Joan Longenecker-Wells v. Benecard Services Inc
658 F. App'x 659
3rd Cir.2016Background
- Benecard, a prescription benefit administrator, collected employees’ and customers’ personal data (names, DOB, addresses, SSNs, W-2s) as a condition of employment or service.
- In early 2015 unknown third parties breached Benecard’s systems and obtained plaintiffs’ confidential information.
- Attackers used stolen data to file fraudulent tax returns and obtain IRS refunds, causing plaintiffs economic harm.
- Plaintiffs filed a putative class action under Pennsylvania law asserting negligence and breach of implied contract claims.
- The District Court dismissed both claims under Federal Rule of Civil Procedure 12(b)(6); plaintiffs appealed.
- The Third Circuit affirmed, concluding the negligence claim is barred by Pennsylvania’s economic loss doctrine and the implied-contract claim was inadequately pleaded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether negligence claim barred by Pennsylvania’s economic loss doctrine | Economic-loss doctrine should be limited to contract-based duties; negligence based on common-law/public-policy duty should be allowed | Doctrine bars negligence claims that seek only purely economic losses without physical or property damage | Affirmed: economic loss doctrine bars the negligence claim here (purely economic tax-refund losses) |
| Whether plaintiffs adequately pleaded a breach of implied contract to safeguard data | Implied contract arose when plaintiffs entrusted personal information as a condition of employment/service | Allegations are conclusory; no specific policies, promises, or conduct pleaded to imply a contractual promise to protect data | Affirmed: implied-contract claim fails under Rule 12(b)(6) for lack of factual enhancement supporting an implied promise |
Key Cases Cited
- Bilt-Rite Contractors, Inc. v. The Architectural Studio, 866 A.2d 270 (Pa. 2005) (permits recovery for pure economic loss in negligent-misrepresentation cases under Restatement § 552)
- Excavation Techs., Inc. v. Columbia Gas Co. of Pa., 985 A.2d 840 (Pa. 2009) (describes economic loss doctrine and its limits)
- Sovereign Bank v. BJ’s Wholesale Club, 533 F.3d 162 (3d Cir. 2008) (interprets Bilt-Rite and rejects narrowing the economic loss doctrine to contract-only duties)
- Azur v. Chase Bank, 601 F.3d 212 (3d Cir. 2010) (applies economic loss doctrine to bar negligence claim despite lack of contract remedy)
- Brown v. Card Serv. Ctr., 464 F.3d 450 (3d Cir. 2006) (standard: plenary review of Rule 12(b)(6) dismissal)
- Enslin v. Coca-Cola Co., 136 F. Supp. 3d 654 (E.D. Pa. 2015) (distinguishes a viable implied-contract claim based on pleaded privacy policies and security practices)