More than five years after a massive 2008 data breach, Heartland Payment Systems once again asked a federal judge to dismiss a lawsuit filed by a group of credit unions and banks, according to court documents obtained by CU Times.
In a motion filed Oct. 15 in U.S. District Court's Houston Division, Heartland's legal team argued that the negligence claims are barred by state laws in New Jersey, where Heartland is headquartered, and Texas, where the breach occurred.
The Princeton, N.J.-based processing giant contended that Texas economic loss doctrine should apply to the case because the core of the negligence claim - accusations that the company's inadequate IT security measures permitted the breach – occurred at a Heartland data center in Texas, the documents said.
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New Jersey's economic loss doctrine also bars the claims, according to Heartland's motion.
Plaintiff credit unions include the $155 million Matadors Community Credit Union of Chatsworth, Calif., the $2 billion GECU of El Paso, Texas, the $2 billion MidFlorida Credit Union of Lakeland, Fla., and the $4.2 billion Pennsylvania State Employees Credit Union of Harrisburg, Penn.
U.S. District Judge Lee Rosenthal, who is currently presiding over the litigation in Southern Texas, dismissed most of the complaints filed by the financial institutions in late 2011.
In that ruling, Judge Rosenthal ruled that the plaintiffs were not specifically protected in contracts between Heartland Payment Systems and its acquiring banks, Heartland Bank and KeyBank, and that the financial institutions were not covered in contracts between Heartland and the major card brands. The credit unions and banks appealed, targeting the negligence and responsibility for losses.
A panel of the Fifth Circuit Court of Appeals in New Orleans ruled last fall that the credit unions and banks could state a claim for negligence because the economic loss doctrine did not apply, despite the fact that the card issuers lacked a written contract with Heartland.
Litigation was then consolidated into one complaint to be heard by Rosenthal.
While the legal war wages on, Heartland Payments has been working to restore its image and launch new products.
The company recently unveiled a new service called Heartland Secure, which utilizes encryption, tokenization and a proprietary EMV-compliant point-of-sale terminals, according to Heartland's website.
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