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Listen to this articleWhere a plaintiff has brought a putative class action alleging that the defendant negligently failed to protect sensitive personal information from targeted data breaches, the defendant’s motion to dismiss should be allowed as to the plaintiff’s unjust enrichment count, but the plaintiff’s negligence claim is not barred by the economic loss doctrine.
“The plaintiff, Joan Tozzi (‘Plaintiff’), individually and on behalf of all others similarly situated, commenced this putative class action against the defendant, South Shore Mental Health Center, Inc. (‘South Shore’), alleging that it negligently failed to protect its patients’ sensitive personal information from targeted data breaches. …
“Although certainly a close call, the court concludes that on the allegations here, Plaintiff has standing to proceed. As the complaint alleges in detail, the targeted theft of Plaintiffs’ Private Information, which undisputedly occurred, places her at real risk of identity theft and all of its attendant harms. … Although no fraud or identify theft has yet been identified as South Shore argues, this case is unlike those standing cases involving only hypothetical future events or indirect harm. … Key here is that the targeted theft of Plaintiff’s own Private Information already has occurred. …
“South Shore’s citation to Federal standing decisions in similar data breach cases does not change the result. As the Appeals Court recently made clear in Kenn [v. Eascare, LLC, 103 Mass. App. Ct. 643, 649 (2024)], Massachusetts ‘is not bound’ by the cases and controversies standard of Article III of the United States Constitution, which determines federal jurisdictional limits. 103 Mass. App. Court at 649. See Webb v. Injured Workers Pharmacy, LLC, 72 F.4th 365, 371-72 (1st Cir. 2023) (setting forth Federal standard). Thus, although a plaintiff may not have standing in Federal court, that fact ‘is not dispositive of the question of her standing in State court.’ Kenn, 103 Mass. App. Court at 649. For this reason, the Federal three-part standing analysis in data breach cases, as stated in Webb, 72 F.4th at 375, and applied in subsequent cases, is not controlling here. …
“South Shore argues that dismissal of the negligence claim is required by the economic loss doctrine. The economic loss doctrine bars recovery of economic damages on a claim of negligence, ‘unless the plaintiffs can establish that the injuries they suffered due to the [defendant’s] negligence involved physical harm or property damage, and not solely economic loss.’ … Here, however, Plaintiff plausibly alleges that South Shore, as her health care provider and keeper of her Private Information, was her fiduciary. … Where a tort is asserted in the context of such a relationship, the doctrine has been held not to apply. … Thus, the economic loss doctrine does not bar Plaintiff’s negligence claim. …
“As already discussed, Plaintiff here plausibly alleges that she had a fiduciary relationship with South Shore as its patient. … Indeed, in Alberts [v. Devine, 395 Mass. 59, 69 (1985)], the court held ‘that a duty of confidentiality arises from the physician-patient relationship and that a violation of that duty, resulting in damages, gives rise to a cause of action sounding in tort against the physician.’ 395 Mass. at 69. Under these circumstances, the complaint states a claim that South Shore breached its fiduciary duty to Plaintiff by failing to protect her Private Information. …
“‘Unjust enrichment occurs when a party retains the property of another against the fundamental principles of justice or equity and good conscience.’ Bonina v. Sheppard, 91 Mass. App. Ct. 622, 625 (2017) (citation omitted). The complaint asserts that the property South Shore unjustly retained was the portion of the payment it received for services rendered that Plaintiff reasonably expected to be used to pay for data security. However, the complaint does not explicitly allege that Plaintiff, herself, paid for the services she received.6 Nevertheless, even if she made payments to South Shore, it is implausible that Plaintiff thought that a separate and distinct part of her healthcare bill was for data security. The court agrees with the District Court in Webb that this ‘overcharge’ or ‘premium’ payment for data protection theory of unjust enrichment fails, where the complaint does not plausibly ‘allege that plaintiffs paid extra for a security package that they were promised and did not receive.’ …
“For the foregoing reasons, South Shore’s motion to dismiss is allowed as to Count 4 of the complaint alleging unjust enrichment, but is otherwise denied in all respects.”
Tozzi v. South Shore Mental Health Center, Inc. (Lawyers Weekly No. 09-045-25) (7 pages) (Kazanjian, J.) (Suffolk Superior Court) (Civil Action No. 2484CV02307-BLS-1) (March 26, 2025).
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