This morrning, the Maine Supreme Court issued its decision in the matter of In re Hannaford Bros. Co. Customer Data Security Breach Litigation, Docket No. Fed-09-586, on a question certified to the Court by the United States District Court for the District of Maine in a pending action of the same name (Docket No. 08-md-01954). In its decision, the Maine Supreme Court held that under Maine law, in the absence of physical harm or economic loss or identity theft, time and effort alone spent in a reasonable effort to avoid harm do not constitute a cognizable injury for purposes of negligence or implied contract.
The Hannaford case, which is being closely watched by practitioners in the data security law field, resulted from a reported theft of credit card data from a chain of grocery stores. More than two dozen class action lawsuits were brought against the owner of the grocery stores in a variety of state and federal courts; the federal cases were consolidated in the District of Maine. In May of 2009, the federal court dismissed the class action, preserving the case as to only one named plaintiff who asserted she had to pay fraudulent charges (other consumer plaintiffs did not claim they had to pay the fraudulent charges). In that decision, the District Court held under Maine law, consumers whose payment data are stolen can recover against the merchant only if the merchant’s negligence caused a direct loss to the consumer’s account, and other alleged injuries were “collateral consequences” for which the merchant is not liable.
However, upon a motion for reconsideration brought by the plaintiffs, the District Court agreed that Maine law on the issue of whether time and effort alone constitute a cognizable injury was unsettled. Consequently, the District Court certified the following question to the Maine Supreme Court:
In the absence of physical harm or economic loss or identity theft, do time and effort alone, spent in a reasonable effort to avoid or remediate reasonably foreseeable harm, constitute a cognizable injury for which damages may be recovered under Maine law of negligence and/or implied contract?
In this morning’s decision, the Maine Supreme Court answered the certified question in the negative. The Court explained that “the tort of negligence does not compensate individuals for the typical annoyances or inconveniences that are a part of everyday life.” The Court found that the expended time and effort of the plaintiffs are also not compensable as a mitigation effort, because they do not represent a legal injury such as lost earnings. “Unless the plaintiffs’ loss of time reflects a corresponding loss of earnings or earning opportunities,” explained the Court, “it is not a cognizable injury under Maine law of negligence.” The Court also found that the expended time and effort do not constitute a cognizable injury for purposes of breach of implied contract, explaining that “Generally, contract damages are more restricted than compensatory damages for torts.”