PHILADELPHIA — The U.S. Third Circuit Court in Philadelphia ruled in the favor of Pennsylvania State Employees Credit Union yesterday on an appeal the credit union made to a breach of contract claim against BJ's and Fifth Third Bank.
Pennsylvania State Employees sued BJ's and Fifth Third Bank in 2005 after there was a security breach of nearly eight million credit card records and the credit union had to reissue close to 20,000 credit cards. The credit union lost at the district court.
The ruling yesterday, reverses the district court ruling and will allow Pennsylvania State Employees and Sovereign Bank who was on the case with them, to continue with their case against BJ's and Fifth Third Bank. The ruling found that even though the credit union was not a direct party to the contracts between VISA, BJ's and Fifth Third, it has third party beneficiary rights.
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The ruling stating that the credit union and Sovereign Bank have grounds to sue over this issue opens the door for financial institutions that have had to reissue credit cards to members due to a retail security breach.
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