Greenstate Credit Union v. Hy-Vee, Inc.

Background

GreenState Credit Union brought a proposed class action on behalf of itself and similarly situated financial institutions. It alleged that malware installed on Hy-Vee’s point-of-sale systems from November 2018 through August 2019 exposed customers’ payment-card information. GreenState asserted negligence and violations of the Minnesota Plastic Card Security Act. It alleged that Hy-Vee failed to use adequate security measures, detect and contain the breach promptly, and follow applicable industry and Federal Trade Commission requirements. GreenState and other financial institutions allegedly had to cancel and reissue compromised cards and reimburse members and customers for fraudulent charges.

Hy-Vee moved to dismiss for improper venue or lack of personal jurisdiction, or alternatively to transfer the case to the Central District of Illinois. Hy-Vee argued that Minnesota lacked general jurisdiction because Hy-Vee was not essentially based there and lacked specific jurisdiction because the relevant conduct occurred in Iowa. It also relied on the first-filed rule and the convenience factors for transferring a case. GreenState opposed the motion.

Personal Jurisdiction

Personal jurisdiction is a court’s authority over a defendant. The court first held that Minnesota lacked specific jurisdiction. Although Hy-Vee operated 38 stores in Minnesota, received 12.38% of its revenue from Minnesota locations, and assigned 13.77% of its workforce to Minnesota locations, the court found that GreenState’s claims arose from conduct in Iowa. Hy-Vee’s technology department and chief technology officer were located near its Iowa headquarters, and the systems managing and monitoring its enterprise-wide data security were in Iowa. The court therefore concluded that the claims were not sufficiently connected to Hy-Vee’s Minnesota contacts.

The court separately held that it could exercise general jurisdiction. General jurisdiction permits a court to hear any claim against a defendant, even when the claim is unrelated to the defendant’s forum contacts. The court found that Hy-Vee was not “at home” in Minnesota under the usual constitutional test because it was an Iowa corporation with its principal place of business in Iowa, and Minnesota was not an exceptional case. But the court held that registration to do business in Minnesota and appointment of an agent for service of process constituted consent to general jurisdiction under controlling Eighth Circuit and Minnesota Supreme Court decisions. The court concluded that it was bound by those decisions despite Hy-Vee’s argument that later United States Supreme Court decisions had undermined them.

Interlocutory Appeal

An interlocutory appeal is an appeal before the case is fully finished. The court determined that an appeal under 28 U.S.C. § 1292(b) would be appropriate because whether registration-based consent remains valid was a controlling legal question, there was substantial disagreement about the effect of later Supreme Court decisions, and an appeal could avoid lengthy and costly litigation in a proposed class action. Either party could apply to the Eighth Circuit within ten days. If that court permitted the appeal, the case would be stayed while the appeal was resolved.

Venue and Transfer

The court denied Hy-Vee’s request to transfer the case under the first-filed rule. That rule generally gives priority to the first court handling parallel cases involving substantially the same parties and issues. Although this case overlapped factually and legally with consumer class actions pending in Illinois, the proposed classes did not have overlapping members, so the rule did not apply.

The court also denied transfer under 28 U.S.C. § 1404(a), which allows transfer for the convenience of the parties and witnesses and in the interests of justice. It found that the Illinois and Minnesota courthouses were roughly equally convenient for travel, that the relevant interests-of-justice factors did not favor Illinois, and that the consumer cases were distinct enough that judicial efficiency would not be improved by placing the cases in the same court. The court deferred to GreenState’s choice of Minnesota as the forum.

Disposition

The court denied Hy-Vee’s motion to dismiss or transfer venue. It determined that an interlocutory appeal under 28 U.S.C. § 1292(b) would be appropriate, set a ten-day period for either party to seek permission to appeal, and ordered that the case would be stayed if the Eighth Circuit permitted the appeal.