United States District Court, S.D. Ohio, Eastern Division
Mohammad S. Galaria, individually and on behalf of all others similarly situated, Plaintiff,
Nationwide Mutual Insurance Co., Defendant. Anthony Hancox, individually and on behalf of all others similarly situated, Plaintiff,
Nationwide Mutual Insurance Co., Defendant.
OPINION AND ORDER
MICHAEL H. WATSON, JUDGE UNITED STATES DISTRICT COURT.
related putative class action lawsuits are before the Court
on Plaintiffs Mohammad S. Galaria's ("Mr.
Galaria") and Anthony Hancox's ("Mr.
Hancox") (together, "Plaintiffs") objections
to a Report and Recommendation ("R&R") issued
by the Magistrate Judge on October 31, 2017, which
recommended granting Defendant Nationwide Mutual Insurance
Company's ("Nationwide") motion to dismiss
Plaintiffs' bailment claim. ECF No. 97. For the following
reasons, the Court OVERRULES Plaintiffs'
objections, ADOPTS the
R&R, and DISMISSES this
factual background of these cases has been set out in the
Court's previous orders and will not be repeated in
detail here. Briefly, Mr. Hancox and Mr. Galaria provided
their personally identifiable information to Nationwide in
the course of purchasing, or seeking to purchase, insurance
products. This information included some combination of their
social security numbers, driver's license numbers, birth
dates, marital status, gender, occupation, and employers'
names and addresses. On October 23, 2012, individuals hacked
into a portion of Nationwide's computer network and stole
this information. Mr. Hancox and Mr. Galaria allege that the
data breach impacted a class of approximately 1.1 million
Opinion and Order dated February 10, 2014, ECF No. 40, the
Court granted Nationwide's motion to dismiss.
Specifically, the Court dismissed Plaintiffs' claim
arising under 15 U.S.C. § 1681e of the Fair Credit
Reporting Act ("FCRA") and their negligence and
bailment claims all for lack of jurisdiction due to lack of
standing. The Court dismissed their invasion of privacy claim
for failure to state a claim. Plaintiffs moved to alter or
amend the judgment under Federal Rule of Civil Procedure
59(e) and for leave to file an amended consolidated class
action complaint. By Opinion and Order dated March 11, 2015,
ECF No. 51, the Court denied both motions. Plaintiffs timely
September 12, 2016, ECF No. 53, the Court of Appeals reversed
and remanded, concluding that Plaintiffs had standing to
assert claims under the FCRA but leaving it to this Court to
determine if they had stated a claim under that statute.
Following the issuance of the mandate, Nationwide filed a
second motion to dismiss, arguing that the complaint failed
to state a claim under the FCRA (and that, in fact, this
Court had already so held) and that Plaintiffs also failed to
plead a viable claim under either negligence or bailment
responded by moving to amend and consolidate their
complaints. By Opinion and Order dated August 16, 2017, ECF
No. 89, the Court consolidated the cases for all purposes,
and, in the context of denying the motion for leave to amend,
granted Nationwide's motion to dismiss Plaintiffs'
FCRA and negligence claims. As a result, only Plaintiffs'
bailment claim remained pending. Consequently, the Court
directed Nationwide to re-file a motion to dismiss directed
to that sole claim. By order of referral dated October 13,
2017, ECF No. 96, the Court referred the motion to dismiss to
the Magistrate Judge.
Report and Recommendation
consideration, Magistrate Judge Vascura recommended granting
Nationwide's motion to dismiss Plaintiffs' bailment
claim for two reasons: (1) Plaintiffs failed to allege a
transfer of the data to Nationwide; and (2) Plaintiffs lacked
an expectation that the information would be returned. First,
the Magistrate Judge concluded that Plaintiffs had not
relinquished control of their personally identifiable
information when they applied for insurance because they had
simultaneously retained control of the information. R&R
2, ECF No. 97. The Magistrate Judge recognized that various
courts across the country have rejected bailment claims in
the context of a security breach on the basis that no
transfer of possession of the data occurred creating an
expectation of return. She determined that any state law
applicable here would yield the same result. Id. at
2-3. Magistrate Judge Vascura noted that Ohio law
"requires a transfer of possession and custody of the
bailed property" and that Kansas and Minnesota law also
view the act of bailment as requiring the transfer of custody
or control of the property. Id. at 3. Further, the
Magistrate Judge specifically explained that, because
Plaintiffs had failed to allege that they had transferred
custody or control of their personal identifiers to
Nationwide, there was no need to determine whether intangible
property, including personally identifiable data, constitutes
personal property for purposes of a bailment claim.
Id. at 4.
Magistrate Judge Vascura recognized that Plaintiffs also had
not alleged an expectation that Nationwide would return the
data. She explained that, not only had Plaintiffs not made
such an allegation, they could not, given that they had
retained and used the same information throughout the time of
the alleged bailment. For both of these reasons, Magistrate
Judge Vascura concluded that Plaintiffs had not stated a
bailment claim against Nationwide.
R&R notified the parties of their right to file
objections within fourteen days pursuant to 28 U.S.C. §
636(b)(1). Plaintiffs filed timely objections and Nationwide
filed a response. The Court addresses Plaintiffs'
objections as follows.
STANDARD OF REVIEW
Court will review de novo the portions of the
R&R that have been properly objected to, pursuant to
Federal Rule of Civil Procedure 72(b)(2). On de novo
review, the Court "may accept, reject, or modify the
recommended disposition; receive further evidence; or return