Heartland Payment Systems – Data Breach Class Action

Chimicles & Tikellis has been appointed to serve as interim co-lead counsel on behalf of a proposed class of banks, credit unions, and other financial institutions affected by the data breach at Heartland Payment Systems, Inc. (“HPS”) . On September 23, 2009, a consolidated amended complaint was filed against HPS.  The consolidated amended complaint was filed in the United States District Court for the Southern District of Texas, where the cases against HPS brought by financial institutions have been transferred for consolidated or coordinated pre-trial proceedings.

HPS, a publicly traded company, processes credit and debit card transactions, and provides other services for over 250,000 businesses across the country, including restaurants and small retail stores. HPS reportedly handles approximately 100 million credit card transactions per month. HPS recently announced that certain data that it maintains in its processing systems had been accessed by outside hackers in 2008. It has been reported that this compromised information includes debit and credit card numbers, expiration dates, and internal bank codes. According to the complaint filed by C&T, HPS only became aware of the breach after it was notified of patterns of fraudulent credit card activity by Visa and MasterCard. This incident at HPS has already been described as the largest credit card data breach ever. Several incidents of actual fraud have already been reportedly linked to the Heartland data breach.

The District Court had dismissed the consolidated amended complaint filed by the financial institutions.  However, on September 3, 2013, the United States Court of Appeals for the Fifth Circuit issued an opinion that reversed the District Court’s dismissal of the plaintiffs’ negligence claims based on New Jersey law.  The Court of Appeals unanimously held that New Jersey’s economic loss rule did not bar the plaintiffs’ tort claims in this case.  The case was remanded back to the District Court for further proceedings.

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