Target Corporation v. ACE American Insurance Company

Background

In 2013, a hacker stole payment-card data and personal contact information connected with Target payment cards. Banks that issued the cards cancelled them and issued replacements, then sought compensation from Target for their costs. Target settled those claims.

Target later sued ACE American Insurance Company and ACE Property & Casualty Insurance Co., alleging breach of contract and seeking declaratory and compensatory damages. Target argued that ACE’s general-liability policies required ACE to indemnify Target for the settlements. The policies covered certain losses resulting from property damage, including loss of use of tangible property that was not physically injured, when the property damage was caused by an occurrence. ACE denied coverage.

The court first granted ACE’s motion for summary judgment and denied Target’s motion for partial summary judgment. The court later granted Target’s motion to alter or amend the judgment, vacated the earlier order, denied ACE’s motion for summary judgment, and granted Target’s motion for partial summary judgment. In that March 22, 2022 order, the court concluded that ACE was required to indemnify Target for its settlement with the issuing banks for the costs of replacing the payment cards.

ACE’s Certification Request

ACE asked the court to certify the March 22 order for an interlocutory appeal. An interlocutory appeal is an appeal before the district court has entered a final judgment. Under 28 U.S.C. § 1292(b), certification requires a controlling question of law, substantial grounds for a difference of opinion on that question, and an immediate appeal that would materially advance the end of the litigation.

ACE identified this proposed question: whether the costs of replacing payment cards cancelled after a data breach were damages because of property damage caused by an occurrence and therefore covered by the policies.

Controlling Question of Law

The court held that ACE had not identified a qualifying controlling question of law. It explained that interpreting contract terms generally is not the kind of controlling legal question that supports certification under Section 1292(b). ACE was seeking review of the court’s interpretation of several policy terms, so this requirement was not met.

Substantial Difference of Opinion

ACE relied on one decision from the United States Court of Appeals for the Third Circuit and one decision from the United States District Court for the Northern District of Alabama. The court found that these decisions did not establish a substantial difference of opinion. Neither was binding authority in the Eighth Circuit, and neither conflicted with the court’s reasoning.

The court relied on the factually similar Eighth Circuit decision in Eyeblaster, Inc. v. Fed. Ins. Co. The court stated that ACE identified no authority within the Eighth Circuit contradicting Eyeblaster and showed neither a disagreement within that circuit nor a circuit split on the coverage question.

Advancement of the Litigation

ACE argued that immediate review could avoid additional discovery and trial-related costs if the Eighth Circuit later reversed the March 22 order. The court rejected that argument. It explained that the possibility of reversal alone does not justify interlocutory certification, which is reserved for extraordinary cases, and that this contract-interpretation dispute did not involve the type of unusually prolonged and complex litigation for which certification is appropriate.

Disposition

The court denied ACE’s motion for certification for interlocutory appeal. The opinion did not alter the March 22, 2022 rulings on the summary-judgment motions; it addressed only whether that order should be certified for an immediate appeal.