Plaintiff and Class Members did not
know, and had no way of knowing, that Defendant was incapable of safeguarding and protecting
their Personal Information data.
79.

Concurrent with filing this Class Action Complaint, Plaintiff served a 60-day

demand letter on Defendant under Section 17.505 of the Texas Business and Commerce Code.
21

Should this matter not be resolved to the satisfaction of Plaintiff, on behalf of himself and all
Class Members, within the 60-day period, Plaintiff intends to amend this Class Action
Complaint and formally assert this cause of action.
80.

Plaintiff, individually and on behalf of the putative Classes, seek an order

requiring Defendant to pay: monetary and punitive damages for the conduct described herein;
three years of credit card fraud monitoring services for Plaintiff and Members of the putative
Classes; and the reasonable attorney’s fees and costs of suit of Plaintiff and Class Members;
together with all such other and further relief as may be just.
WHEREFORE Plaintiff and Class Members pray for Judgment in their favor and
against Defendant on this Count IV of their Complaint; for actual and compensatory
damages; for punitive or exemplary damages; for punitive or exemplary damages; for
punitive or exemplary damages; for injunctive relief; for costs, expenses and attorney fees as
allowed by law; and for such other and further relief as this Court deems just and proper.
COUNT V – BREACH OF CONTRACT
81.

Plaintiff repeats, realleges, and incorporates paragraphs 1-80 in this Complaint as

if fully set forth herein.
82.
delete

any

Defendant promised the Class Members, for a fee of approximately $19, to
of

Plaintiff’s/Class

Member’s

personal

information,

including

Personal

Information, in Defendant’s possession (the “paid-delete” service).
83.

On information and belief, Defendant broke such promise, and did not

delete some or all of Plaintiff’s/Class Member’s Personal Information in Defendant’s
possession, even after the payment of such fee.
84.

Plaintiff have been damage thereby in the amount paid to the Defendant

to perform a “paid-delete,” and in the amount of other losses as previously stated.
22

WHEREFORE Plaintiff and Class Members pray for Judgment in their favor and
against Defendant on this Count V of their Complaint; for actual and compensatory
damages; for punitive or exemplary damages; for punitive or exemplary damages; for
punitive or exemplary damages; for injunctive relief; for costs, expenses and attorney fees as
allowed by law; and for such other and further relief as this Court deems just and proper.
COUNT VI – INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS
85.

Plaintiff repeats, realleges, and incorporates paragraphs 1-84 in this Complaint as

if fully set forth herein.
86.

Defendant acted intentionally or recklessly in failing to adequately secure Plaintiff

and Class Members’ Personal information despite knowing that there were security problems
and failures and did nothing to remedy those problems and failures despite being aware of them.
Moreover, despite being warned that Personal Information was compromised through a breach,
Defendants intentionally or recklessly failed to mitigate such breach causing millions of users
Personal Information to be released to the public. Such conduct was extreme and outrageous,
especially in light of the confidential nature of the products and services that Defendant provides.
87.

Defendant’s actions caused Plaintiff and Class Members emotional distress

directly related to their actions in the form of extreme and severe emotional distress over their
marital relationship, societal status, reputation in the community, and other general distress
resulting from Defendant’s actions and inactions.
WHEREFORE Plaintiff and Class Members pray for Judgment in their favor and against
Defendant on this Count VI of their Complaint; for actual and compensatory damages; for
punitive or exemplary damages; for punitive or exemplary damages; for punitive or
exemplary damages; for injunctive relief; for costs, expenses and attorney fees as allowed by
law; and for such other and further relief as this Court deems just and proper.
23

COUNT VII – TEXAS IDENTITY THEFT ENFORCEMENT PROTECTION ACT
(TITEPA) AS A “TIE-IN” STATUTE AS PROVIDED UNDER SECTION 521.152 OF
THE TEXAS BUSINESS AND COMMERCE CODE
88.

Plaintiff repeats, realleges, and incorporates paragraphs 1-87 in this Complaint as

if fully set forth herein.
89.

As plead in Count IV above, Plaintiff and Class Members are protected under the

DTPA and Defendant is subject to the DTPA and subject to the provisions of the Texas Identity
Theft Enforcement Protection Act (TITEPA) because it is a “tie-in” statute as provided under
Section 521.152 of the Texas Business and Commerce Code.
90.

Defendant stored Plaintiff’s and the Class’s Personal Information, including but

not limited to sensitive personal information and personal identifying information such as their
names, dates of birth, sometimes mother’s maiden names, account numbers, credit card
numbers, physical conditions, and/or mental conditions, sexual preferences, sexual fantasies,
physical addresses, and other information.
91.

Plaintiff and the Class Members are “victims” under this act because their

Personal Information is available on the internet and being perused by unauthorized individuals.
Upon information and belief, Plaintiff and the Class Members’ information is also being used
for profit and for blackmail purposes.
92.

Defendant violated its duty to protect sensitive personal information by failing to

implement and maintain reasonable procedures around the Personal Information, including
taking protective actions when it knew the personal information was vulnerable, to protect the
data from unlawful use.
93.

Defendant also failed to destroy or arrange for the destruction of the personal

information in a safe and secure manner in violation of this act. Further, Class Members who
affirmatively paid Defendant to remove their personal data and received a guarantee that it was
24

removed were harmed. Defendant actually failed to safely and securely destroy that data and
permitted it to be stolen by unauthorized users.
94.

Defendant further violated this act by failing to notify Plaintiff and the Class

immediately upon learning of the breach. Notice, if any, was given to Plaintiff and Class
Members too late and not in accordance with this act.
95.

As a natural and proximate cause of Defendant’s violation of this act, Plaintiff

and the Class Members were harmed and will continue to be harmed.
WHEREFORE Plaintiff and Class Members pray for Judgment in their favor and against
Defendant on this Count VII of their Complaint; for actual and compensatory damages; for
punitive or exemplary damages; for punitive or exemplary damages; for punitive or
exemplary damages; for injunctive relief; for costs, expenses and attorney fees as allowed by
law; and for such other and further relief as this Court deems just and proper.

JURY TRIAL DEMAND
Plaintiff and class members demand a jury trial as to all claims and issues triable of right by a jury.

PRAYER FOR RELIEF
WHEREFORE, Plaintiff and the Members of the proposed Classes pray that this
Honorable Court do the following:
A.

Certify the matter as a class action pursuant to the provisions of Rule 23 of

the Federal Rules of Civil Procedure and order that notice be provided to all Class Members;
B.

Designate Plaintiff as representative of the Classes and the undersigned

counsel as Class Counsel;
C.

Award Plaintiff and the Classes compensatory and punitive damages in

an amount to be determined by the trier of fact;
25

D.

Award Plaintiff and the Classes statutory interest and penalties;

E.

Award Plaintiff and the Classes appropriate injunctive and/or declaratory relief;

F.

Award Plaintiff and the Classes their costs, prejudgment interest, and

attorney fees; and
G.

Grant such other relief as is just and proper.

26

DATED: August 21, 2015.
/s/ James F. McDonough, III.
W. LEWIS GARRISON, JR.,
PHV forthcoming
[e-mail]
TAYLOR C. BARTLETT,
PHV forthcoming
[e-mail]
HENINGER GARRISON DAVIS, LLC
2224 First Avenue North
Birmingham, AL 35203
Tel: [phone]
Fax: [phone]
JAMES F. MCDONOUGH, III.
PHV forthcoming
[e-mail]
HENINGER GARRISON DAVIS, LLC
3621 Vinings Slope, Suite 4320
Atlanta, GA 30339
Tel: [phone]
Fax: [phone]
Attorney for Named Plaintiff
FERRER, POIROT & WANSBROUGH
/s/ John T. Kirtley, III
JOHN T. KIRTLEY, III
Texas Bar no. 11534050
2603 Oak Lawn Ave., Suite 300
P. O. Box 199109
Dallas, Texas 75219
[e-mail]
(Asst. [e-mail])
[phone] phone
[phone] facsimile
Attorney-In-Charge For Plaintiff

27