Katz v. Pershing, LLC
2012 U.S. App. LEXIS 4024
| 1st Cir. | 2012Background
- Katz sues Pershing LLC in a putative MA class action alleging mishandling of nonpublic personal information via NetExchange Pro; NPC uses Pershing as clearing broker; NPC customers, including Katz, received a disclosure statement about the data-sharing agreement.
- NetExchange Pro permits NPC to share customers’ nonpublic information with authorized end-users; Katz argues data vulnerabilities and inadequate monitoring/encryption.
- District court dismissed for lack of Article III and statutory standing; no class certification occurred; this court reviews standing de novo.
- Choice-of-law: New York law governs contract claims under the agreement; Massachusetts law governs consumer-protection claims; CAFA jurisdiction is at issue for diversity.
- Court analyzes both constitutional standing and statutory standing for Massachusetts consumer protection claims; focuses on whether Katz has injury-in-fact, causation, and redressability.
- Overall holding: Katz’s claims fail for lack of Article III standing and failure to state cognizable contract or consumer-protection claims; district court’s dismissal affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Katz has Article III standing to sue on any claim | Katz asserts contractual and privacy-related injuries. | Pershing argues no Article III injury or causation. | Katz lacks Article III standing for all claims. |
| Whether Katz has standing to pursue contract claims | She is or should be an intended beneficiary under NY law. | Agreement explicitly disclaims third-party beneficiary status. | No third-party beneficiary status; no actionable contract claim. |
| Whether Katz can bring 93A/93H privacy claims in federal court | Data-security misrepresentations and failures injure her; private 93H action may be viable. | Private action under 93H not clearly shown to be available; need standing. | Prima facie standing not shown; claims fail for lack of injury in fact. |
| Whether Katz has standing based on increased risk of data breach | Failure to notify and breach standards create risk harming Katz. | Risk without actual breach is too speculative for standing. | Injury-in-fact not sufficiently alleged; standing denied. |
| Whether the disclosure statement could revive or modify contractual rights | Disclosure could negate contract disclaimer. | Unsigned disclosure cannot alter written contract terms. | Disclosure statement cannot negate express third-party beneficiary disclaimer. |
Key Cases Cited
- Adams v. Watson, 10 F.3d 915 (1st Cir. 1993) (small economic loss may confer standing but causation required)
- Ashcroft v. Iqbal, 129 S. Ct. 1937 (U.S. 2009) (pleading must be plausible; mere possibilities insufficient)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (U.S. 2007) (pleading standard requires plausible claims, not mere speculation)
- Defenders of Wildlife v. Norton, 504 U.S. 555 (U.S. 1992) (standing requires injury, causation, redressability; prudential limits apply)
- In re Pharm. Indus. Average Wholesale Price Litig., 582 F.3d 156 (1st Cir. 2009) (injury and causation in pricing-related standing)
- Port Chester Elec. Constr. Corp. v. Atlas, 357 N.E.2d 983 (N.Y. 1976) (plain contract terms control third-party beneficiary status)