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Target wants breach lawsuits from payment-card companies dismissed

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Target wants breach lawsuits from payment-card companies dismissed

Target Corp. is seeking dismissal of litigation filed against it by a group of five payment-card issuing financial institutions in connection with last year’s massive data breach.

Minneapolis-based Target Corp. argues in court papers filed last week in U.S. District Court in St. Paul, Minnesota, that it is not liable for the financial losses sustained by the financial institutions as a result of the breach because it has no direct relationship with the financial institutions.

The financial instructions have charged Target with negligence, negligent misrepresentation by omission, violation of the Minnesota Plastic Card Security Act, and negligence specifically under this act in Umpqua Bank, Mutual Bank, et al. vs. Target Corporation. It is among the cases involving the breach that have been consolidated in St. Paul.

“Target’s security measures were certified by an independent auditor as compliant with ‘all payment industry requirements’ and included ‘state of the art’ tools that Target invested substantial resources to acquire,” said Target, in quoting the complaint.

“However, plaintiffs… a group of five payment-card issuing banks, credit unions and savings associations… nonetheless assert that Target is to blame for not preventing its intrusion. They claim resulting financial losses that include costs associated with reissuing payment cards to customers and reimbursing fraudulent changes.”

Target argues in the court filing that it is not liable for the losses because the payment card issuers do not have a direct relationship with Target, but rather work through third parties including payment processors and payment card companies.

“The banks’ negligence and negligent misrepresentation claims hinge, among other things, on there being a never-before recognized ‘special relationship’ between merchants, like Target, and payment card issuers, like the banks, that justifies creation and imposition of a novel common-law duty of care,” says the court papers.

“The banks, however, are sophisticated parties that do not even have a direct relationship with Target, much less a special relationship that might suffice to create such a duty in either the negligence or negligent misrepresentation context,” says Target, in seeking the litigation’s dismissal.

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