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Chambliss v. CareFirst, Inc.

United States District Court, D. Maryland

May 27, 2016

PAMELA CHAMBLISS, eta!., Plaintiffs,
v.
CAREFIRST, INC, et al., Defendants.

          MEMORANDUM OPINION

          Richard D. Bennett United States District Judge

         Plaintiffs Pamela Chambliss ("Chambliss") and Scott Adamson ("Adamson") (collectively, "Plaintiffs") bring this putative class action against Defendants CareFirst, Inc., CareFirst of Maryland, Inc. (collectively, "Defendants" or "CareFirst"), [1] and Does 1-10, [2]alleging various tort, negligence, and statutory claims arising under Maryland law. Specifically, Plaintiffs claim that Defendants failed to secure adequately the computer hardware storing their customers' personal information, including names, birth dates, email addresses, and subscriber identification numbers.

         Presently pending is Defendants' Motion to Dismiss (ECF No. 11). This Court held a hearing on the pending Motion on May 19, 2016. For the reasons that follow, Defendants' Motion to Dismiss (ECF No. 11) is GRANTED. In sum, Plaintiffs have failed to allege facts sufficient to establish standing under Article III of the Constitution. Accordingly, this Court does not have subject matter jurisdiction to adjudicate their claims. All claims are thus DISMISSED.

         BACKGROUND

         At the motion to dismiss stage, this Court accepts as true the facts alleged in the plaintiffs complaint. See Aziz v. Alcolac, Inc., 658 F.3d 388, 390 (4th Cir. 2011). This case arises out of a well-publicized data breach at Defendant CareFirst, a health insurance provider operating in Maryland, Virginia, and the District of Columbia. Compl. ¶ 10, ECF No. 1. On May 20, 2015, CareFirst announced that it had discovered a data breach that allegedly compromised the confidential personal information of approximately 1.1 million individuals. Id. ¶ 12. Two data breaches allegedly occurred: the first in June 2014, and die second immediately prior to CareFirst's announcement on May 20, 2015. Id. ¶¶ 14-15. This personal information included the names, birth dates, email addresses, and subscriber identification numbers of the affected individuals. Id. ¶ 1. CareFirst denied that any confidential medical records were implicated in the breach. Id. ¶ 1 n.1.

         At the time of the breach, named Plaintiffs Pamela Chambliss and Scott Adamson held health insurance issued by CareFirst.[3] Id. ¶ 11. They seek to bring a putative class action on behalf of other holders of CareFirst health insurance. Id. Plaintiffs allege that CareFirst knew or should have known earlier of both breaches, as the information stolen is allegedly "highly coveted by and a frequent target of hackers." Id. ¶¶ 14, 17. Plaintiffs claim that the potential ramifications of the theft of this data are substantial. Id. ¶¶ 16-19. As customers of CareFirst, Plaintiffs allege that they had a reasonable expectation that their confidential personal information would remain private and confidential. Id. ¶ 21. Due to CareFirst's failure to secure the personal information at issue, Plaintiffs claim that they and the class members "have lost or are subject to losing money and property." Id. However, they do not allege that either named Plaintiff has suffered any actual injury thus far.[4]

         Plaintiffs subsequently filed the present action asserting five claims arising under federal and Maryland law: negligence (Count I); breach of implied contract (Count II); unjust enrichment (Count III); declaratory judgment pursuant to the Declaratory Judgment Act, 28 U.S. Code §§ 2201 (Count IV); and the Maryland Personal Information Protection Act, Md. Code Ann., Com. Law §§ 14-3501, et seq. (Count V). On Defendants' motion, this Court entered a stay on April 21, 2016 (ECF No. 20) pending the resolution of Defendants' Motion to Dismiss. This Court then conducted a hearing on May 19, 2016 on the present Motion.

         STANDARD OF REVIEW

         Defendants move to dismiss the present Complaint pursuant to Rule 12(b)(1) and Rule 12(b)(6) of the Federal Rules of Civil Procedure. As this Opinion addresses only Defendants' jurisdictional objections, Rule 12(b)(1) is the appropriate standard of review. A motion to dismiss under Rule 12(b)(1) of the Federal Rules of Civil Procedure for lack of subject matter jurisdiction challenges a court's authority to hear the matter brought by a complaint. See Davis v. Thompson, 367 F.Supp.2d 792, 799 (D. Md. 2005). This challenge under Rule 12(b)(1) may proceed either as a facial challenge, asserting that the allegations in the complaint are insufficient to establish subject matter jurisdiction, or a factual challenge, asserting "that the jurisdictional allegations of the complaint [are] not true." Kerns v. United States, 585 F.3d 187, 192 (4th Cir. 2009) (citation omitted). With respect to a facial challenge, a court will grant a motion to dismiss for lack of subject matter jurisdiction "where a claim fails to allege facts upon which the court may base jurisdiction." Davis, 367 F.Supp.2d at 799.

         Where the challenge is factual, "the district court is entitled to decide disputed issues of fact with respect to subject matter jurisdiction." Kerns, 585 F.3d at 192. "[T]he court may look beyond the pleadings and 'the jurisdictional allegations of the complaint and view whatever evidence has been submitted on the issue to determine whether in fact subject matter jurisdiction exists.'" Khoury v. Meserve, 268 F.Supp.2d 600, 606 (D. Md. 2003) (citation omitted). The court "may regard the pleadings as mere evidence on the issue and may consider evidence outside the pleadings without converting the proceeding to one for summary judgment." Velasco v. Gov't of Indon., 370 F.3d 392, 398 (4th Cir. 2004); see also Sharefeldin v. Md. Dep't of Pub. Safety & Corr. Servs., 94 F.Supp.2d 680, 684-85 (D. Md. 2000). A plaintiff carries the burden of establishing subject matter jurisdiction. Lovern v. Edwards, 190 F.3d 648, 654 (4th Cir. 1999).

         ANALYSIS

         In moving to dismiss the present Complaint pursuant to Rule 12(b)(1) of the Federal Rules of Civil Procedure, Defendants argue that the Plaintiffs have failed to allege a sufficient injury in fact to satisfy Article III of the Constitution.[5] Plaintiffs thus lack standing, thereby depriving this Court of the requisite subject-matter jurisdiction to adjudicate their claims. Article III, Section 2 places certain restraints on the federal courts, including limiting the courts to the resolution of actual cases and controversies. U.S. Const, art. III, § 2. As the United States Court of Appeals for the Fourth Circuit has explained, "[a]mong 'the several doctrines that have grown up to elaborate that requirement, ' the one 'that requires a litigant to have 'standing' to invoke the power of a federal court is perhaps the most important'" Friends for Ferrell Parkway, LLC p. Stasko, 282 F.3d 315, 319 (4th Cir. 2002) (quoting Alien v. Wright, 486 U.S. 737, 750 (1984)); accord Friends of the Earth, Inc. v. Gaston Copper Recycling Corp., 204 F.3d 149, 153 (4th Cir. 2000) (en banc).

         To establish the "irreducible constitutional minimum of standing, " a plaintiff must satisfy the following criteria. First, that she suffered an "injury in fact, " which is an "invasion of a legally protected interest which is (a) concrete and particularized, . . . and (b) actual or imminent, not conjectural or hypothetical." Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992) (internal citations and quotation marks omitted). Second, the injury must be "fairly traceable to the challenged action of the defendant." Friends for Ferrell Parkway, 282 F.3d at 320 (citing Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180-81 (2000); Lujan, 504 U.S. at 560-61; Allen, 468 U.S. at 751). Third, it must be "likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision." Id.

         The plaintiff bears the burden of establishing standing, as he "is the party seeking to invoke federal jurisdiction." Friends for Ferrell Parkway, 282 F.3d at 320 (citing Lujan, 504 U.S. at 561). Where the lawsuit is a putative class action, any named plaintiffs must allege that they personally have been injured. Worth v. Seldin, 422 U.S. 490, 502 (1975). They may not rely on injuries suffered by unknown class members to confer standing. Id.; see also O'Shea v. Littleton, 414 U.S. 488, 494 (1974) ("[I]f none of the named plaintiffs purporting to represent a class ...


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