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Lewert v. P.F. Chang's China Bistro, Inc.

United States Court of Appeals, Seventh Circuit

April 14, 2016

JOHN LEWERT, on behalf of himself and all others similarly situated, et al., Plaintiffs-Appellants,
P.F. CHANG'S CHINA BISTRO, INC., Defendant-Appellee

         Argued January 13, 2016.

         Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. Nos. 14 C 4787, 14 C 4923 -- John W. Darrah, Judge.

         For JOHN LEWERT, individually and on behalf of all others similarly situated, LUCAS KOSNER, individually and on behalf of all others similarly situated, Plaintiffs - Appellants: Joseph Siprut, Attorney, SIPRUT PC, Chicago, IL.

         For P.F. CHANG'S CHINA BISTRO, INC., a Delaware corporation, Defendant - Appellee: Jon P. Kardassakis, Attorney, LEWIS BRISBOIS BISGAARD & SMITH LLP, Los Angeles, CA; Thomas Alexander Lidbury, Attorney, LEWIS BRISBOIS BISGAARD & SMITH LLP, Chicago, IL.

         Before WOOD, Chief Judge, and BAUER and HAMILTON, Cir-cuit Judges.


         Wood, Chief Judge.

         About two months after they dined at P.F. Chang's China Bistro, in Northbrook, Illinois, John Lew-ert and Lucas Kosner received the unwelcome news that the restaurant's computer system had been hacked and debit-and credit--card data had been stolen. Lewert and Kosner brought separate suits, which were later consolidated, seek-ing damages resulting from the theft on behalf of themselves and a class. Concluding that they had not suffered the requi-site personal injury, the district court dismissed for lack of standing. Fed.R.Civ.P. 12(b)(1). In light of Remijas v. Neiman Marcus Grp., LLC, 794 F.3d 688 (7th Cir. 2015), we reverse and remand for further proceedings.


         P.F. Chang's operates a chain of restaurants throughout the United States. On June 12, 2014, the company announced that its computer system had been breached and some con-sumer credit-and debit--card data had been stolen. At the time, it did not know how many consumers were affected, whether the breach was general or limited to specific loca-tions, or how long the breach lasted. As a precaution, it switched to a manual card--processing system at all locations in the continental United States and encouraged its custom-ers to monitor their card statements. News articles indicated that the breach might have begun as far back as September 2013. Later that summer, on August 4, 2014, P.F. Chang's an-nounced that it had determined that data was stolen from just 33 restaurants. The only affected restaurant in Illinois, it reported, was at the Woodfield Mall in Schaumburg (a sub-urb of Chicago).

         Kosner dined at a different P.F. Chang's, located in Northbrook, on April 21, 2014, and paid with his debit card. On June 8, 2014, four fraudulent transactions were made with the card he had used, and so he cancelled it immediate-ly. Later in June, Kosner learned about the breach at P.F. Chang's. Putting two and two together, he noted that the fraudulent charges on his card had appeared shortly after he dined at P.F. Chang's, and he drew the conclusion that his debit-card data were among those compromised by the breach. Based on that concern, he purchased a credit moni-toring service to protect against identity theft, including against criminals using the stolen card's data to open new credit or debit cards in his name. He spent $106.89 on the service.

         On April 3, 2014, Lewert dined at the same P.F. Chang's in Northbrook as Kosner later patronized. Lewert, too, paid with his debit card. The consequences for Lewert were less troubling: he did not spot any fraudulent charges on his card, nor did he cancel his card and suffer the associated in-convenience or costs. Lewert did allege, however, that after P.F. Chang's initially announced the breach in June 2014, he spent time and effort monitoring his card statements and his credit report to ensure that no fraudulent charges had been made on that card and that no fraudulent accounts had been opened in his name.

         Lewert and Kosner seek to represent a class of all similar-ly situated customers whose payment data may have been compromised. Their actions were consolidated on June 24, 2014. In the aggregate, the claims they assert on behalf of the class exceed $5,000,000 in value. Minimal diversity exists: Lewert and Kosner are citizens of Illinois, while P.F. Chang's is a Delaware corporation with its principal place of business in Arizona. Putting to one side the central issue of Article III standing, to which we return, the district court therefore had jurisdiction under the Class Action Fairness Act (CAFA), 28 U.S.C. § 1332(d)(2). As we said, the district court dismissed the consolidated action for lack of standing.


          We consider de novo the question whether a plaintiff sat-isfies the standing criteria imposed by Article III of the Constitution. Reid L. v. Ill. State Bd. of Educ., 358 F.3d 511, 515 (7th Cir. 2004). The district court " must accept as true all material allegations of the complaint, drawing all reasonable infer-ences therefrom in the plaintiff's favor, unless standing is challenged as a factual matter." Id. The plaintiffs, as the " part[ies] invoking federal jurisdiction," bear the burden of establishing Article III standing. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). They must demonstrate that they have " suffered a concrete and particularized injury that is fairly traceable to the challenged ...

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