1

UNITED STATES DISTRICT COURT

DISTRICT OF MINNESOTA
In re: Target Corporation Customer Data
Security Breach Litigation,
This document relates to all actions.
MDL N. 14-2522 (PAM/JJK)
Status ConIerence: May 14, 2014
Robert Kulla,
PlaintiII,
v.
Gregg W. SteinhaIel, Beth M. Jacob, James
A. Johnson, Solomon D. Trujillo, Anne M.
Mulcahy, Roxanne S. Austin, Calvin
Darden, Mary E. Minnick, Derica W. Rice,
John G. StumpI, Douglas M. Baker, Jr.,
Henrique De Castro, and Kenneth L.
Salazar,
DeIendants,
-and-
Target Corporation,
Nominal DeIendant.
Lead Case No. 14-cv-00203
(PAM/JJK)
(consolidated with 14-cv-00261
(PAM/JJK), 14-cv-00266 (PAM/JJK),
and 14-cv-00551 (PAM/JJK))
DEFENDANTS CASE MANAGEMENT STATEMENT PURSUANT TO
PRETRIAL ORDER NUMBER ONE
Pursuant to Pretrial Order No. 1, DeIendants Target Corporation ('Target),
Target Brands, Inc., Target Corporate Services, Inc. , Target Corporation oI Minnesota,
CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page l of 26
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Target.com,
1
and Gregg W. SteinhaIel, Beth M. Jacob, James A. Johnson, Solomon D.
Trujillo, Anne M. Mulcahy, Roxanne S. Austin, Calvin Darden, Mary E. Minnick, Derica
W. Rice, John G. StumpI, Douglas M. Baker, Jr., Henrique De Castro, and Kenneth L.
Salazar (the 'Individual DeIendants and, collectively with Target, Target Brands, Inc.,
Target Corporate Services, Inc. , Target Corporation oI Minnesota, Target.com, and
AIIiliated Computer Services (ACS), the 'DeIendants)
2
submit the Iollowing case
management statement:
3
I. DESCRIPTION OF THE CASE
A. Overview of the Data Breach Litigation
On December 19, 2013, Target publicly announced that it had detected
unauthorized access to Target payment card data (the 'Data Breach), potentially
involving customers who made credit or debit card purchases in Target`s U.S. stores Irom
November 27 to December 15, 2013. That same day, plaintiIIs began Iiling lawsuits (the
'Cases) against Target in Iederal courts across the country alleging various causes oI
1
Target`s position is that these other Target entities are improperly named deIendants.
2
Target, Target Brands, Inc., Target Corporate Services, Inc. , Target Corporation oI
Minnesota, and Target.com are represented in MDL No. 14-2522 by Faegre Baker
Daniels LLP and Morrison & Foerster LLP. Faegre Baker Daniels also represents Target
and the Individual DeIendants in the Shareholder Cases. ACS is represented by Berens &
Miller, P.A.
3
On April 30, 2014, counsel Ior deIendants met and conIerred telephonically with
plaintiIIs` counsel in various Consumer and Bank Cases to discuss the issues set Iorth in
Pretrial Order No.1. Counsel Ior deIendants suggested that it would be more eIIicient iI
the parties jointly proposed that the Court Iirst appoint lead and liaison counsel and
directed the parties to then meet and conIer and submit a single proposed case
management order Ior the Court`s consideration. PlaintiIIs` counsel were unable to reach
a consensus on that proposal.
CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page 2 of 26
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action arising Irom the Data Breach. As the Court observed in its Pretrial Order No. 1,
the Cases can be grouped into three types: class actions brought by consumer plaintiIIs
(the 'Consumer Cases), class actions brought by Iinancial institution plaintiIIs such as
banks or credit unions (the 'Bank Cases), and the shareholder derivative actions that
have already been consolidated in Civ. No. 14-203 (the 'Shareholder Cases). As oI
May 7, 2014, there are 81 Consumer Cases, 28 Bank Cases, and 4 Shareholder Cases
pending beIore the Court.
4
B. The Consumer Cases
1. Plaintiffs Allegations
5
PlaintiIIs in the 81 Consumer Cases, which were pending in 38 diIIerent Iederal
district courts prior to transIer, are Target guests who allege that they used a debit or
credit card at Target during the November 27 to December 15 time period. The
Consumer Case plaintiIIs generally allege that Target Iailed to take adequate precautions
to prevent the Data Breach and that Target Iailed to promptly notiIy potentially aIIected
guests.
Named plaintiIIs in the 81 Consumer Cases reside in more than two dozen states
and have collectively asserted well over 100 diIIerent causes oI action. These include the
Iollowing:
4
As the Court observed in Pretrial Order No. 1, the Schafer case is potentially both a
Consumer Case and a Bank Case. For purposes oI counting the number oI cases,
deIendants have counted the Schafer case as a Consumer Case.
5
This summary does not purport to be a perIect synthesis oI the allegations contained in
all oI the 81 complaints Iiled in Consumer Cases.
CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page 3 of 26
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State common law causes oI action Ior bailment (9 diIIerent state laws),
breach oI contract (10 diIIerent state laws), breach oI implied contract (11 diIIerent state
laws), breach oI Iiduciary duty (6 diIIerent state laws), breach oI the implied covenant oI
good Iaith and Iair dealing (2 diIIerent state laws), breach oI implied warranty (1 state
law), concealment (2 diIIerent state laws), invasion oI privacy (9 diIIerent state laws),
'money had and received (1 state law), negligence (23 diIIerent state laws), negligence
per se (11 diIIerent state laws), negligent misrepresentation or omission (7 diIIerent state
laws), and unjust enrichment (3 state laws);
State statutory causes oI action Ior violation oI data protection and data
breach notiIication laws (3 diIIerent state laws), unIair or deceptive acts and practices
(UDAP) laws (26 diIIerent state laws); and
Federal statutory causes oI action under the Declaratory Judgment Act, Fair
Credit Reporting Act, Federal Driver`s Privacy Act, and Federal Stored Communications
Act.
PlaintiIIs in more than 50 oI the Consumer Cases seek to represent similarly
deIined nationwide classes. The Consumer Case PlaintiIIs also seek to represent
numerous subclasses on behalI oI individuals who either live in, or shopped at Target
stores, in 27 diIIerent states. The Consumer Case PlaintiIIs seek to recover (i) actual and
compensatory damages in an unspeciIied amount; (ii) various statutory damages and
penalties; (iii) punitive damages; (iv) various types oI injunctive and equitable relieI; (v)
restitution; (vi) disgorgement; and (vii) an award oI attorneys` Iees, costs, and
disbursements.
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2. Targets Defenses
The Iollowing statement oI deIenses identiIies arguments that Target anticipates
making but is not intended to be comprehensive. Target reserves the right to assert
additional deIenses as necessary.
TheConsumer Caseplaintiffslackstanding. The majority oI Consumer Case
plaintiIIs assert only hypothetical Iuture injuries based on their asserted belieI that their
personal or Iinancial inIormation was compromised by the Data Breach. Such
speculative allegations oI possible injury are insuIIicient to satisIy the 'injury in Iact
requirement oI Article III standing. Clapper v. Amnesty International USA, 133 S. Ct.
1138, 1147 (2013) ('we have repeatedly reiterated that threatened injury must be
certainly impending to constitute injury in Iact, and that allegations oI possible Iuture
injury are not suIIicient.) (internal quotation omitted); see also Polanco v. Omnicell,
Inc., No. 13-1417 (NLH/KMW), 2013 WL 6823265, (D.N.J. Dec. 26, 2013) (dismissing
Ior lack oI standing relying on Clapper); In re Barnes & Noble Pin Pad Litig., No. 12-cv-
8617, 2013 WL 4759588 (N.D. Ill. Sept. 3, 2013) (same). Other Consumer Case
plaintiIIs allege injuries involving replacement oI their credit and debit cards or lost time
spent monitoring their Iinances. But plaintiIIs 'cannot manuIacture standing merely by
inIlicting harm on themselves based on their Iears oI hypothetical Iuture harm that is not
certainly impending. Clapper, 133 S.Ct. at 1151. Moreover, Target has already oIIered
one year oI Iree credit monitoring and identity theIt protection to all Target guests who
shopped in U.S. stores. This service includes a complimentary credit report, daily credit
monitoring, identity theIt insurance (except where prohibited by law), and access to
CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page 5 of 26
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personalized assistance Irom a Fraud Resolution Agent.
Theallegationsfail tostateclaims. The Consumer Case plaintiIIs have asserted
more than 100 diIIerent causes oI action, many oI which Iail to state claims under Rule
12(b)(6). Target will not attempt to explain how each oI these claims is deIective here,
but will provide several examples. First, plaintiIIs` Iailure to allege suIIicient Iacts
demonstrating a causal link between the Data Breach and their alleged injuries will be
Iatal to many oI their causes oI action.
6
Second, the same standing deIects alleged above
will also derail many oI plaintiIIs` claims under state UDAP laws, which require a
showing oI monetary harm. See In re Sony Gaming Networks and Customer Data
Security Breach Litig. 2014 WL 223677 at *35-41 ('Sony) (S.D. Cal. Jan. 21, 2014)
(dismissing certain Florida, Michigan, New York, and Texas UDAP claims Ior Iailure to
allege any actual damages). Third, many similarly pleaded claims Ior violation oI the
Fair Credit Reporting Act (FCRA), bailment, breach oI contract, and unjust enrichment
have all been dismissed at the pleading stage in other data breach cases Ior reasons that
will be applicable here. See id. at *54 (dismissing FCRA claims); id. at 974 (dismissing
bailment claims); In re Zappos.com, Inc., Customer Data Security Breach Litig., 2013
WL 4830497, at *3-4 (D. Nev. Sept. 9, 2013) ('Zappos) (dismissing breach oI contract
and unjust enrichment claims).
Plaintiffswill beunabletocertifyaclass. As in prior data breach cases, the
6
Even iI plaintiIIs survive a motion to dismiss directed at this issue, Target anticipates
that plaintiIIs will be unable to produce evidence demonstrating causation, rendering their
claims susceptible to summary judgment.
CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page 6 of 26
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Consumer Case plaintiIIs will be unable to certiIy a class. Among other things,
individualized choice-oI-law issues
7
will preclude certiIication oI a nationwide class
action, see Mazza v. Am. Honda Motor Co., 666 F.3d 581, 596 (9th Cir. 2012) (reIusing
to certiIy nationwide consumer class action due to material diIIerence in state consumer
protection laws), and individualized Iactual issues will predominate concerning
causation, damages, reliance, and the named plaintiIIs` purported understanding and
assumptions about Target`s data security. See, e.g., Hannaford, 293 F.R.D. 21 (D. Maine
Mar. 20, 2013) (denying motion Ior class certiIication because individualized issues
concerning damages predominated); In re TJX Companies Retail Sec. Breach Litig., 246
F.R.D. 389, 392 (D. Mass. Nov. 29, 2007) ('TJX) (denying motion Ior class certiIication
because individualized issues concerning causation and reliance predominated).
Individualized issues concerning plaintiIIs` alleged injuries will also prevent plaintiIIs
Irom satisIying the commonality requirement oI Rule 23(a)(2) in light oI the Supreme
Court`s clariIication oI the relevant standard in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct.
7
As outlined above, the Consumer Case plaintiIIs hail Irom dozens oI diIIerent states and
allege numerous claims under diIIerent state laws. Here, as in other recent data breach
cases, see, e.g., In re Sony Gaming Networks & Customer Data Sec. Breach Litig., 2014
U.S. Dist. LEXIS 7353, *75 (S.D. Cal. Jan. 21, 2014), litigation will entail extensive
choice-oI-law analysis and interpretation oI diIIerent state laws. Eighth Circuit law will
apply to procedural issues and to matters oI Iederal substantive law, including Article III
standing. See, e.g., In re Temporomandibular Joint (TMJ) Implants Products Liab. Litig.,
97 F.3d 1050, 1055 (8th Cir. 1996) ('When analyzing questions oI Iederal law, the
transIeree court should apply the law oI the circuit in which it is located.); In re
Medtronic, Inc., Implantable Defibrillators Litig., 465 F. Supp. 2d 886, 892 (D. Minn.
2006). When addressing matters oI substantive state law, however, the Court will have to
apply the state law that would have applied to the individual cases had they not been
transIerred, including applicable state choice-oI-law rules. See In re TMJ Implants
Products Liab. Litig., 97 F.3d at 1055.
CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page 7 of 26
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2541, 2551 (2011).
3. Affiliated Computer Services
[Related to Reynosov. Target andAffiliatedComputer Services,
I nc., No. 14-cv-346 (D. Minn.)]
ACS oIIers a debit card service in various states. The claims alleged in the
Reynoso matter relate to a Consumer Case action against Target, described supra, and
two claims asserted speciIically against ACS by a subclass oI Illinois residents who use
the state beneIit debit card, the EPPICard MasterCard ('EPPICard). The Illinois
subclass alleges that ACS acted in violation oI Illinois` Consumer Fraud and Deceptive
Business Practices Act and Negligence.
ACS will raise certain deIenses to those claims, including, without limitation, that
the subclass oI such as plaintiIIs Iailed to state a claim upon which relieI can be granted,
Iailed to mitigate their damages, and waived any claims.
ACS also adopts the Target DeIendants` deIenses identiIied supra. In addition,
ACS reserves the right to assert additional deIenses or claims as necessary.
4. Procedural Status
Statusof Discovery. No discovery has occurred in any oI the Consumer Cases
apart Irom the service oI several third-party subpoenas in the consolidated Northern
District oI Illinois actions. Those subpoenas were issued Ior preservation purposes, and
the return oI those subpoenas was immediately stayed by Judge Gettleman. In the
Pietanza case, originally pending in the Eastern District oI New York, Judge Cogan
directed the parties to exchange document requests and interrogatories on April 18, 2014.
Target and the Pietanza plaintiIIs asked Judge Cogan to adjourn this deadline in light oI
CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page 8 of 26
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the impeding transIer to the District oI Minnesota, a request that was not ruled on prior to
transIer. Neither Target nor the Pietanza plaintiIIs have exchanged discovery requests
because, per Pretrial Order No. 1, all discovery is currently stayed. In addition to these
matters, a number oI Consumer Case plaintiIIs also unsuccessIully sought preservation
orders,
8
orders permitting expedited discovery, or discovery Irom third parties prior to
transIer.
Other MotionPractice. Consumer Case plaintiIIs in the consolidated Northern
District oI Illinois actions also moved Ior a protective order regarding Target`s customer
communications (denied); a preliminary injunction regarding credit monitoring (denied);
to Iile a consolidated complaint (granted); to liIt the stay in order to Iile a second
amended complaint (denied); and several placeholder motions Ior class certiIication,
pursuant to Damasco v. Clearwire Corp., 662 F.3d 891 (7th Cir. 2011).
9
The plaintiII in
the Rippy case in the Southern District oI Illinois unsuccessIully moved to remand her
case back to the Circuit Court oI Clinton, County, Illinois, Ior lack oI Iederal subject
matter jurisdiction.
PartiesOpposingTransfer tothisDistrict. On April 4, 2014, the Judicial Panel
8
PlaintiIIs in the Due Fratelli obtained a preservation order Irom the Circuit Court oI
Cook County, Illinois, on December 27, 2013, prior to the removal oI that case to the
Northern District oI Illinois. That order expired, per its own terms, on January 6, 2014.
Judge Gettleman in the Northern District oI Illinois denied plaintiIIs` attempt to reimpose
a similar order Iollowing removal.
9
PlaintiIIs withdrew their placeholder motions Ior class certiIication based on Target`s
stipulation that it would not make any oIIer oI judgment to the named plaintiIIs without
giving Iive days` written notice to counsel in advance so that plaintiIIs could re-Iile their
motions.
CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page 9 of 26
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on Multidistrict Litigation (JPML) issued a Conditional TransIer Order (CTO-1)
concerning a number oI the Consumer and Bank Cases, indicating that those cases would
be transIerred to this district iI the parties did not object within seven days. Visa Inc. and
MasterCard Inc., co-deIendants in one oI these cases, Christensen v. Target Corp., N.
13 01136 (D. Utah), have opposed transIer. Visa and MasterCard Iiled a joint motion
with the JPML on April 23, 2014, requesting that the claims against them be severed and
allowed to remain in the District oI Utah or, in the alternative, that the JPML vacate its
Conditional TransIer Order and allow the entire Christensen case to remain in the District
oI Utah. Responses to that motion are due May 15, 2014.
5. Related State-Court Litigation
Apart Irom several small claims court cases, there are not currently any related
state court cases involving consumer plaintiIIs.
6. Predictions as to the Total Number of Cases
There are currently 81 Consumer Cases. Consumer Cases were initially being
Iiled at a rate oI one or two every day. In the past month, however, that pace has slowed
to approximately one a week. Based on that rate, it is possible that an additional 5-10
Consumer Cases may be Iiled.
C. The Bank Cases
1. Plaintiffs Allegations
PlaintiIIs in the Bank Cases are banks and credit unions who allege some Iorm oI
injury based on the theIt oI their customers` inIormation as part oI the Data Breach. The
Bank Case plaintiIIs generally allege that the theIt oI their customers` credit and debit
CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page l0 of 26
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card inIormation has harmed them by (i) Iorcing them to reIund Iraudulent charges to
their customers` accounts that may be connected to stolen card inIormation; (ii) causing
them to close and re-open checking and savings accounts on behalI oI customers who
believe that their card inIormation was stolen; and (iii) cancelling and re-issuing credit
and debit cards to customers who believe that their card inIormation was stolen. Target
has no contractual relationship with most, iI not all, oI the Bank Case plaintiIIs.
Named plaintiIIs in the 27 Bank Cases have collectively asserted more than 30
diIIerent causes oI action. These include the Iollowing:
State common law causes oI action Ior bailment (1 state law), breach oI
implied contract (3 diIIerent state laws), breach oI implied contract (4 diIIerent state
laws), conversion (1 state law), negligence (8 diIIerent state laws), negligence per se (4
diIIerent state laws), negligent misrepresentation or omission (4 diIIerent state laws),
negligent perIormance oI services (1 state law), and unjust enrichment (1 state law);
State statutory causes oI action Ior violation oI UDAP laws (7 diIIerent
state laws); and
Federal statutory causes oI action under the Gramm-Leach-Bliley Act and
Racketeer InIluenced and Corrupt Organizations (RICO) Act.
PlaintiIIs in 23 oI the Bank Cases seek to represent nationwide classes oI banks
and other Iinancial institutions. The Bank Case plaintiIIs also seek to represent various
subclasses oI Iinancial institutions located in seven states. The Bank Case plaintiIIs seek
to recover (i) actual and compensatory damages in an unspeciIied amount; (ii) various
statutory damages and penalties; (iii) speciIic perIormance, restitution, or rescission; (iv)
CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page ll of 26
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punitive damages and treble damages pursuant to the RICO Act; (v) various types oI
injunctive and equitable relieI; (vi) restitution; (vii) disgorgement; and (viii) an award oI
attorneys` Iees, costs, and disbursements.
2. Targets Defenses
The Iollowing statement oI deIenses identiIies arguments that Target anticipates
making but is not intended to be comprehensive. Target reserves the right to assert
additional deIenses as necessary.
Theallegationsfail tostateclaims. Like the Consumer Case plaintiIIs, the claims
asserted by the Bank Case plaintiIIs contain a number oI pleading deIects. As in the TJX
case, breach oI contract claims asserted by the Bank Case plaintiIIs should be dismissed
Ior lack oI privity. See TJX, 524 F. Supp. 2d 83, 88 (D. Mass. 2007). Claims Ior
negligence should be dismissed under the economic loss doctrine, and claims Ior unjust
enrichment should be dismissed due to inadequate allegations oI wrongIulness or
unconscionability. See Sovereign Bank v. BJs Wholesale Club, Inc., 533 F.3d 162, 179
(3rd Cir. 2007) (upholding dismissal oI negligence and unjust enrichment claims); TJX,
524 F. Supp. 2d at 91 (dismissing negligence claims).
Plaintiffswill beunabletocertifyaclass. As in the TJX case, the Bank Case
plaintiIIs will be unable to certiIy a class because individualized issues will predominate
with regard to reliance (as to misrepresentation claims) and causation. As the court
explained in TJX, '|p|roving the element oI reliance will necessarily involve individual
questions oI Iact, and the issuing banks will be unable to invoke a presumption oI
reliance on the part oI class members. TJX, 246 F.R.D. at 392. The TJX court
CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page l2 of 26
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elaborated that '|t|he problem Ior the plaintiIIs is that the liability oI |deIendants| will not
hinge on whether the data breach caused Iraud-related losses; liability will depend on
whether the breach caused a particular plaintiII`s loss. Given that there are a myriad oI
ways in which Iraud losses can occur . . . evidence oI general causation will not suIIice . .
. . Instead, causation will have to be determined loss-by-loss, bank-by-bank, Iurther
rendering certiIication inappropriate. Id. at 396-97. Variations in their alleged injuries
will also prevent the Bank Case plaintiIIs Irom showing the necessary commonality in
light oI Dukes, 131 S. Ct. at 2551. Like the Consumer Cases, the Bank Cases also allege
violations oI numerous state laws that will make certiIication oI a nationwide class
inappropriate. See Mazza, 666 F.3d at 596.
3. Procedural Status
No discovery has occurred in any oI the Bank Cases.
4. Related State-Court Litigation
There are not any related state court cases involving bank or other Iinancial
institution plaintiIIs.
5. Predictions as to the Total Number of Cases
There are currently 28 Bank Cases. The rate at which new Bank Cases are being
Iiled has increased in the past two months but that pace is still only about one new case a
week. Based on that rate, it is possible that an additional 5-10 Bank Cases may be Iiled.
D. The Shareholder Cases
1. Plaintiffs Allegations
Four shareholders oI Target have Iiled these derivative actions purporting to assert
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claims belonging to Target. DeIendants in the actions are (i) the Individual DeIendants
(Target`s 12 directors, 11 oI whom are independent outside directors, Target`s ChieI
Financial OIIicer, and Target`s Iormer ChieI InIormation OIIicer); and (ii) Target, as a
nominal DeIendant.
The Shareholder Case plaintiIIs allege that the Individual DeIendants Iailed to
properly oversee Target, Iailed to prevent the Data Breach, and Iailed to cause Target to
announce the Data Breach as quickly as Target should have. Shareholder Case plaintiIIs
allege that the Individual DeIendants` Iailures have caused or will cause injury to Target.
Shareholder Case plaintiIIs assert claims against the Individual DeIendants Ior breach oI
Iiduciary duty, waste oI corporate assets, gross mismanagement, and abuse oI control.
Shareholder Case plaintiIIs seek (i) damages in an unspeciIied amount, (ii) unspeciIied
improvements to Target`s corporate governance and internal procedures, (iii) restitution
to Target oI the Individual DeIendants` compensation, and (iv) an award oI attorneys`
Iees, costs, and disbursements.
2. Individual Defendants Defenses
The Iollowing statement oI deIenses identiIies arguments that DeIendants
anticipate making but is not intended to be comprehensive. DeIendants reserve the right
to assert additional deIenses as necessary.
TheactionsshouldbedismissedduetoPlaintiffs failuretomakepre-suit
demand. Because the claims (iI they exist) belong to Target, the Shareholder Case
plaintiIIs must Iirst plead via particularized Iacts that they made a demand Ior action
upon Target`s board oI directors beIore Iiling suit, or that their Iailure to make a demand
CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page l4 of 26
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should be excused because demand would have been Iutile. See Fed. R. Civ. P. 23.1.
Shareholder Case plaintiIIs have Iailed to meet these pleading requirements and have
Iailed to satisIy Minnesota law (which governs because Target is a Minnesota
corporation). See Winter v. Farmers Educ. & Co-operative Union, 107 N.W.2d 226, 234
(Minn. 1961) (demand is required unless a shareholder shows that 'it is plain Irom the
circumstances that it would be Iutile). Shareholder Case plaintiIIs make only generic,
conclusory allegations oI demand Iutility. In addition, even iI one assumed that none oI
Target`s 12 directors could Iairly consider a demand, a demand would not be Iutile
because the Minnesota Business Corporation Act ('MBCA) allows corporations
involved in derivative actions to appoint a special litigation committee comprised oI
independent outsiders to 'consider legal rights or remedies oI the corporation and
whether those rights and remedies should be pursued. Minn. Stat. 302A.241, subd. 1.
Because demand would not be Iutile, the actions should be dismissed due to plaintiIIs`
Iailure to make a pre-suit demand.
Thedirector defendantsareshieldedfromliabilitybyTargetsAmendedand
RestatedArticlesof I ncorporation. Consistent with the MBCA, Target`s Amended and
Restated Articles oI Incorporation provide that '|n|o director . . . shall be personally
liable to |Target| Ior monetary damages Ior breach oI Iiduciary duty as a director, except
with respect to breaches oI a director`s duty oI loyalty, or Ior acts or omission not in good
Iaith or that involve intentional misconduct or a knowing violation oI law. See Art. IV
and Minn. Stat. 302A.251, subd. 4. All oI the conduct alleged by the Shareholder Case
plaintiIIs, even iI true, Ialls within the exculpation provision oI Article IV. ThereIore, the
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director deIendants cannot be held liable Ior damages.
Theallegationsfail tostateclaims. The Individual DeIendants were required to
discharge their duties in good Iaith, in a manner that they reasonably believed to be in
Target`s best interests, and with the care an ordinarily prudent person in a like position
would exercise under similar circumstances. See Minn. Stat. 302A.251, subd. 1. None
oI the Iacts alleged by the Shareholder Case plaintiIIs (as opposed to Shareholder Case
plaintiIIs` conclusory allegations, which must be ignored) state plausible claims that the
Individual DeIendants Iailed to discharge these duties. One cannot assume or inIer that
the Individual DeIendants breached their duties simply because the Data Breach occurred
on their watch.
3. Procedural Status
All deIendants have been served in all oI the Shareholder Cases, and these cases
have been consolidated. No other activities have occurred.
4. Related State-Court Litigation
There is one shareholder derivative action Iiled against deIendants in Hennepin
County District Court, and entitled Beth Koeneke v. Roxanne S. Austin, et al., No. 27-cv-
14-1832 (Judge Laurie J. Miller, presiding). The complaint in the Koeneke action makes
nearly identical allegations, raises identical claims, and seeks identical relieI, as in the
Shareholder Cases. On April 11, 2014, deIendants Iiled a motion to stay the Koeneke
action in Iavor oI proceedings in the Shareholder Cases in this Court, or in the alternative,
to dismiss the Koeneke action. The hearing on DeIendants` motion is set Ior June 12,
2014. Pursuant to rules applicable in Minnesota state court, the state court will rule on
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the motion within 90 days oI the hearing date. DeIendants anticipate that any discovery
or other proceedings in the Koeneke action will be deIerred until aIter Minnesota state
court has decided deIendants` pending motion.
5. Predictions as to the Total Number of Cases
It is possible that other Target shareholders will Iile 'tag-along derivative actions
in either this Court, or in the Hennepin County District Court. However, deIendants have
no inIormation about whether such suits actually might be Iiled, where they might be
Iiled, or when they might be Iiled. Target has received a shareholder demand directed to
its Board oI Directors that the Board is expected to consider at an upcoming meeting.
The demand covers the same matters as the complaints in the Shareholder Cases.
II. LEAD AND LIAISON COUNSEL
A. Defendants Views as to Appropriate Lead and Liaison Counsel
DeIendants take no position as to which plaintiIIs` counsel should be designated as
interim lead or liaison counsel Ior the consolidated proceedings as a whole or Ior the
Consumer Cases and Bank Cases. PlaintiIIs in the Shareholder Cases have conIerred and
reached agreement on Lead Counsel and Liaison Counsel Ior those actions. DeIendants
are amenable to the leadership structure agreed to by the Shareholder Case plaintiIIs.
DeIendants suggest that the Court`s decision as to Lead Counsel and Liaison
Counsel should be made as early as possible so that the parties can make Iurther progress
with regard to the negotiation oI various procedural issues. To that end, DeIendants
propose that within 14 days aIter the Court appoints Lead Counsel and Liaison Counsel
in the MDL, the parties should meet and conIer and submit a single, joint proposed case
CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page l7 of 26
18
management order in the MDL Ior the Court`s consideration.
B. Guidelines Concerning Plaintiffs Counsel Timekeeping
Concurrently with this Iiling, DeIendants are submitting a proposed methodology
containing certain guidelines to monitor and document attorneys` Iees and expenses. The
purpose oI these proposed guidelines is to limit duplicative and excessive litigation costs
and expenses that may ultimately be sought in connection with any settlements or
judgments relating to this action. The guidelines will also reduce the likelihood oI later
disputes concerning whether plaintiIIs` counsel have adequately documented their time
spent working on the Cases.
Imposing guidelines on attorney timekeeping at the outset oI the case is a common
practice in large multidistrict litigations, see, e.g., In re HardiePlank Fiber Cement Siding
Litig., MDL File No. 12-md-02359-MJD-LIB (D. Minn. Oct. 3, 2012) (Davis, J.);
Guidelines, ECF No. 417, In Re Idevice Address Book Litig., No. 3:13-cv-00453-JST
(N.D. Cal. Nov. 22, 2013), including other data breach MDL proceedings. See Case
Management Order No. 1, ECF No. 21, In re Heartland Payment Systems, Inc. Data
Security Breach Litig., No. H-09-MD-02046 (S.D. Tex. Aug. 28, 2009); Further
Procedural Order, ECF No. 22, In re Hannaford Bros. Co. Customer Data Security
Breach Litigation, No. 2:08-MD-1954 (D. Me. July 25, 2008). Indeed, DeIendants`
proposal is largely based on similar guidelines that were recently entered in the In re
HardiePlank MDL currently pending in this District. These guidelines are also
consistent with the Court`s prior instruction that counsel provide the Court with monthly
reports on the amount oI time billed to the Cases. (Pretrial Order No. 1, ECF No. 4 at 5.)
CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page l8 of 26
19
III. PLEADINGS
A. Service Status
Consumer Cases. PlaintiIIs have served Target with a summons (or Target has
waived service) in all oI the Consumer Cases except Ior the Iollowing: Alvarez v. Target,
No. 14-CV-129 (N.D. Cal.); Bess v. Target, N. 14-CV-262 (D. S.C.); Crawford v.
Target, No. 14-CV-2071 (W.D. Tenn.); Ellison v. Target, No. 14-CV-209 (E.D. Penn.);
Guzman v. Target, No. 13-CV-5953 (N.D. Cal.); Kirschenstein v. Target, N. 14-CV-
1450 (C.D. Cal.); Klein v. Target, No. 13-CV-1974 (C.D. Cal.); Marciniszyn v. Target,
No. 14-CV-113 (D. Conn; removal Irom Conn. Superior Court); and Switzer v. Target,
N. 13-CV-1319 (S.D. I.).
PlaintiIIs in Reynoso v. Target and Affiliated Computer Services, Inc., No. 14-cv-
346 (D. Minn.) have served AIIiliated Computer Services.
BankCases. PlaintiIIs have served Target with a summons (or Target has waived
service) in all oI the Bank Cases except Ior the Iollowing: Animas Credit Union v.
Target, N. 14-CV-292 (D. N.M.); Commercial Bancshares, Inc. v. Target, N. 14-CV-
4012 (W.D. Ark.); First NBC Bank v. Target, No. 14-CV-1012 (E.D. La.); and North
Districts Community Credit Union v. Target, No. 14-CV-175 (W.D. Penn.).
Shareholder Cases. All deIendants have been served in all oI the Shareholder
Cases.
B. Waiver of Service
To eliminate disputes over service oI process and reduce the expense oI such
service, DeIendants agree to waive service oI process Ior Cases Iiled in Iederal court,
CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page l9 of 26
20
subject to the provisions oI Fed. R. Civ. P. 4(d). The notice required by that rule should
be provided to counsel Ior the DeIendants.
C. Consolidated Complaints
In light oI the above waiver, deIendants do not anticipate any disputes concerning
service and believe that the parties should move promptly to consolidate the cases.
Given the similarity oI claims and allegations asserted by plaintiIIs in the various
Cases, it is appropriate to combine those allegations into three consolidated complaints,
one Ior the Consumer Cases,
10
one Ior the Bank Cases, and one Ior the Shareholder
Cases.
11
PlaintiIIs should Iile these three consolidated complaints within 30 days aIter
the Court`s appointment oI Consolidated Cases Lead Counsel and Consumer, Bank, and
Shareholder Cases Lead Counsel.
D. Deadline to Answer or Otherwise Respond
DeIendants will answer or otherwise respond to each oI the three consolidated
complaints within 45 days aIter plaintiIIs Iile each Consolidated Complaint.
IV. PROPOSED MOTION SCHEDULE
A. Motions to Dismiss
DeIendants intend to Iile motions to dismiss the consolidated complaints and
10
Target proposes that the consumer plaintiIIs in Schafer should consolidate their claims
with the other Consumer Case plaintiIIs and that the Iinancial institution plaintiIIs in
Schafer should consolidate their claims with the other Bank Case plaintiIIs.
11
The Shareholder Case plaintiIIs have already agreed that Iiling a consolidated
complaint is appropriate. See Stipulation Regarding Consolidation oI Related Actions,
Appointment oI Lead Counsel, and Related Issues, ECF No. 32 14, Kulla v. Target
Corp. et al., No. 14-cv-00203-PAM-JJK (Apr. 3, 2014).
CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page 20 of 26
21
propose the Iollowing brieIing schedule:
PlaintiIIs` oppositions to deIendants` motions to dismiss should be due
within 30 days aIter such motions are Iiled.
DeIendants` reply brieIs will be due within 21 days aIter plaintiIIs`
opposition brieIs are Iiled.
Prior to Iiling their motions to dismiss, plaintiIIs and deIendants should jointly
contact the Court to reserve a mutually convenient hearing date to occur as soon as
practicable Iollowing the deadline Ior deIendants Iiling any reply memorandum.
In the event that any oI deIendants` motions to dismiss are denied, deIendants will
Iile an answer to the relevant consolidated complaint within 30 days aIter denial oI their
motion.
B. Motions to Amend the Pleadings or Add Parties
All motions which seek to amend the pleadings or add parties in the Consumer
Cases should be served within 60 days aIter the date that DeIendants serve an answer in
the Consumer Cases. All motions which seek to amend the pleadings or add parties in the
Bank Cases should be served within 60 days aIter the date that Target serves an answer in
the Bank Cases. All motions which seek to amend the pleadings or add parties in the
Shareholder Cases should be served within 60 days aIter the date that deIendants serve an
answer in the Shareholder Cases
C. Other Motions
The parties should discuss the need Ior other dispositive and non-dispositive
motions at the Rule 26(I) meet and conIer conIerence reIerred to in Section V.C and
CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page 2l of 26
22
propose deadlines Ior such motions Iollowing that conIerence.
V. DISCOVERY
A. Discovery Coordination
In order to prevent duplication oI eIIort, discovery should proceed on the same
general schedule in the Consumer Cases, Bank Cases, and Shareholder Cases.
Consolidated Cases Lead Counsel and Consumer, Bank, and Shareholder Cases Lead
Counsel should coordinate their discovery eIIorts and take reasonable steps to avoid
making duplicate demands Ior inIormation on the deIendants.
B. Discovery Stayed until Resolution of Motions to Dismiss
All discovery and other pre-trial proceedings should remain stayed pending the
Court`s resolution oI deIendants` motions to dismiss.
C. Parties to Confer Regarding Discovery Following Resolution of
Motions to Dismiss
PlaintiIIs and deIendants should conduct a Rule 26(I) conIerence with regard to
discovery within 14 days oI the date that deIendants Iile their answers and should jointly
contact the Court to reserve a mutually convenient Rule 16 conIerence date to occur as
soon as practicable thereaIter.
It is appropriate to phase discovery with respect to the Consumer and Bank Cases
so that the Iirst stage oI discovery would be limited to only those issues necessary to
determine whether any oI the Cases should proceed as a class action. As such, discovery
in this case should be phased into a Class CertiIication Discovery Phase and a Merits
Discovery Phase. Discovery in the Class CertiIication Discovery Phase should be limited
only to discovery concerning transactions between the named plaintiIIs and Target (in the
CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page 22 of 26
23
Consumer Cases) and any other discovery necessary to brieI class certiIication.
Discovery during the Merits Discovery Phasewhich will only occur in the event that
the Court certiIies a class or classesshould be directed to issues relevant to the actual
claims and deIenses oI the parties. All discovery oI third parties should remain stayed
until the Merits Discovery Phase. The parties` Rule 26(I) conIerence and subsequent
discovery plan should address the phasing oI discovery and set Iorth proposed schedules
Ior both discovery phases, among other things.
D. E-Discovery
1. Preservation of Electronically Stored Information
Within 30 days aIter appointment oI Consolidated Cases Lead Counsel and
Consumer, Bank, and Shareholder Cases Lead Counsel, the parties should Iile a joint
proposed pretrial order documenting their agreement as to what reasonably accessible
electronically stored inIormation (ESI) should be preserved. Given the size and
complexity oI the litigation, this order should address reasonable limits on: (1) the time
period Ior which ESI will be preserved; (2) the number and types oI custodians per party
Ior whom ESI will be preserved; and (3) the type oI ESI that the parties believe should be
preserved. The parties should also identiIy any data sources that are not reasonably
accessible and that the parties agree do not need to be preserved.
In determining what ESI to preserve, the parties should apply the proportionality
standard set Iorth in Fed. R. Civ. P. 26(b)(2)(C) and 26(g)(1)(B)(iii). The parties should
strive to deIine a scope oI preservation that is proportionate and reasonable and not
disproportionately broad, expensive, or burdensome.
CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page 23 of 26
24
2. Meet and Confer Regarding Document Search and Production
Formats
At the Rule 26(I) meet and conIer conIerence reIerred to in Section V.C, the
parties should discuss and attempt to reach agreement on methods, such as the use oI
keyword searches, to be used to identiIy discoverable ESI and Iilter out ESI that is not
subject to discovery, as well as their preIerred Iormat(s) Ior production oI ESI. All ESI
should be produced in a Iormat that preserves their ability to be searched. The parties
should not degrade the searchability oI documents as part oI the document production
process.
3. Document Production and Repositories
DeIendants will produce documents to Consolidated Cases Lead Counsel (or his
or her designee) Ior dissemination to other plaintiIIs.
PlaintiIIs may, iI they so choose, maintain documents disclosed and produced by
deIendants in a document repository to be established by Consolidated Cases Lead
Counsel.
VI. COORDINATION WITH STATE COURT LITIGATION
There are no related consumer or bank cases pending in state court at this time.
Target will notiIy the Court within a reasonable time iI any such cases are Iiled in state
court that require coordination with this proceeding. Target will also notiIy the court oI
any ruling on its motion to dismiss in the Koeneke action currently pending in Hennepin
County District Court.
VII. SETTLEMENT
Prior to the JPML`s transIer order, a number oI plaintiIIs, via counsel, approached
CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page 24 of 26
25
Target`s counsel about early settlement discussions. Target advised these plaintiIIs that it
was open to such discussions but that those discussions should occur aIter the JPML had
determined where the cases should be consolidated and the MDL court had appointed
lead counsel. Target remains open to discussion oI settlement and anticipates exploring
the possibility oI early resolution with lead counsel between now and a ruling on Target`s
Iorthcoming motions to dismiss.
VIII. TRIAL DATES.
In light oI deIendants` anticipated motions to dismiss it is premature to set dates
Ior the trial(s) oI those Cases that would be tried in this District.
Date: May 7, 2014 s/Wendy J. Wildung
Wendy J. Wildung, MN 117055
Michael A. Ponto, MN 203944
FAEGRE BAKER DANIELS LLP
2200 Wells Fargo Center
90 South Seventh Street
Minneapolis, MN 55402
(612) 766-7000
(612) 766-1600
wendy.wildungFaegreBD.com
michael.pontoFaegreBD.com
Local Counsel for Defendants Target
Corporation, Target Brands, Inc., Target
Corporate Services, Inc., Target
Corporation of Minnesota, and Target.com
in MDL No. 14-2522; Counsel for
Defendants in Consolidated Proceeding
No. 14-cv-203.
Date: May 7, 2014 s/Rebekah KauIman
Harold J. McElhinny, CA 66781*
Jack W. Londen, CA 85776*
Michael J. Agoglia, CA 154810*
Rebekah KauIman, CA 213222*
CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page 25 of 26
26
MORRISON FOERSTER LLP
425 Market Street
San Francisco, CaliIornia 94105-2482
(415) 268-7000
(415) 268-7522
HMcElhinnymoIo.com
JLondenmoIo.com
MAgogliamoIo.com
RKauImanmoIo.com
David F. McDowell, CA 125806*
MORRISON FOERSTER LLP
707 Wilshire Boulevard
Los Angeles, CaliIornia 90017-3543
(213) 892-5200
(213) 892-5454
DMcDowellmoIo.com
* Admitted pro hac vice per Pretrial Order
N. 1
Counsel for Defendants Target
Corporation, Target Brands, Inc., Target
Corporate Services, Inc. , Target
Corporation of Minnesota, and Target.com
in MDL No. 14-2522.
Date: May 7, 2014
s/Barbara P. Berens
Barbara P. Berens, 209788
Justi Rae Miller, 387330
BERENS MILLER, P.A.
80 South Eighth Street, Suite 3720
Minneapolis, MN 55402
(612) 349-6171
(612) 349-6416 (Facsimile)
bberensberensmiller.com
jmillerberensmiller.com
Attorneys for Defendant Affiliated
Computer Services, Inc.
sI-3406664
CASE 0:l4 cv 00203 PAM JJK Document 38 Filed 05/08/l4 Page 26 of 26