No.

09-35823
(and Consolidated Case No. 09-35824)

IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT
__________________________________________________

LAURA KROTTNER, ISHAYA SHAMASA, and JOSEPH LALLI,

Plaintiffs - Appellants,

v.

STARBUCKS CORPORATION,
Defendant - Appellee.
__________________________________________________

Appeal from the United States District Court

for the Western District of Washington
__________________________________________________

PLAINTIFFS – APPELLANTS’ OPENING BRIEF

__________________________________________________

Lynn Lincoln Sarko Mila F. Bartos

Mark A. Griffin Karen J. Marcus
Gretchen Freeman Cappio Eugene J. Benick
KELLER ROHRBACK L.L.P. FINKELSTEIN THOMPSON LLP
1201 Third Avenue, Suite 3200 1050 30th Street, NW
Seattle, WA 98101-3052 Washington, DC 20007
Telephone: (206) 623-1900 Telephone: (202) 337-8000

Ben Barnow
BARNOW AND ASSOCIATES, P.C.
One North LaSalle, Suite 4600
Chicago, IL 60602
Telephone: (312) 621-2000

Attorneys for Plaintiffs - Appellants

 TABLE OF CONTENTS

Page

I. JURISDICTION.................................................................................................1

II. STATEMENT OF THE ISSUES ......................................................................1

III. STATEMENT OF THE CASE..........................................................................2

IV. STATEMENT OF THE FACTS .......................................................................5

V. SUMMARY OF ARGUMENT ...................................................................... 12

VI. STANDARD OF REVIEW ............................................................................ 13

VII. ARGUMENT ................................................................................................. 15

A. Starbucks Breached Its Contractual Duty to Plaintiffs, Resulting in

Injury and Compensable Damages. ............................................................ 15

1. Plaintiffs have adequately pled the existence of an implied contract

under Washington law. ........................................................................... 18

2. Plaintiffs have plausibly pled the elements of a breach of a contract. ... 22

3. Starbucks’ breach of implied contract damaged Plaintiffs..................... 23

4. Plaintiffs’ Claims Are Ripe for Adjudication......................................... 27

B. Starbucks Was Negligent In Allowing Plaintiffs’ PII To Be

Compromised And Should Be Held Legally Accountable......................... 28

1. Plaintiffs Have Pled Plausible Prima Facie Elements of Negligence

Entitling Plaintiffs To Survive A Motion To Dismiss............................ 29

i
 2. Injury, Harm and Damages are Discrete Legal Concepts, The
Understanding Of Which Are Critical To The Proper Adjudication
Of The Plaintiffs’ Negligence Claim...................................................... 32

a. The Concepts of “Injury,” “Harm,” and “Damage” Are Distinct

Legal Concepts Which Should Not Be Blurred.................................. 32

b. Plaintiffs Have Alleged an Injury ....................................................... 34

(i) Injury For Standing Encompasses Injury For Negligence Claim... 35

(ii) Plaintiffs Are Seeking Remedy Of A Modern Problem Under Well

Established Causes Of Action......................................................... 37

(iii) Washington Would Not Be The First Jurisdiction To Find

Increased Risk of Identity Theft As Cognizable Claim Under State
Law.................................................................................................. 38

c. Harm Exists for Plaintiffs’ Negligence Claim As Plaintiffs Have

Experienced the Loss of Their PII Because of Starbucks' Data
Mishandling......................................................................................... 39

(i) “Proof” Is Not Required At This Stage of The Litigation.............. 42

3. Plaintiffs Have Alleged Sufficient Damages Under Washington Law .. 43

4. The Economic Loss Rule Does Not Apply............................................. 45

C. Credit Monitoring Is an Available Remedy Under Washington Law. ....... 50

1. Washington Courts Traditionally Protect Plaintiffs in Areas of

Developing Case Law ……………………………………………….…51

2. Plaintiffs’ Duty to Mitigate Implicates the Remedy of Credit

Monitoring. ............................................................................................. 54

D. In the Alternative, This Court Should Certify Issues to the Washington

Supreme Court ............................................................................................ 56

ii
VIII. CONCLUSION ............................................................................................. 59

REQUEST FOR ORAL ARGUMENT…………………………………………...59

STATEMENT OF RELATED CASES .................................................................. 60

CERTIFICATE OF COMPLIANCE WITH FED. R. APP. P. 32(A)(7)(C) AND

CIRCUIT RULE 32-1............................................................................................. 61

iii
 TABLE OF AUTHORITIES

Cases Page(s)

Affiliated FM Ins. Co. v. LTK Consulting Serv. Inc.,

556 F.3d 920 (9th Cir. 2009) ............................................................................58

Alejandre v. Bull,
153 P.3d 864 (Wash. 2007) ........................................................................47, 48

Arizonans for Official English v. Ariz.,

520 U.S. 43 (1997)............................................................................................57

Ashcroft v. Al-Kidd,
No. 06-36059, 2009 WL 2836448 (9th Cir. Sept. 4, 2009)..............................14

Ashcroft v. Iqbal,
129 S. Ct. 1937 (2009)......................................................................................14

Banknorth N.A. v. B.J.'s Wholesale,

442 F. Supp. 2d 206 (M.D. Pa. 2006).........................................................48, 49

Bell Atl. Corp. v. Twombly,

550 U.S. 544 (2007)..........................................................................................14

Bernsen v. Big Bend Elec. Co-op., Inc.,

842 P.2d 1047 (Wash. Ct. App. 1993)..............................................................26

Boucher v. Shaw,
483 F.3d 613 (9th Cir. 2007) ............................................................................57

Bravo v. Dolsen Cos.,

888 P.2d 147 (Wash. 1995) ........................................................................51, 52

Broad v. Mannesmann Anlagenbau AG,

196 F.3d 1075 (9th Cir. 1999) ..........................................................................57

iv
Brotherson v. Prof'l Basketball Club,
604 F. Supp.2d 1276 (W.D. Wash. 2009) ..................................................18, 21

Brust v. Newton,
852 P.2d 1092 (Wash. Ct. App. 1993)..............................................................25

Burchfiel v. Boeing Corp.,

205 P.3d 145 (Wash. Ct. App. 2009)................................................................54

Bush v. Safeco Ins. Co. of Am.,

596 P.2d 1357 (Wash. Ct. App. 1979)..............................................................28

Cartozian & Sons, Inc., v. Ostruske-Murphy, Inc.,

390 P.2d 548 (Wash. 1964) ..............................................................................22

Caudle Towers, Perrin, Forster & Crosby, Inc

580 F.Supp.2d 273 (S.D.N.Y. 2008) ................................................................53

Colorado Structures, Inc. v. Ins. Co. of the West,

167 P.3d 1125 (Wash. 2007) ......................................................................22, 24

Crest Inc. v. Costco Wholesale Corp.,

115 P.3d 349 (Wash. Ct. App. 2005)................................................................25

Crowson v. Quality Food Ctrs., Inc.,

No. 04-2-05608-0, 2004 WL 1530885 (Wash. Super. June 14,
2004) ...........................................................................................................51, 52

Daly v. Metropolitan Life Ins. Co.,

2 N.Y.S.2d 530, 4 Misc. 3d (N.Y. 2004)....................................................35, 44

Daly v. Metropolitan Life Ins. Co.,

782 N.Y.S.2d 530 (N.Y. Sup. Ct. 2004)...........................................................38

Denny's Rest., Inc. v. Security Union Title Ins. Co.,

859 P.2d 619 (Wash. Ct. App. 1993)................................................................28

v
Donovan v. Philip Morris,
455 Mass. 215, 225, 914 N.E.2d 891 (2009)..............................................52, 57

Doss v. Southern Cent. Bell Tel. Co.,

834 F.2d 421, 424 (5th Cir. 1987) ....................................................................54

Duncan v. Northwest Airlines, Inc.,

203 F.R.D. 601 (W.D. Wash. 2001) ...........................................................50, 55

Everest & Jennings, Inc. v. American Motorists Ins. Co.,

23 F.3d 226 (9th Cir. 1994) ..............................................................................13

Federal Signal v. Safety Factors,

886 P.2d 172 (Wash. 1994) ................................................................. 26, 27, 54

Federal Trade Comm'n v. Neovi, Inc.,

598 F. Supp. 2d 1104 (S.D. Cal. 2008).............................................................44

First Maryland Leasecorp v. Rothstein,

864 P.2d 17 (Wash. Ct. App. 1993)..................................................................39

Frazee v. Western Dairy Products,

47 P.2d 1037 (Wash. 1935) ..............................................................................33

Guy Stickney, Inc. v. Underwood,

410 P.2d 7 (1966)..............................................................................................21

Hansen v. Mountain Fuel Supply Co.,

858 P.2d 970, 977 (Utah 1993).........................................................................52

Heaton v. Imus,
608 P.2d 631 (Wash. 1980) (en banc) ..............................................................19

Huff v. Roach,
106 P.3d 268 (Wash. Ct. App. 2005)................................................................32

Hui v. Sunnyside Sch. Dist. No. 201,

132 Wash. App. 1015, 2006 WL 775164, (Wash. Ct. App. 2006) ..................31

vi
Hutchins v. 1001 Fourth Ave. Assocs.,
802 P.2d 1360 (Wash. 1991) ............................................................................30

In Re Hannaford Bros. Co. Customer Data Security Breach Litigation,

No. 2:08-MD-1954 , 2009 WL 3193158 ..........................................................57

In re TJX ,
524 F. Supp. 2d 83 (D. Mass. 2007).................................................................49

Jackowski v. Borchelt,
209 P.3d 514 (Wash. Ct. App. 2009)................................................................46

Jacob's Meadow Owners Ass'n v. Plateau 44 II, LLC,

162 P.3d 1153 (Wash. Ct. App. 2007)..............................................................23

Jaeger v. Cleaver Constr., Inc.,

201 P.3d 1028 (Wash. Ct. App. 2009)..............................................................55

Johnson, Christenson, Viger Constructors, Inc. v. Perry, Shelton, Walker &

Assoc., PLLC,
133 Wash. App. 1008, 2006 WL 1462743 (Wash. Ct. App. 2006) .................40

Jones v. Commerce Bancorp, Inc.,

2006 WL 1409492 (S.D.N.Y. May 23, 2006) ..................................... 33, 38, 44

Jordache Enter., Inc v. Brobeck, Phleger & Harrison,

56 Cal.Rptr.2d 661 (Cal. App. 2 Dist. 1996)....................................................32

Katz v. United States,

389 U.S. 347 (1967)..........................................................................................30

Keystone Land & Development Co. v. Xerox Corp.,

94 P.3d 945 (Wash. 2004) (en banc) ................................................................18

Keystone Land & Dev't Co. v. Xerox Corp.,

353 F.3d 1093 (9th Cir. 2003) ..........................................................................58

vii
Kilthau v. Covelli,
563 P.2d 1305 (Wash. Ct. App. 1977)..............................................................19

King v. Rice,
191 P.3d 946 (Wash. Ct. App. 2008)................................................................46

Kuhn v. Capital One Financial Corp.,

855 N.E.2d 790, 2006 WL 3007931 (Mass. Ct. App. Oct. 23,
2006) .............................................................................................. 35, 37, 44, 45

Lehrer v. State, Dept. of Social and Health Services,

5 P.3d 722 (Wash. Ct. App. 2000)....................................................................15

Lew v. Goodfellow Chrysler-Plymouth, Inc.,

492 P.2d 258 (Wash. Ct. App. 1971)................................................................40

Love v. United States,

915 F.2d 1242 (9th Cir. 1990) ..........................................................................13

Mayer v. Huesner,
107 P.3d 152 (Wash. Ct. App. 2005)................................................................30

McFarland v. Commercial Boiler Works,

116 P.2d 288 (Wash. 1941) ..............................................................................33

McKeown v. First Interstate Bank,

240 Cal.Rptr. 127 (Cal. Ct. App. 1987)............................................................41

Mendez v. Palm Harbor Homes, Inc.,

45 P.3d 594 (Wash. Ct. App. 2002)............................................................20, 21

Microsoft Corp. v. Immersion Corp.,

No. 07-936, 2008 WL 2998238 (W.D. Wash. Aug. 1, 2008) ..........................26

Migliori v. Boeing N. Am., Inc.,

97 F. Supp. 2d 1001 (C.D. Cal. 2000) ..............................................................54

viii
Moore v. The Sally J.,
27 F.Supp.2d 1255 (W.D. Wash. 1998) .....................................................33, 39

Moss v. U.S. Secret Serv.,

572 F.3d 962 (9th Cir. 2009) ............................................................................14

Multicare Med. Ctr. v. Dep't of Soc. & Health Servs.,

790 P.2d 124 (Wash. 1990) ..............................................................................19

Navarro v. Block,
250 F.3d 729 (9th Cir. 2001) ............................................................................14

O'Hartigan v. Department of Personnel,

821 P.2d 44 (Wash. 1991) (en banc) ................................................................40

Oscar v. University Students Coop. Ass'n,

965 F.2d 783 (9th Cir.), cert. denied, 506 U.S. 1020 (1992)............................13

Panag v. Farmers Ins. Co. of Washington,

204 P.3d 885 (Wash. 2009) ..............................................................................41

Pennsylvania State Employees Credit Union v. Fifth Third Bank,

398 F. Supp. 2d 317 (M.D. Pa. 2005).........................................................49, 50

People v. Dolbeer,
29 Cal.Rptr. 573, 214 Cal. App. 2d 619 (1963) ...............................................41

People v. Kozlowski,
117 Cal.Rptr.2d 504, 96 Cal. App. 4th 853 (Cal. Ct. App. 2002) ....................40

Presidio Group, LLC v. GMAC Mortg., LLC,

No. C08-5298RBL, 2008 WL 5110845 (W.D. Wash. 2008)...........................42

Reese v. Malone,
No. C08-1008MJP, 2009 WL 506820 (W.D. Wash. 2009) .............................42

Reid v. Pierce County,

136 Wash.2d 195, 961 P.2d 333 (Wash. 1998) ................................................30

ix
Rettkowski v. Department of Ecology,
910 P.2d 462 (Wash. 1996) ..............................................................................36

Ross v. Harding,
391 P.2d 526 (Wash. 1964) ..............................................................................22

Rouse v. Glascam Builders, Inc.,

677 P.2d 125 (1984)..........................................................................................21

Ruiz v. Gap Inc.,

540 F.Supp.2d 1121 (N.D.Cal. 2008).................................................. 35, 37, 38

Safeco Ins. Co. v. Barcom,

773 P.2d 56 (Wash. 1989) ................................................................................28

Schwindt v. Commonwealth Ins. Co.,

997 P.2d 353 (Wash. 2000) ..............................................................................28

Shqeirat v. U.S. Airways, Inc.,

515 F. Supp. 2d 984 (D. Minn. 2007)...............................................................38

Sign-O-Lite Signs, Inc. v. DeLaurenti Florists, Inc.,

825 P.2d 714 (Wash. Ct. App. 1992)................................................................44

Silvas v. E*Trade Mortg. Corp.,

514 F.3d 1001 (9th Cir. 2008) ..........................................................................31

Sofie v. Fibreboard Corp.,

771 P.2d 711 (Wash. 1989) ..............................................................................25

State ex rel. Macri v. City of Bremerton,

111 P.2d 612 (Wash. 1941) ........................................................................33, 34

State v. Mayze,
622 S.E.2d 836 (Ga. 2005) ...............................................................................40

State v. Robinson,
145 Wash. App. 1022, 2008 WL 2505445 (Wash. Ct. App. 2009) .................31

x
Steele v. Organon, Inc.,
716 P.2d 920, 106 Wash.2d 1008 (1986) .........................................................40

Stephens v. Omni Ins. Co.,

159 P.3d 10 (Wash. Ct. App. 2007)..................................................................44

Stockton Heartwoods, Ltd. v. Bielski,

No. 4:04CV1675MLM, 2006 WL 571983 (E.D. Mo. Mar. 8, 2006) ..............26

Stollenwerk v. Tri-West Health Care Alliance,

No. 03-0185, 2005 WL 2465906 (D. Ariz. Sept. 8, 2005).................. 37, 52, 53

Stollenwerk v. Tri-West Health Care Alliance,

254 Fed. Appx. 664 (9th Cir. 2007)......................................... 37, 41, 42, 45, 53

Tacoma Northpark LLC. v. NW LLC,

96 P.3d 454 (Wash. Ct. App. 2004)..................................................................21

Tallmadge v. Aurora Chrysler Plymouth, Inc.,

605 P.2d 1275 (Wash. Ct. App. 1979)..............................................................41

Tanner Elec. Coop. v. Puget Sound Power & Light Co.,

911 P.2d 1301 (Wash. 1996) ............................................................................18

Thompson v. St. Regis Paper Co.,

685 P.2d 1081(Wash. 1984) .......................................................................20, 21

Townsend v. Quadrant Corp.,

2009 WL 3337228 (Wash. Ct. App. Oct. 19, 2009).........................................46

Trendwest Resorts, Inc. v. Ford,

12 P.3d 613, 616 (Wash. Ct. App. 2000)..........................................................18

Trustees of Constr. Indus. & Laborers Health & Welfare Trust v.

Hartford Fire Ins. Co.,
482 F.3d 1064 (9th Cir. 2007) ..........................................................................55

xi
Veith v. Xterra Wetsuits, LLC,
183 P.3d 334 (Wash. Ct. App. 2008)................................................................19

Wells v. State,
846 P.2d 589 (Wyo. 1992)................................................................................39

Whited v. Parking Violations Bureau,

111 Fed. Appx. 953 (9th Cir. 2004)..................................................................30

Witriol v. LexisNexis Group,

No. C05-02392 MJJ, 2006 WL 4725713 (N.D. Cal. Feb. 10, 2006) ...............36

Young v. Whidbey Island Bd. of Realtors,

638 P.2d 1235 (Wash. 1982) ............................................................................51

Statutes

28 U.S.C. § 1291......................................................................................................1

28 U.S.C. § 1332......................................................................................................1

Rules

Fed. R. App. P. 4......................................................................................................1

Fed. R. Civ. P. 8 .......................................................................................................4

Fed. R. Civ. P. 12 ...............................................................................................3, 14

Other Authorities

Ga. Code. Ann. § 16-9-125....................................................................................40

Wash. Rev. Code Ann. 19.108.010........................................................................25

xii
 I. JURISDICTION

Subject matter jurisdiction existed below pursuant to the Class Action

Fairness Act of 2005, 28 U.S.C. § 1332(d). The district court’s final judgment is

appealable, and this Court has jurisdiction, under 28 U.S.C. § 1291.

The district court entered final judgment on August 14, 2009. ER 1.1

Plaintiffs Laura Krottner, Ishaya Shamasa, and Joseph Lalli (“Plaintiffs”) filed

their notice of appeal on September 11, 2009 pursuant to Fed. R. App. P. 4. ER

19.

II. STATEMENT OF THE ISSUES

This appeal raises the following issues:

1. Did Starbucks’ failure to safeguard Plaintiffs’ Personal Identifiable

Information, despite a contractual duty to do so, result in a cognizable injury under

contract law in Washington, whether or not Plaintiffs can prove at the pleading

stage that their PII was misused?

2. Did Starbucks’ failure to safeguard Plaintiffs’ PII, despite a common

law duty to do so, result in a cognizable injury under negligence law in

Washington, whether or not Plaintiffs can prove at the pleading stage that their PII

was misused?

1
The abbreviation “ER” refers to Plaintiffs-Appellants’ Excerpts of Record
concurrently filed herewith.

1
 3. Under Washington state law, does credit monitoring constitute an

available remedy for an injured party?

III. STATEMENT OF THE CASE

This appeal arises from two almost-identical putative class action complaints

filed in the Western District of Washington by Plaintiffs Lalli, Krottner, and

Shamasa, against Starbucks Corp. (“Starbucks” or “Defendant”). Plaintiffs are

employees2 of Starbucks, and brought two claims against Starbucks for breaches of

contract and negligence. ER 103, 267. The complaints relate to the October 2008

theft of a laptop on which Starbucks had stored, in unencrypted form, the

Personally Identifying Information (“PII”)3 of 97,000 Starbucks employees. ER

103, 268.

The stolen PII included the employees’ names, addresses, and social security

numbers. ER 103, 268. To date, the laptop has never been recovered. Plaintiffs’

injuries included the loss of confidentiality of their PII and a heightened risk of

future identity theft. ER 115. The corresponding damages include time and

expenses for ongoing monitoring of their credit as a result of Starbucks’ negligence

2
The term “employee” refers to both current and former employees, as both were
affected by the breach.
3
“PII” generally refers to information that can be used uniquely to identify a single
individual, such as social security numbers or birthdates.

2
and breach of its contract with Plaintiffs. ER 118, 123. Additionally, at least one

named Plaintiff had already experienced an instance of identity theft within months

of this laptop theft—a crime that the lower court recognized as inferentially

connected to the laptop theft. ER 106, 16.

By offering them one year of credit monitoring after the theft, Starbucks

acknowledged that the theft had in fact injured and damaged employees. ER 129.

In a letter sent to each affected individual, Starbucks’ admonished its own

employees to “take appropriate steps to protect [themselves].” ER 129, 293.

Plaintiffs found the offer to be inadequate based on the type of sensitive

information stolen and have requested injunctive relief, additional remedies and

damages, including but not limited to further credit monitoring, identity theft

insurance, credit restoration services, and periodic compliance audits by a third

party of the security of Starbucks’s computer systems. ER 125. On May 7, 2009,

Starbucks filed motions to dismiss both complaints pursuant to Fed. R. Civ. P.

12(b)(6). ER 71. Starbucks alleged that Plaintiffs: (a) lacked standing for failure

to plead injury; (b) failed to allege damages; (c) failed to state a breach of implied

contract claim; and (d) were barred by the economic loss rule from asserting

negligence claims. ER 72.

3
 On August 14, 2009, the district court issued orders granting Starbucks’

motions to dismiss. ER 2, 18. The district court ruled that Plaintiffs had suffered

injury under Article III and, therefore, had standing to bring their claims. ER 8,

11. Acknowledging what it perceived to be a dearth of controlling precedent in

Washington, the district court nonetheless dismissed Plaintiffs’ complaints for lack

of “cognizable injury.” ER 16-17.

Given the current state of evolving technology and the advent of electronic,

portable personal data (including PII), as well as available technology to secure

this data, this case raises cutting-edge issues related to the duties and rights

associated with keeping certain personal information private. While Plaintiffs

recognize that the legal landscape surrounding personal privacy protection

inevitably evolves along with applicable technology, Plaintiffs also believe that

their causes of action are redressable by this Court under current legal precedent.

The primary issue before this Court is whether Plaintiffs’ complaints meet

the pleading standards of Fed. R. Civ. P. 8. Plaintiffs contend that the district court

erred when it granted the motions to dismiss for three reasons. First, Plaintiffs

have plausibly pled the injury element of their breach of contract claim. Second,

Plaintiffs have plausibly pled the injury element of their negligence claim. Third,

given that Washington has recognized medical monitoring as a remedy, credit

4
monitoring would be an available remedy for negligence and/or contract claims

under Washington law.

IV. STATEMENT OF THE FACTS

Starbucks’ name is synonymous with coffee. It is an international retailer of

coffee and coffee beans, employing approximately 176,000 people worldwide. ER

103, 268. Starbucks owes its success and preeminence in the coffee industry to

many factors, one of which is doubtless the protection of the confidentiality of its

trade secrets, research and development files. However, when it comes to

protecting its employees’ private information, such as social security numbers and

birth dates, Starbucks’ record is far from stellar.

In 2006, Starbucks lost a laptop containing PII, including the unencrypted

names and social security numbers, of roughly 60,000 employees. ER 100, 265. A

few years ago, Starbucks was also the subject of an identity theft ring that included

one or more of Starbucks’ own employees who accessed a computer system with

the intent of stealing employee information. ER 100, 265.

This lawsuit arises from a third incident of unauthorized disclosure of

Starbucks employees’ PII—the theft of a laptop that occurred in or near Seattle,

Washington in October of 2008. ER 103-104, 268. The laptop contained the

unencrypted names, addresses, and social security numbers of roughly 97,000

5
employees. ER 100, 265. The theft of a company’s laptop containing any personal

information is always cause for concern. But in this case, not only did Starbucks

imprudently store PII on an unprotected and portable laptop, it even failed to

encrypt the PII—a violation of standard industry procedures in this electronic age.

ER 100-101, 104, 107-108, 265-266, 268, 270-271.

Worse, Starbucks failed to promptly report the theft to employees. ER 105,

269. More than twenty days after the theft, Starbucks mailed a letter to some of its

employees (“Notice Letter”) that the PII of 97,000 Starbucks employees had been

stolen while the PII was in Starbucks’ possession and control. ER 104, 268-269.

In the Notice Letter, Starbucks stated that it had “no indication that the private

information has been misused,” even though Starbucks has not, and cannot, verify

this statement, because the employees’ PII was in one or more criminals’ control.

ER 129, 293. Starbucks has provided no basis for this perfunctory conclusion, nor

any guarantees that the information would not be misused in the future. ER 118,

281-282.

Each Plaintiff and Starbucks entered into a contract (“Contract Documents”)

when the Plaintiffs began employment. ER 112-113, 275-276. As a condition of

employment, Starbucks gathers and uses social security numbers to aid it in hiring,

promoting, transferring and reassigning employees. ER 112, 275. In its Owner

6
Staffing Services Brochure, Starbucks sets forth various, specific terms of the

agreement: “In consideration of an application for employment, or a current

employee for promotion, transfer, reassignment or retention, Starbucks Coffee

Company may inquire into the individual’s background. This background inquiry

may include, but is not limited to obtaining a consumer credit report and/or an

investigative consumer credit report for the purposes of validation of a social

security number . . . .” ER 112, 236, 275, 397. According to the Application

Contract, Plaintiffs provided their social security numbers to Starbucks with the

understanding that Starbucks would safeguard the information. ER 112, 276.

Starbucks states that “[c]onfidential information may be shared on a need-to-

know basis,” and that access to the information is limited. ER 112, 237, 276, 398.

Implied in this bargain is that Starbucks will protect its employees’ PII from

disclosure or loss as part of the employment relationship. ER 112, 276. Once

someone becomes a Starbucks employee, Starbucks also identifies certain

standards for maintaining the privacy of its employees in its “Standards of

Business Conduct.” ER 113, 276. In this document, Starbucks lays out the “legal

and ethical standards that we all must follow on a day-to-day basis.” ER 113, 245,

276, 406. Under the item “PARTNER PRIVACY AND PERSONAL

ACTIVITIES,” Starbucks states that “[t]reating each other with respect and dignity

7
includes respecting one another’s privacy.” ER 113, 246, 276-277, 407. Starbucks

also states that it “strives to provide a safe work environment for all partners.” ER

113, 247, 277, 408. On its website, Starbucks promises to secure the information

that it collects. ER 114, 227-278. Thus, Starbucks values encryption for its

customers’ PII, but has not done so for its employees.

After the theft, Starbucks recognized that its employees had been injured.

The Notice Letter recommended that employees undertake certain preventive

measures and mitigation efforts. ER 129-130, 293-294. The Notice Letter

requested that employees monitor their “financial accounts carefully for suspicious

activity and take appropriate steps”4 to protect themselves from potential identity

theft. ER 129, 293. “To assist” their employees in that “effort,” Starbucks offered

its victims a remedy of one year of low-level credit monitoring from Equifax

through its Equifax Credit Watch™ Silver (“Equifax Package”). ER 129-130,

293-294. Employees bore the burden of taking the affirmative step to apply for its

limited protection. ER 105, 269-270. Further, there is nothing to stop any identity

thief from using the information as soon as all 97,000 employees’ one year of

credit monitoring expires. ER 118-119, 282-283. In fact, as pled in the Amended

4
These measures included enrolling in the Equifax Package, placing a fraud alert
on their credit report, and purchasing credit monitoring after Starbucks’ year of
free credit monitoring expired. ER 130.

8
Complaint, thieves now typically use the information more than one year from the

date of the theft. ER 117, 281. Although the offer of credit monitoring was a step

in the right direction, as Plaintiffs alleged, a one-year service has proven to be

inadequate. ER 106, 119, 282-283.

Starbucks’ failure to maintain reasonable and adequate security procedures

to protect against the theft of Plaintiffs’ PII have put Plaintiffs and the proposed

Class at an increased risk of becoming victims of identity theft. ER 115, 279. In

addition to having their PII compromised, Plaintiffs and the proposed Class have

incurred—and will continue to incur—out-of-pocket costs, lost time, and other

damages as a result of monitoring their credit card accounts, credit reports, and

other financial information to protect their PII from misuse now and in the future.

ER 101, 266.

Plaintiffs Lalli, Shamasa, and Krottner have spent time, exerted effort, and

incurred expenses in safeguarding their PII as a result of Starbucks’ loss. ER 105-

106, 269-270. For example, Plaintiff Lalli signed up and paid out-of-pocket

expenses for Experian TripleAlert, a service which costs $16 per month for daily

monitoring of his credit with the three credit reporting agencies: Experian,

TransUnion, and Equifax. ER 270. Plaintiff Lalli also placed fraud alerts on his

credit cards. ER 269. Plaintiff Lalli spent and continues to spend substantial

9
amounts of time checking his 401(k) and bank accounts. ER 269-270. Ultimately,

Plaintiff Lalli experienced general anxiety and stress regarding the situation caused

by Starbucks. ER 270.

Upon receiving the Notice Letter from Starbucks, Plaintiff Krottner signed

up for the one year the Equifax Purchase. ER 105. Approximately one week after

receiving the letter, Plaintiff Krottner called her bank and asked them to monitor

her accounts for suspicious activity. Id. Since receiving the notice letter, Plaintiff

Krottner has been extra-vigilant about monitoring her bank and 401(k) accounts,

checking these accounts nearly every day and spending a substantial amount of

time doing so. Id. Furthermore, upon the expiration of the credit monitoring

offered by Starbucks, Plaintiff Krottner will have to pay out-of-pocket for credit

monitoring she did not otherwise need or use prior to Starbucks losing her PII. Id.

Like Plaintiff Krottner, Plaintiff Shamasa signed up for the Equifax Package

monitoring program that Starbucks offered. ER 105. In December 2008, Chase

Bank contacted Plaintiff Shamasa to inquire whether he had received checks for

his new checking account. ER 106. Plaintiff Shamasa informed Chase Bank that

he did not open this new checking account. Id. Chase Bank then explained that

there had been an attempt to open up a new checking account with his social

10
security number and worked with Plaintiff Shamasa to close the unauthorized

account. Id.

Plaintiff Shamasa believes that his identity was stolen as a result of

Starbucks’ loss of his PII, and the district court agreed that this inference was

permissible on a motion to dismiss. ER 105-106, 16. Although he signed up for

the Equifax Purchase, Plaintiff Shamasa was not informed by Equifax when his PII

was apparently misused to set up a new, unauthorized bank account, illustrating the

inadequacy of Starbucks’ proposed remedy. ER 105-106. Despite Starbucks’

feeble efforts to remedy the loss of its employees’ PII, Plaintiffs and the proposed

Class have spent and will continue to spend considerable time and money

attempting to prevent identity theft and monitoring their financial accounts for

fraudulent activity. ER 119, 283.

As a direct result of Starbucks’ failure to safeguard its employees’ PII,

Plaintiffs and members of the proposed Class have had their PII compromised,

invaded, and taken from their exclusive control. ER 101, 266. Moreover, they

have incurred – and will incur – attempted identity and/or out-of-pocket costs, lost

time, and other damages relating to the vigilant monitoring of their credit card

accounts, credit reports, and other financial information. ER 101, 266.

11
 V. SUMMARY OF ARGUMENT

Despite “lacking controlling precedent on which to rely” and the fact that

“[n]o Washington court has considered whether a plaintiff has either a contract or

negligence cause of action arising from an increased risk of identity theft,” the

district court dismissed Plaintiffs’ negligence and breach of contract claims based

on lack of “cognizable injury.” ER 12, 16. Plaintiffs present three arguments on

appeal as to why this ruling was in error. First, Starbucks’ breach of its implied

contract with Plaintiffs resulted in the loss of the privacy of their PII and an

increased risk of identity theft, which provide grounds for the award of breach of

contract damages and injunctive relief to Plaintiffs. Plaintiffs plausibly pled an

implied contract, Starbucks’ breach of that contract, and resultant damages.

Second, Starbucks’ breach of its common law duty to Plaintiffs injured Plaintiffs

and entitles them to damages for negligence. Starbucks does not deny the facts

giving rise to the breach of its duties to Plaintiffs, and implicitly recognized their

injury when it offered them a year of credit monitoring. Plaintiffs have plausibly

pled duty, breach of duty, causation, injury and damages. Hence, the negligence

claim likewise has been sufficiently pled for purposes of overcoming a motion to

dismiss. Third, given Washington’s recognition of medical monitoring as a

12
remedy and its preference for upholding complaints related to developing areas of

law, Plaintiffs should be permitted to seek the remedy of credit monitoring.

Alternatively, this Court should certify two issues to the Washington

Supreme Court: (1) whether Washington law recognizes an increased risk of

identity theft as a cognizable injury for purposes of negligence and/or breach of

contract claims, and (2) whether loss of time and money for credit monitoring

constitute cognizable damages for negligence and/or breach of contract claims

under Washington law.

VI. STANDARD OF REVIEW

This Court reviews a district court’s dismissal order de novo. Everest &

Jennings, Inc. v. American Motorists Ins. Co., 23 F.3d 226, 228 (9th Cir. 1994)

(citing Gobel v. Maricopa County, 867 F.2d 1201, 1203 (9th Cir. 1989)); Oscar v.

University Students Coop. Ass’n, 965 F.2d 783, 785 (9th Cir.) (en banc), cert.

denied, 506 U.S. 1020 (1992) (citing Kruso v. Int’l Tel. & Tel. Corp., 872 F.2d

1416, 1421 (9th Cir. 1989), cert. denied, 496 U.S. 937 (1990)). All allegations of

material fact are taken as true and construed in the light most favorable to the non-

moving party. Love v. United States, 915 F.2d 1242, 1245 (9th Cir. 1990).

13
 The standard of review on a Fed. R. Civ. P. 12(b)(6) motion to dismiss

requires a court to assess the legal sufficiency of the plaintiff’s claims. Navarro v.

Block, 250 F.3d 729, 732 (9th Cir. 2001). Dismissal is appropriate only where a

complaint fails to allege “enough facts to state a claim to relief that is plausible on

its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A complaint

withstands the plausibility test “when the plaintiff pleads factual content that

allows the court to draw the reasonable inference that the defendant is liable for the

conduct alleged.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (citing Twombly,

550 U.S. at 556 (noting that plausibility lies somewhere between allegations that

are “merely consistent” with liability and a “probability requirement”)); see also

Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (citing Iqbal, 129 S.

Ct. at 1949) (“In sum, for a complaint to survive a motion to dismiss, the non-

conclusory ‘factual content,’ and reasonable inferences from that content, must be

plausibly suggestive of a claim entitling the plaintiff to relief”); Ashcroft v. Al-

Kidd, No. 06-36059, 2009 WL 2836448, at *24 (9th Cir. Sept. 4, 2009) (“Twombly

and Iqbal do not require that the complaint include all facts necessary to carry the

plaintiff’s burden”). Plaintiffs’ claims for relief are plausible and sufficiently pled.

14
 VII. ARGUMENT

A. Starbucks Breached Its Contractual Duty to Plaintiffs, Resulting in

Injury and Compensable Damages

Plaintiffs have more than plausibly shown that: (1) Starbucks had a

contractual duty to safeguard Plaintiffs’ PII; (2) Starbucks breached that

contractual duty; and (3) Plaintiffs suffered damage as a result. See Lehrer v.

State, Dept. of Social and Health Serv., 5 P.3d 722, 727 (Wash. Ct. App. 2000)

(citing Northwest Indep. Forest Mfrs. v. Department of Labor & Indus., 899 P.2d 6

(Wash. Ct. App. 1995); Restatement (Second) of Contracts § 235(2) (1981)) (“Any

failure to perform a contractual duty constitutes a breach…, and the injured party is

generally entitled to damages which put the party in the same position in which it

would have been had the breach not occurred.”). The Amended Complaints

adequately pled the breach of an implied contract, and seek relief in the form of

contract damages and injunctive relief that are available in Washington. ER 123-

125, 286-288. Plaintiffs identify three specific documents that give rise to an

implied contract, which are collectively referred to as “Contract Documents.” ER

123-124, 287. The Contract Documents, coupled with the parties’ course of

dealing, show that Starbucks had both an implied contractual duty to maintain the

confidentiality of Plaintiffs’ PII, which Starbucks breached, thereby damaging

Plaintiffs.

15
 The first of the Contract Documents can be seen in Starbucks’ solicitation of

PII from applicants “in consideration of an application for employment, or a

current employee for promotion, transfer, reassignment, or retention.” ER 236,

397. Starbucks does not deny that this document is Starbucks’ corporate

communication to prospective employees regarding Starbucks’ inquiries into their

backgrounds, including validation of social security numbers. ER 91.

Second, the Starbucks “Standards of Business Conduct” states that “[j]ust as

we take care to protect our information, Starbucks respects the information of

others,” and that Starbucks and its employees should not “accept or use anyone

else’s confidential information (or agree to maintain anyone’s information in

confidence) except under an agreement approved by the Law and Corporate

Affairs department.” ER 256, 417. Starbucks issued the Standards of Business

Conduct “to restate Starbucks [sic] longstanding commitment to follow the law and

to act ethically in all situations.” Starbucks asserted that “the Starbucks Board of

Directors, senior management team and I [Chairman Howard Schultz], are all

bound by the Standards and the Standards have our full support.” ER 243, 404.

Starbucks does not deny that the Standards of Business Conduct pertain to

workplace conduct and the need of employees to “respect one another’s privacy.”

ER 92.

16
 Third, Starbucks’ online Privacy Statement explicitly governs Starbucks’ use

of Plaintiffs’ PII. Available at www.starbucks.com/customer/privacy.asp, ER 114,

278. The policy states: “The provision of personal information to Starbucks means

that you agree and consent that we may collect, use and share your personal

information in accordance with this privacy policy.” The policy defines the

information to which it applies as including “employment-related information,

such as may be found on resumes, applications, background verification

information, or in employment references.” It states that Starbucks may use the

personal information collected on the site to “communicate with you about specific

jobs.” The policy describes how employees’ personal information is secured (as

well as the larger universe of all Starbucks’ customers’ information): “Starbucks

strives to maintain appropriate physical, technical and administrative security with

respect to its offices and information systems so as to prevent loss, misuse,

unauthorized access, disclosure, or modification of personal information.” It states

that “[b]y using our services and viewing this Site, you are consenting to the

information collection, use and disclosure practices described in this privacy

policy.” Starbucks admits that this website is a Starbucks communication

regarding privacy responsibilities (though, despite the language quoted above, it

mystifyingly denies that the Privacy Statement applies to employees). ER 92.

17
 Starbucks did not provide Plaintiffs with the opportunity to negotiate or

modify the Contract Documents. Rather, Starbucks presented their terms to

Plaintiffs as take-it-or-leave-it arrangements: Either Plaintiffs could seek

employment with Starbucks and accept all the conditions imposed by the Contract

Documents, or Plaintiffs could elect not to pursue employment with Starbucks.

Starbucks’ Contract Documents clearly required Plaintiffs to share their PII with

Starbucks in order to be considered for hire and retention, and indicated that

Starbucks and Plaintiffs were expected to abide by standards of conduct that

included the protection of confidential information.

1. Plaintiffs have adequately pled the existence of an implied

contract under Washington law

To establish if there is a duty under an implied contract, Washington courts

apply the “objective manifestation test” in ruling on the existence of a contract: A

court considers the “objective acts or outward manifestations of the parties” to

conclude whether they have reached “mutual assent.” Brotherson v. Prof’l

Basketball Club, 604 F. Supp. 2d 1276, 1283 (W.D. Wash. 2009) (citing Keystone

Land & Dev. Co. v. Xerox Corp., 94 P.3d 945, 949 (Wash. 2004) (en banc);

Trendwest Resorts, Inc. v. Ford, 12 P.3d 613, 616 (Wash. Ct. App. 2000), rev'd on

other grounds, 43 P.3d 1223 (Wash. 2002) (en banc); Multicare Med. Ctr. v.

Department of Soc. & Health Servs., 790 P.2d 124, 132-33 (Wash. 1990) (en

18
banc)). The parties’ assent does not need to be perfect; their assent to a “core of

common meaning” is sufficient. Id. (citing Ford, 12 P.3d at 616-17). A contract is

interpreted to discern the parties’ intent, based on, among other considerations, the

language of the agreement, “all the circumstances surrounding the making of the

contract, the subsequent acts and conduct of the parties to the contract, and the

reasonableness of respective interpretations advocated by the parties.” Tanner

Elec. Coop. v. Puget Sound Power & Light Co., 911 P.2d 1301, 1310 (Wash. 1996)

(en banc) (citing Scott Galvanizing, Inc. v. Northwest EnviroServices, Inc., 844

P.2d 428 (Wash. 1993) (en banc)) (internal quotations omitted).

An implied in fact contract is “an agreement of the parties arrived at from

their conduct rather than their expressions of assent.” Heaton v. Imus, 608 P.2d

631, 632 (Wash. 1980) (en banc). A contract consists of offer, acceptance, and

consideration. See Veith v. Xterra Wetsuits, LLC, 183 P.3d 334, 337 (Wash. Ct.

App. 2008) (citing Christiano v. Spokane County Health Dist., 969 P.2d 1078

(Wash. Ct. App. 1998)). The existence of an implied contract is a question for the

trier of fact. Kilthau v. Covelli, 563 P.2d 1305, 1306 (Wash. Ct. App. 1977). The

Amended Complaints adequately allege the existence of an implied contract. ER

112-115, 123-124, 275-278, 286-287.

19
 Starbucks offered to assess Plaintiffs for employment, and later for retention

and promotion, if Plaintiffs would provide Starbucks access to their PII. ER 236,

397. Indeed, to accept its offer to be considered for employment or retention as an

employee, Starbucks required Plaintiffs to provide their PII to Starbucks. ER 236,

397. The Contract Documents also indicate that in return for the benefit of

receiving employees’ PII, Starbucks agreed to retain employees’ information in a

confidential manner, in keeping with Starbucks’ legal and ethical responsibilities.

ER 112-113, 237, 275-276, 398. In consideration for the possibility of

employment or retention, and under the condition of its safekeeping, Plaintiffs

communicated their PII to Starbucks. Just as a reasonable person takes pains to

protect the confidentiality of his or her social security number, Plaintiffs would not

have provided their PII to Starbucks without being required to do so to obtain the

benefit of assessment for employment or retention. ER 112-113, 275-276.

Starbucks possessed all of the bargaining power, and presented the Contract

Documents to Plaintiffs as a fait accompli. Plaintiffs could “take or leave” the

Contract Documents’ terms, and there was “no true equality of bargaining power

between the parties.” Mendez v. Palm Harbor Homes, Inc., 45 P.3d 594, 602

(Wash. Ct. App. 2002) (citing Yakima County (W.Valley) Fire Prot. Dist. No. 12 v.

City of Yakima, 858 P.2d 245 (Wash. 1993) (en banc)) (internal quotations

20
omitted). Ambiguities in adhesion contracts such as the present implied contract

should be construed against the drafter—in this case, Starbucks. See id. (citing

Rouse v. Glascam Builders, Inc., 677 P.2d 125 (en banc) (1984); Guy Stickney, Inc.

v. Underwood, 410 P.2d 7 (1966)).

Washington case law recognizes that employee handbook documents, such

as the “Starbucks Standards of Business Conduct,” ER 242-262, can serve as

contracts that bind the employer. See, e.g., Thompson v. St. Regis Paper Co., 685

P.2d 1081, 1087 (Wash. 1984) (en banc) (collecting cases). Additionally, whether

or not the elements of a contract exist, the Washington Supreme Court has held

that “employers may be obligated to act in accordance with policies as announced

in handbooks issued to their employees.” Id. The Thompson court recognized that

“employers expect, if not demand, that their employees abide by the policies

expressed in such manuals,” giving rise to employees’ reasonable expectation that

their employers will abide by the policies as well. Id. at 1088. Whether or not

Plaintiffs have read the Contract Documents has no bearing on the existence of a

contract. Brotherson, 604 F. Supp. 2d at 1285 (citing Yakima County, 858 P.2d at

255). If failure to read a contract is relevant at all, only the person who failed to

read the contract can raise the failure as a defense to contract formation.

Brotherson, 604 F. Supp. 2d at 1285 (citing Yakima County, 858 P.2d at 255).

21
 Based on the previously referenced Contract Documents and the course of

dealing between the Plaintiffs and Starbucks, this court should find that Plaintiffs

adequately plead the existence of an implied contract under Washington law.

2. Plaintiffs have plausibly pled the elements of a breach of a

contract.

Starbucks’ failure to safeguard the confidentiality of Plaintiffs’ PII

constitutes a breach of its contract with Plaintiffs. When a party to a contract fails

to perform a promise or contract, it has breached the contract, and the injured party

is entitled to damages. Colorado Structures, Inc. v. Ins. Co. of the West, 167 P.3d

1125, 1131 (Wash. 2007) (en banc) (citing Cartozian & Sons, Inc., v. Ostruske-

Murphy, Inc., 390 P.2d 548 (Wash. 1964); Ross v. Harding, 391 P.2d 526 (Wash.

1964); Tacoma Northpark LLC. v. NW LLC, 96 P.3d 454 (Wash. Ct. App. 2004);

Restatement (Second) of Contracts §346 cmt. a (1981)).

Starbucks does not dispute the fact of the breach. Starbucks has never

denied that Plaintiffs’ PII was saved in unsecured form on the laptop of a

Starbucks employee, or that the laptop was stolen and has never been recovered.

ER 73. Nor does it dispute the content of the Contract Documents, which assured

Plaintiffs that Starbucks “respects the information of others,” “take[s] care to

protect our information,” and is “bound by the Standards” of Business Conduct

requiring maintenance of “physical, technical, and administrative security.” ER

22
256, 243, 417, 404. Further, Starbucks has never contended that it lacks the

institutional capacity to protect the confidentiality of sensitive information. In fact,

its Contract Documents acknowledge that the protection of proprietary information

is essential to its business. ER 255, 416. Thus, the fact of Starbucks’ contractual

breach is not in dispute.

3. Starbucks’ breach of implied contract damaged Plaintiffs

Every breach of contract gives rise to a cause of action, “even when the

aggrieved party has not suffered any actual damage.” Jacob’s Meadow Owners

Ass’n v. Plateau 44 II, LLC, 162 P.3d 1153, 1160 (Wash. Ct. App. 2007) (citing

Ford, 43 P.3d 1223). Thus, even if the damages were not clear, a breach would

suffice to give rise to a contract cause of action under Washington law. Here,

however, the resulting harm and damages stemming from Starbucks’ breach of

contract are clear. Plaintiff Shamasa’s harm is his loss of his ability to control

access to his PII and his damages are that following the theft, Plaintiff Shamasa is

now required to monitor his financial accounts on a regular, ongoing basis. ER

106. Likewise, Plaintiffs Lalli and Krottner have also suffered the same harm and

damages, as they will now be required to expend time and money monitoring their

financial accounts on a regular, ongoing basis. ER 105, 270. They will also have

to pay out-of-pocket for credit monitoring once the single year of credit monitoring

23
services supplied by Starbucks expires. ER 105, 269-270. Indeed, Plaintiff Lalli

has already paid out-of-pocket for his credit monitoring.

In its motion to dismiss, Starbucks attacked Plaintiffs’ damages theory.

However, the district court’s opinion discussed injury.5 Whether the district court

intentionally rejected Defendant’s arguments against damages or unintentionally

conflated injury and damages is unclear. What is clear is that at crucial points

throughout the district court’s opinion, concepts of injury, harm, and damages were

used interchangeably. This led the district court to inconsistent and incorrect

analyses. See Section VII.B.2., infra.

However, even if injury were required to establish a breach of contract,

Starbucks’ offer to pay for one year of credit monitoring reinforces the

determination that Plaintiffs indeed suffered an injury due to Starbucks’ breach of

contract. Plaintiffs have suffered the injuries of increased risk of identity theft,

5
The concept of injury is actually subsumed in the breach of contract. While
plaintiffs in this case were injured by the breach of the contract, plaintiffs do not
need to show injury in order to recover damages as a result of the breach. See
Colorado Structures, 167 P.3d at 1131 (citing Cartozian & Sons, 390 P.2d 548;
Ross, 391 P.2d 526; Tacoma Northpark, 96 P.3d 454; Restatement (Second) of
Contracts §346 cmt. a) (explaining that plaintiffs can recover damages even for
nominal or partial breaches of contract). Moreover, the district court erred in
ruling that injury for standing did not support injury for the common law claims.
Cf. ER 8-10 with §VII. B.2.b.i., infra.

24
emotional distress, and the loss of privacy as their PII is now in the ether or worse.

The injury here is similar to the exposure of a trade secret, regardless of the

subsequent uses to which the disclosed trade secret is put. See WASH. REV. CODE

ANN. 19.108.010(2) (West 2009) (defining “misappropriation” under

Washington’s Uniform Trade Secrets Act to include “disclosure or use of a trade

secret of another without express or implied consent”). As the district court

observed, “If Plaintiffs have suffered no present injury, then why is Starbucks

offering them a present remedy?” ER 8. Thus Starbucks’ breach of their

contractual duty to safeguard Plaintiffs’ PII resulted in injury equivalent to that

they would have suffered had their PII been displayed on a billboard: loss of the

privacy of their PII, and vulnerability to the misuse of their PII.

Generally, recovery of damages for breach of contract should place an

aggrieved party in the same economic position it would have attained had the

contract been performed.6 Crest Inc. v. Costco Wholesale Corp., 115 P.3d 349,

351 (Wash. Ct. App. 2005). Damages available for breach of contract under

6
The issue of contract damages is a question of fact to be determined by the jury.
Sofie v. Fibreboard Corp., 771 P.2d 711, 716 (Wash. 1989) (en banc) (stating
jury’s damage-finding function is constitutional in nature and must be respected);
Brust v. Newton, 852 P.2d 1092, 1095 (Wash. Ct. App. 1993) (citing Sofie, 771
P.2d 711) (“The question of damages [is] similarly factual in nature. Damage
determinations are a classic example of the type of questions which are
traditionally decided by a jury.”).

25
Washington law include consequential damages, which are damages that “flow

naturally and inevitably from the breach, and are so related to it as to have been

within the contemplation of the parties when they entered into the contract.”

Wash. Contract Law and Practice, 25 David K. DeWolf & Keller W. Allen, Wash.

Practice § 14.7 (2d ed. 2007); see also Microsoft Corp. v. Immersion Corp., No.

07-936, 2008 WL 2998238, at *3 (W.D. Wash. Aug. 1, 2008); Restatement

(Second) of Contracts § 347 cmt. c (1981) (“consequential losses include such

items as injury to person or property resulting from defective performance”). Time

and money spent in addressing and mitigating the impact of the breach is a

measure of damages. See Restatement (Second) of Contracts § 350(2) (1981)

(citing Federal Signal v. Safety Factors, 886 P.2d 172, 185 (Wash. 1994)(efforts to

repair, though unsuccessful, were reasonable); Bernsen v. Big Bend Elec. Co-op.,

Inc., 842 P.2d 1047, 1052 (Wash. Ct. App. 1993) (mitigation decision was

reasonable)); Stockton Heartwoods, Ltd. v. Bielski, No. 1675, 2006 WL 571983, at

*3 (E.D. Mo. Mar. 8, 2006) (recognizing damages to plaintiff for time spent as a

result of a defendant’s breach of contract but dismisses the case on other grounds).

If an aggrieved party makes reasonable efforts to make itself whole after the other

party’s breach, the injured party may recover the cost of those efforts whether or

26
not they are successful. See Restatement (Second) Contracts § 350 (2); see also

Federal Signal, 886 P.2d at 185; VII.C.2, infra.

The remedies appropriate for Starbucks’ breach of contract include all those

specified in the Amended Complaints: damages for all costs for, and time spent,

on bank and credit monitoring to prevent identity theft and related fraud. ER 124,

287. These damages flow naturally and inevitably from Starbucks’ breach of its

contract with Plaintiffs. Indeed, Starbucks’ post-theft communication to Plaintiffs

instructed Plaintiffs to “take appropriate steps to protect [themselves] against

potential identity theft.” ER 129, 293. It advised them to take credit monitoring

steps “to ensure that your information is protected and secure,” evincing that their

information is not fully protected and secure without monitoring. Id. The letter

also offered one year of credit watch services to employees, indicating that such

damages arise “naturally and inevitably” from Starbucks’ breach of its contractual

duty to maintain the confidentiality of Plaintiffs’ PII. Id.

4. Plaintiffs’ Claims Are Ripe for Adjudication

In light of the above duty to mitigate, the district court erred when it opined

that Plaintiffs could wait to file suit until documented identity theft occurs. ER 84.

A contract cause of action accrues when the wrongful act is committed—when the

contract is breached. See, e.g., Schwindt v. Commonwealth Ins. Co., 997 P.2d 353,

27
356 (Wash. 2000) (en banc) (citing Safeco Ins. Co. v. Barcom, 773 P.2d 56 (Wash.

1989) (en banc); Denny's Rest., Inc. v. Security Union Title Ins. Co., 859 P.2d 619

(Wash. Ct. App. 1993); Bush v. Safeco Ins. Co. of Am., 596 P.2d 1357 (Wash. Ct.

App. 1979)). Here the breach was Starbucks’ failure to safeguard Plaintiffs’ PII.

Instead of waiting until worst-case-scenario predictions come true, Plaintiffs are

taking the reasonable and foreseeable steps of monitoring their credit and bank

accounts in order to attempt to minimize their damage from Starbucks’ breach of

contract, steps that require both money and time. ER 105, 269-270. Plaintiffs also

seek injunctive relief in the form of identity theft insurance and periodic

compliance audits by a third party of the security of Starbucks’s computer systems.

ER 125. The district court erred when it granted a motion to dismiss Plaintiffs’

contract claim, without review of any evidence on damages or injunctive relief, at

this nascent stage in the litigation.

B. Starbucks Was Negligent In Allowing Plaintiffs’ PII To Be

Compromised And Should Be Held Legally Accountable

Plaintiffs seek to hold Starbucks accountable for its negligent conduct and to

deter future negligence, which could result in further exposure of employee PII.7

7
As reflected in the Plaintiffs’ complaints, Starbucks has a demonstrated history of
allowing the PII of its employees to be compromised. ER 106, 270. In 2006
Starbucks failed to safeguard the PII of 60,000 of its employees stored on two
unencrypted laptops which were either misplaced or stolen from Starbucks. ER

28
As explained in the following section, Plaintiffs have pled a plausible prima facie

case of negligence under Washington law. ER 122-23, 285-86. Plaintiffs then

explain that the lower court confused and conflated the concepts of injury, harm,

and damages. Courts have parsed out the concepts injury, harm, and damage and

found that each word has a distinct legal meaning. While plaintiffs only need to

plead injury in a prima facie case of negligence, plaintiffs can and do explain that

they have also plead harm and damage - elements which support the other non-

injury elements of a prima facie negligence claim. Finally, Plaintiffs establish that

the economic loss rule does not bar their negligence claims because the Plaintiffs’

negligence claims focus on the common law duty placed on Starbucks, on the loss

of their personal property and is thus wholly distinct from their contract claims.

1. Plaintiffs Have Pled Plausible Prima Facie Elements of Negligence

Entitling Plaintiffs To Survive A Motion To Dismiss
Plaintiffs have alleged with sufficient detail the requisite elements of their

negligence claim pursuant to Washington law. To establish a claim for negligence,

100, 265. Prior to 2006, an employee in Starbucks’ own human resource

department was imprisoned for accessing the PII of Starbucks employees and
providing it to members of an identity theft ring. ER 100-101, 265-266.
Plaintiffs believe that Starbucks should be punished to deter any similar wrongful
conduct in the future. See, e.g. Restatement (Second) of Torts §901(c) (stating
that one of the principles for determining the measure of damages in tort is to
punish wrongdoers and to deter wrongful conduct).

29
the plaintiff must allege: (1) duty, (2) breach, (3) causation, and (4) injury. 8 See

Hutchins v. 1001 Fourth Ave. Assocs., 802 P.2d 1360, 1362 (Wash. 1991) (citing

Christen v. Lee, 780 P.2d 1307 (Wash. 1989)). Before the district court, Starbucks

did not dispute that Plaintiffs had plausibly pled Starbucks’ common law duty9 to

safeguard its employees’ PII or the fact that it was breached10 as a result 11of its

8
Despite the standard for negligence in Washington, Starbucks focused its
argument below on “damages.” ER 85, 88. The error has its roots in the
conflation of injury, harm, and damage—an error perpetuated by the lower court.
See, e.g., ER 53 (discussing damages in context of injury); ER 55 (mixing harm
and damage); ER 56 (analyzing injury in terms of cost).
9
Although Starbucks has failed to raise any defect in the other prima facie
elements, Plaintiffs addressed them briefly before the district court. First,
Plaintiffs allege that Starbucks owed a duty to safeguard Plaintiffs’ PII in a manner
consistent not only with certain guidelines from the Federal Trade Commission and
the Washington State Office of the Attorney General. ER 107, 109-112, 271-275.
Moreover, in Katz v. United States, 389 U.S. 347, 351(1967), the Supreme Court
established the principle that the right of privacy protects persons. Katz developed
the test of “reasonable expectations of privacy” as the test to be applied to
determine whether an individual's right of privacy has been breached. Id. It is
uncontested that Plaintiffs have a reasonable expectation to the privacy of their PII.
Washington recognizes a common law right to privacy, Reid v. Pierce County, 961
P.2d 333 (Wash. 1998), and has adopted the Restatement (Second) of Torts § 652D
(1977) for such a claim. Mayer v. Huesner, 107 P.3d 152, 155 (Wash. Ct. App.
2005). Common law breach of privacy claims can apply to employer-employee
relationships when the employee’s personal information is publically disclosed by
the employer. See id. at 156. Thus, employers have a common law duty to keep
private employee data confidential.
10
Plaintiffs allege that Starbucks breached its common law duty by storing the
information on a laptop that was unsecured, and failing to encrypt the data on that
laptop. ER 111-112, 275.

30
own conduct. ER 13, 92. As such, challenges to the elements of duty, breach, and

causation are waived. See Silvas v. E*Trade Mortg. Corp., 514 F.3d 1001 (9th Cir.

2008) (quoting Doi v. Halekulani Corp., 276 F.3d 1131, 1140 (9th Cir. 2002))

(stating “[I]t is well established that an appellate court,” will not consider issues

that were not properly raised before the district court and noting that failure to raise

an objection prior to judgment waives the right to challenge the issue on appeal);

see generally State v. Robinson, 145 Wash. App. 1022, 2008 WL 2505445, at *13

(Wash. Ct. App. 2009) (citing WASH. R. APP. P. 2.5 (West. 2009) (failure to raise

an argument results in its waiver); Hui v. Sunnyside Sch. Dist. No. 201, 132 Wash.

App. 1015, 2006 WL 775164, at *11 (Wash. Ct. App. 2006) (citing defense

counsel’s lack of objection is a tactical decision and a waiver); see also Whited v.

Parking Violations Bureau, 111 Fed. Appx. 953 (9th Cir. 2004). Instead,

Starbucks’ main dispute below was with Plaintiffs’ damages theory: Whether it

was recognized under Washington law and, if so, whether it was sufficiently stated.

This argument misses the point as damages are different from the injury needed to

plead a prima facie case of negligence.

11
Plaintiffs alleged that, but for Starbucks’ breach of duty, Plaintiffs would not
have suffered injury. And, as discussed below, Plaintiffs have alleged injuries that
were caused by Starbucks’ negligent acts. ER 115, 279.

31
 2. Injury, Harm and Damages are Discrete Legal Concepts, The
Understanding Of Which Are Critical To The Proper
Adjudication Of The Plaintiffs’ Negligence Claim

As stated above, Plaintiffs have been injured, harmed and damaged by

Starbucks’ negligent behavior. Unfortunately, the lower court, confused these

concepts and, as result, found that they did not exist for Plaintiffs. While Plaintiffs

only need to plead injury in a prima facie case of negligence, Plaintiffs have also

shown that they have suffered harm and damages as a result of Starbucks’

negligence.

a. The Concepts of “Injury,” “Harm,” and “Damage” Are

Distinct Legal Concepts Which Should Not Be Blurred

In the analysis of the underlying tort and contract claims, distinctions

between the legal concepts of injury, harm, and damage must be recognized and

observed. See Huff v. Roach, 106 P.3d 268, 270 (Wash. Ct. App. 2005) (citing

Lavigne v. Chase, Haskell, Hayes & Kalamon, P.S., 112 Wash. App. 677, 682, 50

P.3d 306 (Wash. Ct. App. 2002)) (“Although ‘injury’ and ‘damages’ are often used

interchangeably, an important difference exists in meaning”); Jordache Enter., Inc

v. Brobeck, Phleger & Harrison, 56 Cal.Rptr.2d 661, 663, 667 (Cal. App. 2 Dist.

1996) (Jordache), rev’d on other grounds, 18 Cal.4th 739 (1998) (Jordache II);

The Restatement of Torts defines “injury” as “the invasion of any legally

protected interest of another,” and defines “harm” as “the existence of loss or

32
detriment in fact of any kind to a person resulting from any cause.” Restatement

(Second) of Torts, § 7 (1)-(3), cmts. a-b (1965); see also McFarland v.

Commercial Boiler Works, 116 P.2d 288, 292 (Wash. 1941)(citing Restatement of

Torts § 281 (1934)) (stating negligence requires invasion of a legally protected

interest); Frazee v. Western Dairy Products, 47 P.2d 1037, 1039 (Wash.

1935)(quoting Palsgraf v. Long Island R.R. Co., 248 N.Y. 339 (N.Y. 1928))

(“Negligence is not actionable unless it involves the invasion of a legally protected

interest, the violation of a right”); Moore v. The Sally J., 27 F.Supp.2d 1255, 1263

(W.D. Wash. 1998) (explaining harm).

“Damages” refers to monetary compensation recoverable, that is, the “sum

of money awarded to a person injured by the tort of another.” Restatement

(Second) of Torts § 12A (1965), Restatement (Second) of Torts § 902 (1979)

(citing State ex rel. Macri v. City of Bremerton, 111 P.2d 612, 616 (Wash. 1941)

(en banc)).12 “The rules for determining the measure of damages in tort are based

upon the purposes for which actions of tort are maintainable.” Restatement

(Second) of Torts § 901 (1979); see also Ford, 43 P.3d at 1227 (citing Restatement

(Second) of Torts § 901). Such purposes include giving compensation for harms,

punishing wrongdoers, and deterring wrongful conduct. See Restatement (Second)

12
These definitions are the same for torts and contracts. Restatement §902,
comment a.

33
of Torts § 901 at (a), (c). As damages flow from an injury they do not constitute

the injury itself. See Restatement (Second) of Torts §§ 12A , 902; see also ex rel

Macri, 111 P.2d at 616 (“…it should be borne in mind that the term ‘damages' is in

its legal sen[s]e defined as meaning the compensation which the law will award for

an injury done.”). If injury and damages are conflated, the results reached can be

internally inconsistent and yield incorrect analyses contrary to applicable law.

Here, the injury was the loss of privacy and, as determined by the district

court, the increased risk of identity theft, as well as emotional distress and anxiety.

ER 48-50. The harm is the loss of the actual PII and the ability to control access to

the PII—a detrimental change in condition to intangible rights—i.e., the proverbial

toothpaste is out of the tube. The damages are time and out of pocket expenses

incurred in mitigation as well as actual instances of identity theft and/or

unauthorized charges. ER 101, 106, 117, 119, 124, 266, 269-70, 281, 283, 287.

b. Plaintiffs Have Alleged an Injury

Plaintiffs were injured by Starbucks as they have lost the privacy of their

PII; it is not under lock and key at Starbucks as it was supposed to be. Plaintiffs

have also suffered emotional distress and an increased risk of identity theft.

Plaintiffs have established an injury as recognized by courts around the country.

See Kuhn v. Capital One Financial Corp., 855 N.E.2d 790, 2006 WL 3007931, at

34
*3-4 (Mass. Ct. App. Oct. 23, 2006) (Table) (finding that despite the plaintiff not

having to pay the fraudulent charges on her account, Plaintiff’s actions to have the

account closed and to protect her credit constituted injury); Daly v. Metropolitan

Life Ins. Co., 2 N.Y.S.2d 530, 4 Misc. 3d at 891-93 (N.Y. 2004); Jones v.

Commerce Bancorp, Inc., 2006 WL 1409492, *2 (S.D.N.Y. May 23, 2006); Ruiz v.

Gap Inc., 540 F.Supp.2d 1121, 1126 (N.D.Cal. 2008).

(i) Injury For Standing Encompasses Injury For

Negligence Claim

Under an Article III analysis, the district court found that Plaintiffs had

suffered an injury in fact. ER 48-50. Specifically, the district court held that

although Plaintiffs had not yet suffered (what the court defined as) actual identity

theft, it was irrelevant for purposes of standing that they “might suffer additional

injuries in the future” because they had actual present injury, in the form of

increased risk, now. ER 48 (emphasis in original). In support of this proposition,

the district court found it incredible for Starbucks to argue no injury or risk of

future harm in the face of “having already offered these Plaintiffs free credit

monitoring.” ER 49. Moreover, the district court cited numerous decisions from

this and other circuits that had found risk of future injury as sufficient for the

present injury analyses. ER 48-50. In closing, the district court specifically held

that “Plaintiffs’ allegations . . . establish a presently compensable injury” and “the

35
threat of identity theft in the wake of the loss of the laptop . . . constitute[s] an

injury in fact.” ER 50.

Despite recognizing injury for standing purposes, the district court erred in

holding that a finding of injury for standing did not support a finding of injury on

the underlying claims. In Lujan v. Defenders of Wildlife, the Supreme Court

defined constitutional “injury in fact” as an “invasion of a legally protected interest

which is (a) concrete and particularized . . . and (b) “‘actual or imminent, not

‘conjectural’ or ‘hypothetical.’’” 504 U.S. 555, 560 (1992) (citations omitted).

Washington common law defines “injury” as simply “an invasion of a legally

protected interest”. See Rettkowski v. Department of Ecology, 910 P.2d 462, 467

(Wash. 1996) (en banc) (citing Black's Law Dictionary 785 (6th ed. 1990)) (“The

common law definition of ‘injury’ is ‘[t]he invasion of any legally protected

interest of another.’”). Thus, “injury in fact” is, under these circumstances, a

higher threshold than Washington’s common law “injury” standard because it

starts with simple injury and additionally requires the invasion to be concrete,

actual or imminent, and not hypothetical. Compare Lujan, 504 U.S. at 560 with

Rettkowski, 910 P.2d at 467. Thus, the lower court erred when it found that

Plaintiffs had met the higher threshold and yet somehow had failed to meet the

lower threshold.

36
 (ii) Plaintiffs Are Seeking Remedies Well Established
Causes Of Action

The district court also erred when it incorrectly framed the analysis as

whether the Washington Supreme Court would “recognize a common law cause of

action to recover for an increased risk of identity theft.” ER 13; see also ER 12

(“No Washington court has considered whether a plaintiff has either a contract or

negligence cause of action arising from an increased risk of identity theft

unaccompanied by damages from identity theft.”) In doing so, it ignored the

negligence and contract causes of action pled in the Complaints. ER 122-124, 285-

287. Plaintiffs are not seeking to fashion a new cause of action for “increased risk

of identity theft.” Rather, Plaintiffs have pled existing and recognized causes of

action – negligence and breach of an implied contract.13 ER 122-124, 285-287.

13
Although noting its responsibility to look to other jurisdictions in the absence of
Washington authority, ER 12, it ignored numerous cases from within this Circuit,
and others, where claims have been upheld where plaintiffs expended time and
out-of-pocket costs to address wrongs caused by a defendant’s conduct. Gap, 540
F.Supp.2d at 1126; Witriol v. LexisNexis Group, No. C05-02392 MJJ, 2006 WL
4725713 at *6 (N.D. Cal. Feb. 10, 2006)(costs associated with monitoring and
repairing credit impaired by unauthorized release of private information upheld
claim); Stollenwerk v. Tri-West Healthcare Alliance, No. 03-0185, 2005 WL
2465906 (D. Ariz. Sept. 8, 2005) (Stollenwerk I), aff’d in part, rev’d in part,
Stollenwerk v. Tri-West Health Care Alliance, 254 Fed. Appx. 664, 668 (9th Cir.
2007)(Stollenwerk II)(claims of actual identity theft or fraudulent account activity
upheld claim); Kuhn v. Capital One Fin. Corp., 855 N.E.2d 790, 2006 WL
3007931, at *3 (Mass. App. 2006) (time and money spent to repair identity theft
and prevent future fraudulent activity upheld claim); Jones v. Commerce

37
 (iii) Washington Would Not Be The First Jurisdiction To
Find Increased Risk of Identity Theft As Cognizable
Claim Under State Law

In its opinion, the district court stated “if the Washington Supreme Court

were to recognize a common law cause of action to recover for an increased risk of

identity theft, it would apparently be the only court to do so.” ER 13. The Court

continued “…as the court is aware, every court that has considered a similar claim

has found that it is not cognizable under applicable state law. ER 13. However,

courts have recognized an “increased risk of identity theft” as “cognizable under

applicable state law” under similar claims. Gap, 540 F.Supp.2d at 1126;

Stollenwerk I, 2005 WL 2465906, at *12(discussing denial of motion to dismiss at

earlier proceeding).

Bancorp, Inc., No. 06 Civ. 835, 2006 WL 1409492, *2 (S.D.N.Y. May 23,
2006)(time spent in response to identity theft compensable); EMC Mortgage
Corp. v. Jones, 252 S.W.3d at 857, 872 (Tex. App. 2008)(time spent to repair
credit and loan problems compensable); Daly v. Metropolitan Life Ins. Co., 782
N.Y.S.2d 530 (N.Y. Sup. Ct. 2004)(negligence survives summary judgment when
plaintiff pled time expended to rectify identity theft); Shames-Yeakel v. Citizens
Fin. Bank, No. 07-c-5387, 2009 U.S. Dist. LEXIS 75093 (N.D. Ill. Aug. 21,
2009)(actual identity theft and fraudulent activity supported negligence claim);
see also Shqeirat v. U.S. Airways, Inc., 515 F. Supp. 2d 984 (D. Minn.
2007)(release of social security numbers sufficient injury under constitutional
right to privacy claim).

38
 As this area of jurisprudence evolves, it is important to consider both the

legal issues raised in other jurisdictions as well as the application of the law of the

instant Court to the factual scenario.

c. Harm Exists for Plaintiffs’ Negligence Claim

As Plaintiffs Have Experienced the Loss of Their PII
Because of Starbucks’ Data Mishandling14

Harm is “the existence of loss or detriment in fact of any kind to a person

resulting from any cause.” Restatement (Second) of Torts, § 7 (1965) (emphasis

added). Thus, harm occurs when a:

detriment or loss to a person which occurs by virtue of, or as a result

of, some alteration or change in his person, or in physical things, and
also the detriment resulting to him from acts or conditions which
impair his physical, emotional, or aesthetic well-being, his pecuniary
advantage, his intangible rights, his reputation, or his other legally
recognized interests.

Restatement (Second) or Torts §7, cmt. b (emphasis added); The Sally J, 27

F.Supp.2d at 1263. The term “harm” implies no particular causal relation. Id. at

cmt c. Moreover, a person may suffer harm before he sustains all, or even the

greater part, of the damages occasioned by the negligence. First Maryland

Leasecorp v. Rothstein, 864 P.2d 17, 21 (Wash. Ct. App. 1993) (citing Gazija v.

Nicholas Jerns Co., 543 P.2d 338 (Wash. 1975) (en banc)); Steele v. Organon,

14
The issues of injury and damage are addressed separately for each claim in §§
VII.A, VII.B.

39
Inc., 716 P.2d 920, review denied, 106 Wash.2d 1008 (1986)); Johnson,

Christenson, Viger Constructors, Inc. v. Perry, Shelton, Walker & Assoc., PLLC,

133 Wash. App. 1008, 2006 WL 1462743, at *10 (Wash. Ct. App. 2006) (citing

First Maryland, 864 P.2d 17).

Given the affirmative duty to mitigate, incurring costs or paying fees to

mitigate the effects of the negligence constitutes appreciable harm. Lew v.

Goodfellow Chrysler-Plymouth, Inc., 492 P.2d 258, 261 (Wash. Ct. App. 1971)

(quoting Hoff v. Lester, 168 P.2d 409 (Wash. 1946)) (“plaintiff cannot be

compensated for damages which he might have prevented by reasonable efforts

and expenditures.”).

A person’s PII is their intangible property right in which Plaintiffs have a

legally recognized right to privacy in the state of Washington and elsewhere. See

O'Hartigan v. Department of Personnel, 821 P.2d 44, 47 (Wash. 1991) (en banc)

(citing Thorne v. El Segundo, 726 F.2d 459 (9th Cir.1983), cert. denied, 469 U.S.

979 (1984)). See also n. 10, supra. 15

15
See also State v. Mayze, 622 S.E.2d 836, 841 (Ga. 2005) (citing GA. CODE. ANN.
§ 16-9-125 (“identity fraud is an offense against the victim’s possessory interest
in his or her personal information,” and personal information is an intangible
commodity); see, e.g., People v. Kozlowski, 117 Cal.Rptr.2d 504, 96 Cal. App.
4th 853, 869 (Cal. Ct. App. 2002) (finding that personal identification numbers,
or PIN codes, constitute property because they are a means of access to bank
accounts); People v. Dolbeer, 29 Cal.Rptr. 573, 214 Cal. App. 2d 619, 622-23

40
 Plaintiffs alleged that they suffered appreciable harm when their PII was

physically lost and they were no longer able to control the access to their PII. ER

105-106; see also §VII.B.3., infra. This constitutes appreciable harm as defined

above. See, e.g., Panag v. Farmers Ins. Co. of Washington, 204 P.3d 885, 903

(Wash. 2009)(“The expenses incurred by the plaintiffs to monitor their credit

represent a completed harm” under the Consumer Protection Act); see also

Tallmadge v. Aurora Chrysler Plymouth, Inc., 605 P.2d 1275, 1278 (Wash. Ct.

App. 1979) (explaining inconvenience of dealing with defective vehicle is

compensable); McKeown v. First Interstate Bank, 194 Cal. App. 3d, 1225 at 1228-

29 (Cal. Ct. App. 1987) (overturned other grounds, Laird v. Blacker, 279 Cal.

Rptr. 700, 706 (Cal. Ct. App. 1991)).

Additionally, Plaintiff Shamasa also alleges harm from the actual misuse of

his PII. ER 106. Actual misuse of PII constitutes appreciable harm. See, e.g.,

Stollenwerk II, 254 Fed. Appx. at 667-68.

(1963) (holding that confidential lists of telephone subscribers constitute property

because of their value).

Moreover, the fact that Washington has criminalized identity theft shows that one
has a possessory interest in his or her personal information. See WASH. REV.
CODE ANN.§§ 9.35.020 (identify theft statute) 9.35.001 (statement of legislative
intent for identity theft statute).

41
 (i) “Proof” Is Not Required At This Stage of The
Litigation

The district court erred in concluding that harm could only be realized if

“either proof of actual loss from identity theft or proof that a loss is highly likely to

occur” existed. ER 15 (emphasis added). The district court already determined an

inference that the stolen laptop has resulted in actual misuse. ER 16. Plaintiffs

have adequately alleged harm. ER 115-120, 279-283. At this stage, nothing more,

especially evidentiary proof, is required. See, e.g., Reese v. Malone, No. 08-1008,

2009 WL 506820, *10 (W.D. Wash. 2009) (explaining party survives motion to

dismiss through adequate pleading with proof developed during discovery);

Presidio Group, LLC v. GMAC Mortg., LLC, No. C08-5298RBL, 2008 WL

5110845, *5 (W.D. Wash. 2008) (stating in order to survive a motion to dismiss,

plaintiff need only to plead facts such that reasonable expectation discovery would

reveal evidence in support). Accordingly, Plaintiffs have adequately alleged harm

here.16

16
Despite this backdrop, the district court erred in finding that Washington would
not recognize remedies for “harms not yet realized,” and seeking to place a
monetary minimum on harm. ER 15-16. That Stollenwerk II faced damages of
$7,000 is irrelevant to whether Plaintiffs suffered harm here. Harm, as defined
above, is not based on minimum out-of-pocket losses, but on a detrimental change
in condition to tangible or intangible rights. Restatement (Second) of Torts, § 7
cmt. b. Plaintiffs have met this requirement.

42
 3. Plaintiffs Have Alleged Sufficient Damages Under Washington
Law

The damages sought by Plaintiffs are of the classic type properly sought

under negligence claims: A plaintiff “whose legally protected interests have been

endangered by the tortious conduct of another” and/or “who has already suffered

injury by the tort of another” “is entitled to recover for expenditures reasonably

made or harm suffered in a reasonable effort to avert” harm. Restatement (Second)

of Torts § 919 (1979); see also C.2, infra. Plaintiffs and members of the putative

Class have incurred damages by spending significant amounts of time and money

monitoring their credit information, as well as dealing with instances of identity

theft. ER 101, 266. For example, Plaintiff Krottner has spent time and effort

monitoring her credit and upon expiration of her one year of credit monitoring will

incur expenses related to the continuation of credit monitoring. ER 105. Plaintiff

Lalli signed up and paid out-of-pocket for Experian Triple Alert, a service which

costs $16 a month for daily monitoring of his credit. ER 270. Plaintiff Shamasa

alleged that he was a victim of identity theft when he discovered that an individual

attempted to open a checking account in his name, and he will need to continue

spending time to monitor his accounts in the future. ER 105-106. These are

examples of time and expenditures of money that Plaintiffs would not need to

protect their identities, but for Starbucks’ negligence. As discussed above, the

43
district court erred when it took the issue of damages from the jury. See §VII.A.3,

supra.

Courts have routinely held that time and money spent in monitoring bank

accounts, requesting credit reports, purchasing monitoring services, and attempting

to mitigate/remediate losses caused by lost PII constitute damages. See Stephens v.

Omni Ins. Co., 159 P.3d 10, 25 (Wash. Ct. App. 2007) (holding that “time and

expense” of investigating possible damage to credit rating is compensable for a

consumer protection act violation); Sign-O-Lite Signs, Inc. v. DeLaurenti Florists,

Inc., 825 P.2d 714, 720 (Wash. Ct. App. 1992) (holding that lost time, outside of

litigation, spent dealing with dispute was a compensable under a consumer

protection act violation); Kuhn, 2006 WL 3007931 at *3 (holding that time spent

seeking to prevent or undo harm caused by negligence and breach of contract is

compensable and that “one ‘whose legally protected interests have been

endangered by the tortious conduct of another is entitled to recover for

expenditures reasonably made or harm suffered in a reasonable effort to avert the

harm threatened’”)(citing Restatement (Second) of Torts § 919); Witriol, supra;

Jones, supra; EMC Mortgage, supra; Daly, supra; Federal Trade Comm'n v.

Neovi, Inc., 598 F. Supp. 2d 1104 (S.D. Cal. 2008), supra. Indeed, Starbucks

specifically advised Plaintiffs and members of the putative Class to take such

44
actions in order to protect themselves from identity theft. ER 129, 293.

Accordingly, Plaintiffs have incurred and will continue to incur expenses related to

credit monitoring and other preventative measures to protect their identities. ER

105-106, 269-270. In every instance of actual identity theft, damage has been

found or at least assumed without discussion. See, e.g., Stollenwerk II, 254 Fed.

Appx. at 667-68; Kuhn, 2006 WL 3007931, at *3; Daly, 4 Misc. 3d at 893; Jones,

2006 WL 1409492, at *2; Shames-Yeakel, 2009 U.S. Dist. LEXIS 75093, *39-41.

Thus, in the instant case, Plaintiffs have alleged sufficient damages.

4. The Economic Loss Rule Does Not Apply

Washington’s economic loss rule prohibits plaintiffs from recovering purely

economic damages in tort when the plaintiff's entitlement to damages is based in

contract. Alejandre v. Bull, 153 P.3d 864 (Wash. 2007) (en banc). “The rule

prohibits plaintiffs from recovering in tort economic losses to which their

entitlement flows only from contract because tort law is not intended to

compensate parties for losses suffered as a result of a breach of duties assumed

only by agreement.” Id. at 682 (quotation omitted) (emphasis added). The rule

“ensures that a party to a contract cannot recover in tort the risk the parties had

already allocated through contract.” Townsend v. Quadrant Corp., --- P.3d ----,

2009 WL 3337228, *7 (Wash. Ct. App. Oct. 19, 2009) (emphasis added).

45
Examples of economic losses include deterioration, disappointed economic

expectations, or the loss of the benefit of the bargain. See id.; Alejandre, 153 P.3d

at 870 n.3. Tort principles, in turn, concern legal obligations rather than bargained-

for obligations. Jackowski v. Borchelt, 209 P.3d 514, 519 (Wash. Ct. App. 2009).

In other words, if common law provides a duty, the economic loss rule does not bar

a claim based on the breach of that duty simply because a contract exists governing

other matters. See id. at 520-21 (suit against realtor survives based on statutory

and common law duties which existed in addition to governing contract).

Moreover, “the rule does not bar recovery for personal injury or damage to

property other than a defect in the property.” King v. Rice, 191 P.3d 946 (Wash.

Ct. App. 2008) (emphasis added). As Justice Chambers recognized in his

concurrence in Alejandre, “‘[t]he insight behind the [economic loss rule] doctrine

is that commercial disputes ought to be resolved according to the principles of

commercial law rather than according to tort principles designed for accidents that

cause personal injury or property damage.’” 153 P.3d at 874 (Chambers, J.,

concurring) (quoting Miller v. U.S. Steel Corp., 902 F.2d 573, 575 (7th Cir. 1990)

(Posner, J.)).17 It “is called in law an ‘economic loss,’ to distinguish it from an

17
For example, a claim for negligence would be barred by the economic loss
doctrine if the purchaser of tires contracted to purchase a large quantity of tires
with an advertised tread pattern that was not as the seller/manufacturer advertised.

46
injury to the plaintiff's person or property (property other than the product itself),

the type of injury on which a products liability suit usually is founded.” Miller, 902

F.2d at 574.

The Amended Complaints’ allegations of property damage are

distinguishable from Alejandre, the sole Washington case on which Starbucks

relied in its Motion to Dismiss. In Alejandre, the plaintiffs sought damages arising

out of the defendant’s negligent misrepresentation regarding a defective septic

system that was not disclosed at the time of the sale of the home. Alejandre, 153

P.3d at 870. The court held that this was essentially a claim for a defective

product, which was purely economic in nature; the rule barred the plaintiffs’

desired recovery. Alejandre, 153 P.3d at 870. Here, however, Plaintiffs and the

proposed Class do not allege a defect in a product. Rather, Plaintiffs’ negligence

claim involves the negligent handling of PII over which Starbucks exercised

control. Thus, Plaintiffs and the proposed Class properly complain of injury which

is not an economic loss.

In summary, for the economic loss rule to bar the negligence claim, the duty

would have to be purely contractual, the parties to the contracts would have had to

The losses flow purely from the contractual term that the tires would have a
certain tread pattern, not from some injury to the property. Rather, this is solely a
product defect. This is distinct from the loss of PII in the instant case, where
losses flow from Defendant’s breach of a duty to safeguard the PII of Plaintiffs.

47
have negotiated and allocated the risk of loss of PII in the contracts at issue, and

Plaintiffs would have to be seeking “economic losses” as defined by Washington

courts. Here, Plaintiffs have alleged that Starbucks has a common law duty to

safeguard the PII with which they were entrusted. See ER 122, 285; see also n.10,

supra. Starbucks cannot in good faith argue that risk of identity has been allocated

in the contracts at issue here (cf. VII.A., Contract Documents, supra (failing to

provide for risk or allocation thereof)) or that Plaintiffs are seeking economic

losses as defined by the applicable law. As such, the economic loss rule is simply

inapplicable.

Nor do the out-of-circuit cases cited by Starbucks below that rely on other

states’ law, support application of the economic loss rule in the case at bar. The

Banknorth N.A. v. B.J.'s Wholesale court applied Maine law to a service contract

between a debit card issuer and a merchant, where a third party had hacked into the

merchant's system and taken the debit card numbers of customers. See 442 F.

Supp. 2d 206, 207-10 (M.D. Pa. 2006). The court found that, although Maine's

highest court had only applied the economic loss rule in the product-liability

context, lower Maine courts and Maine's federal district court had applied it to

certain cases involving service contracts. Id. at 211-12. The court ruled that the

terms of the relationship of a service provider and consumer may be defined

48
comprehensively by the terms of their contract, just as are the terms of a

relationship between a product buyer and seller. Id. at 212. That case does not

address an employment situation.

The In re TJX decision also does not pertain to the employment context; it

involved a suit by banks that had issued credit and debit cards against a retailer,

arising from a data breach of the retailer's computer system that compromised the

security of millions of consumers. 524 F. Supp. 2d 83, 85-87 (D. Mass. 2007).

The plaintiffs argued that they were third-party beneficiaries of contracts between

the retailer and its own bank, and between the retailer's bank and credit-card

companies. Id. at 88. The only non-economic loss they claimed was that the

compromised cards of their customers could no longer be used. Id. at 90. The

court ruled that the Massachusetts economic loss doctrine barred recovery there.

Id. at 90. The Pennsylvania State Employees Credit Union case likewise involves

a complicated set of relationships among banks, customers, and retailers, rather

than an employment situation. Pennsylvania State Employees Credit Union v.

Fifth Third Bank, 398 F. Supp. 2d 317 (M.D. Pa. 2005). Again, the case does not

address data breaches in the employment context. There, a credit union sued a

retailer and its bank for the theft of the bank-card information of some of the credit

union's customers arising from the inadequate security of the retailer. Id. at 319.

49
The court found that Pennsylvania courts apply the economic loss doctrine

broadly, and ruled that the need to replace bank cards that could no longer be used

does not constitute damage to person or property. Id. at 330. In contrast, in the

case at bar, Plaintiffs have suffered a loss that cannot be remedied solely with

money: the privacy of their PII has been compromised, and can never be restored.

C. Credit Monitoring Is an Available Remedy Under Washington Law

Medical monitoring is an established remedy in Washington courts. At least

one Washington district court has specifically recognized medical monitoring as a

remedy to a negligence claim under Washington law. Duncan v. Northwest

Airlines, Inc., 203 F.R.D. 601, 608-09 (W.D. Wash. 2001) (allowing plaintiff

claiming enhanced risk to pursue a medical monitoring remedy under a theory of

negligence). In Duncan, a second-hand smoking case, the court held that although

there was no “independent tort” for medical monitoring under Washington law,

medical monitoring is a “remedy to a negligence claim under Washington law.”

Id. Likewise, Plaintiffs seek a similar recognition that credit monitoring is a

remedy to claims under negligence and/or tort theories of liability here.

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 1. Washington Courts Traditionally Protect Plaintiffs in Areas of
Developing Case Law.

Even before the availability of a monitoring remedy was certain, Washington

courts expressed a preference for upholding complaints based on developing

issues. As the Washington State Supreme Court has recognized, “[w]hen an area

of the law involved is in the process of development, courts are reluctant to dismiss

an action on the pleadings alone by way of a CR 12(b)(6) motion.” Bravo v.

Dolsen Cos., 888 P.2d 147, 150-51 (Wash. 1995) (en banc) (quoting Haberman v.

Wash. Pub. Power Supply Sys., 744 P.2d 1032, 1046 (Wash. 1987) (en banc)). The

law surrounding identity theft is clearly evolving. In fact, the recent advent of the

widespread use of laptop computers, and the storage of sensitive data on those

devices, heightens the risk of identity theft in a way that is unprecedented in

history, much less case law.

This deferential approach—that of giving plaintiffs the benefit of the doubt

under Rule 12(b)(6) motions involving novel issues—has been cited specifically in

the context of a monitoring remedy in Washington. See Crowson v. Quality Food

Ctrs., Inc., No. 04-2-05608-0, 2004 WL 1530885, at *2 (Wash. Super. June 14,

2004). In Crowson, a lawsuit regarding adulterated beef, plaintiffs sought the

remedy of medical monitoring in advance of actual illness. Id. Quoting Bravo to

emphasize that courts should allow plaintiffs’ monitoring claims to proceed, the

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Crowson court specifically upheld the negligence claim seeking medical

monitoring as a remedy. Id. (quoting Bravo, 888 P.2d 147).

Likewise, in a very recently decided medical monitoring case, Donovan v.

Philip Morris, 455 Mass. 215, 225, 914 N.E.2d 891 (2009), the court observed:

Our tort law developed in the late Nineteeth and early Twentieth
centuries, when the vast majority of tortious injuries were caused by
blunt trauma and mechanical forces. We must adapt to the growing
recognition that exposure to [dangers] may cause substantial injuries
which should be compensable, even if the full effects are not
immediately apparent.

Id. (citing Hansen v. Mountain Fuel Supply Co., 858 P.2d 970, 977 (Utah 1993)).

The Donovan court recognized that smokers with an increased risk of lung cancer,

but who have not manifested any smoking-related disease, should be entitled to the

remedy of medical monitoring, the sole remedy that plaintiffs sought. Id. Like

Massachusetts, Washington law is similarly developing alongside technology.

Just as a medical monitoring remedy, now established in Washington, helps

injured parties assess the medical ramifications of a danger to which they have

been exposed, the purpose of credit monitoring is to facilitate early detection of

identity theft and further injury caused by a defendant’s culpable conduct and to

minimize resulting damages. Cf. Stollenwerk I, supra; Caudle, infra.18

18
In Stollenwerk I the court, applying the standard for medical monitoring,
fashioned a credit monitoring remedy to a claim which had: (1) a significant

52
Accordingly, Plaintiffs have alleged that they have been damaged under negligence

and contract theories, and they have selected, at Starbucks’ suggestion, the remedy

of credit monitoring to protect their PII from further harm. It is obviously too early

to apportion liability, much less to designate a final remedy, at the motion to

dismiss stage. See 5 Charles Alan Wright and A. Miller, Federal Practice and

Procedure § 1255 (“The sufficiency of a pleading is tested by the Rule 8(a)(2)

statement of the claim for relief and the demand for judgment is not considered

exposure of sensitive personal information; (2) a significantly increased risk of

identity fraud as a result of that exposure; and (3) the necessity and effectiveness of
credit monitoring in detecting, treating, and/or preventing identity fraud.
Stollenwerk I, 2005 WL 2465906, at *4; accord Caudle Towers, Perrin, Forster &
Crosby, Inc 580 F.Supp.2d 273, 282 (S.D.N.Y. 2008)(credit monitoring claim
under NY law may exist if (a) plaintiff's personal data was stored electronically
and that the means of storage was lost or stolen and (b) “rational basis” for the fear
that the data would be misused).

On summary judgment, Stollenwerk I held that when a plaintiff had not

suffered identity theft, there was no credit monitoring available if: (a) there had
been no offer of proof that the theft was for data and not property, and (b) the
significance of the increased risk was not quantified. Id. at *5. The Ninth Circuit
echoed this by stating “Stollenwerk and DeGatica failed to produce evidence to
overcome summary judgment” because they had “produced evidence of neither
significant exposure of their information nor a significantly increased risk that they
will be harmed by its misuse. The only proof of exposure they have offered is the
burglary itself.” Stollenwerk II, 254 Fed. Appx. at 666. Similarly, Caudle was
dismissed as plaintiffs failed to put on evidence supporting their rational basis for
fear of future identity theft. 580 F. Supp. 2d at 281-82. Moreover, unlike here,
there was no evidence of actual misuse connected to the theft. Id. at 282.
Plaintiffs should be afforded the opportunity given Stollenwerk and Caudle to
gather and present evidence in support of the credit monitoring remedy.

53
part of the claim for that purpose”); Doss v. Southern Cent. Bell Tel. Co., 834 F.2d

421, 424 n. 3 (5th Cir. 1987) (vacating order to dismiss where district court based

its dismissal of complaint in part on the unavailability of remedy requested in

complaint); Migliori v. Boeing N. Am., Inc., 97 F. Supp. 2d 1001, 1004 (C.D. Cal.

2000) (citing William W Schwarzer, et al., Civil Procedure Before Trial § 9:230)

(noting that “a Rule 12(b)(6) motion ‘will not be granted merely because [a]

plaintiff requests a remedy to which he or she is not entitled.’”). Accordingly, the

credit monitoring remedy should have been upheld.

2. Plaintiffs’ Duty to Mitigate Implicates the Remedy of Credit

Monitoring

Plaintiffs have a duty to mitigate their damages in both contracts and torts.

See, e.g., Burchfiel v. Boeing Corp., 205 P.3d 145, 153-54 (Wash. Ct. App. 2009);

Young v. Whidbey Island Bd. of Realtors, 638 P.2d 1235, 1237 (Wash. 1982)

(citing Restatement (Second) of Torts § 918 (1979)); Restatement (Second) of

Contracts § 350(2) (1981) (citing Federal Signal, 886 P.2d at 185; Bernsen, 842

P.2d at1052). Starbucks advised their employees to “monitor their financial

accounts carefully for suspicious activity and take appropriate steps to protect

yourself,” ER 129, 293, and offered just one year of credit watch services.

Plaintiffs Krotter and Lalli believed that one year of the monitoring Starbucks

offered was not enough to protect their identities. Accordingly, to “monitor” and

54
“take appropriate steps,” Plaintiffs Krottner and Shamasa signed up for the free

one-year credit monitoring service that Starbucks offered. ER 105. Plaintiff

Krottner avers that she will pay for credit monitoring service upon the expiration of

the one-year service for which Starbucks paid. ER 105. Plaintiffs Krottner and

Lalli have expended time personally monitoring various financial accounts more

frequently than they had previously, and intend to continue to do so. ER 105, 269-

270. Plaintiff Lalli paid for his own credit monitoring service.19 ER 270.

The district court erred in finding that Washington requires that all losses be

realized before monitoring damages are available for a negligence claim. Compare

ER 15-16 with ER 16 (“Indeed, it may be that the relatively modest cost of credit

monitoring is a much more cost-efficient remedy than a wait-and-see approach”).

Such a rule is contrary with Washington’s current law on medical monitoring,

whose purpose is to prevent all further injury from being realized – hence why

such patients are monitored in the first instance. See Duncan, 203 F.R.D. at 604

(stating plaintiff had suffered injury from second hand smoke but wanted medical
19
It was within Plaintiff Lalli’s rights to choose a credit monitoring service
rather than sign up for a service through Starbucks. Jaeger v. Cleaver Constr.,
Inc., 201 P.3d 1028, 1037 (Wash. Ct. App. 2009) (“Courts allow a wide latitude of
discretion to the person who, by another's wrong, has been forced into a
predicament where he is faced with a probability of injury or loss. If a choice of
two reasonable courses presents itself, the person whose wrong forced the choice
cannot complain that the injured party chose one over the other”) (citations
omitted).

55
observation and testing to determine whether more serious illnesses would develop

in the future). In light of Washington’s precedent, this Court should find that the

lower court erred in requiring all losses be realized before awarding monitoring

damages.

Accordingly, under negligence and/or contract theories, Plaintiffs should be

able to seek the remedy of credit monitoring to protect their PII from further harm.

D. In the Alternative, This Court Should Certify Issues to the

Washington Supreme Court

As stated above, this Court should reverse the district court’s orders

dismissing the cases and remand them for further proceedings. Alternatively, this

Court should certify two issues to the Washington Supreme Court: (1) whether

Washington law recognizes an increased risk of identity theft as a cognizable

injury for purposes of negligence and/or breach of contract claims, and (2) whether

loss of time and money for credit monitoring constitute cognizable damages for

negligence and/or breach of contract claims under Washington law. See WASH. R.

APP. P. 16.16 (“Certificate procedure is the means by which a federal court submits

a question of Washington law to the Supreme Court”). The Ninth Circuit has

certified issues to the Washington Supreme Court when “important and undecided

issue[s]” are presented, and there is “no controlling precedent in the decisions of

the Washington Supreme Court,” recognizing that “[c]ertification saves time,

56
energy, and resources and helps build a cooperative judicial federalism.” Broad v.

Mannesmann Anlagenbau AG, 196 F.3d 1075, 1076 (9th Cir. 1999).20

As in In re Hannaford Brothers, where similar issues regarding damages in a

privacy case were certified to the Supreme Court of Maine, the issues presented

here are fundamental, urgent, and of statewide importance. See In Re Hannaford

Bros. Co. Customer Data Sec. Breach Litig., No. 2:08-MD-1954 , 2009 WL

3193158 (D. Me. Oct. 5, 2009), see also Donovan, 914 N.E.2d at 215 (certifying

similar issues regarding damages and injury to the Supreme Judicial Court of

Massachusetts). As such, Washington should have the first opportunity to construe

the law in this area. See generally Arizonans for Official English v. Ariz., 520 U.S.

43, 76-80 (1997) (suggesting certification to give the state the first opportunity to

construe a newly enacted state statute); Boucher v. Shaw, 483 F.3d 613, 616 (9th

Cir. 2007) (certifying question of whether individual managers are “employers”

under Nev.Rev.Stat. § 608.011 as a question “of first impression [with] significant

implications for Nevada's wage protection law”); Trustees of Constr. Indus. &

20
As the Broad court noted, it is not necessary to raise certification to the district
court to preserve the issue here. 196 F.3d at 1076 n.3. This Court may consider
certification if not raised in the district court if the issue is an issue of law not
dependent on a factual record developed by the parties. Id. Here, whether
Washington law recognizes these claims in the data breach context is not a matter
that is dependent on the factual record. As such, certification would be appropriate
here. ER 4.

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Laborers Health & Welfare Trust v. Hartford Fire Ins. Co., 482 F.3d 1064, 1066

(9th Cir. 2007) (certifying question of whether the notice requirements of

Nev.Rev.Stat. § 339.035(2) apply to third-party beneficiaries). Other than state

and federal trial court opinions on the related issue of medical monitoring, there

have been no definitive Washington Supreme Court opinions dealing with the

issues of increased risk of identity theft or credit monitoring. Having the

Washington Supreme Court decide the issues, instead of asking this Court to divine

its philosophy on them, would save time and resources.

These issues matter to the citizens of Washington because they will

determine their rights to bring negligence and contract claims based on the

expenditure of time and money following a data breach. The determination of

rights is an appropriate use of the certification vehicle. See Affiliated FM Ins. Co.

v. LTK Consulting Serv. Inc., 556 F.3d 920, 921 (9th Cir. 2009) (right to operate

commercially and extensively on another's property may bring a suit in tort against

a third party for damage to that property); Keystone Land & Dev’t Co. v. Xerox

Corp., 353 F.3d 1093, 1098 (9th Cir. 2003) (whether Washington law would

recognize a particular implied contract and if so, what is the appropriate measure

of damage for its breach). Any delay in obtaining such a determination would

58
cause significant detriment to Washington consumers, employees, and/or to the

public interest. The record below is adequate to present the issues.

VIII. CONCLUSION

Plaintiffs respectfully request that this Court reverse the district court’s

ruling that granted dismissal of Plaintiffs’ claims for breach of contract and

negligence.

REQUEST FOR ORAL ARGUMENT

Pursuant to Rule 34 of the Federal Rules of Appellate Procedure, Appellant

respectfully requests that oral argument be permitted. This appeal involves novel

legal issues and oral argument will give the Court the opportunity to further

explore these issues.

Dated: November 9, 2009 s/ Mila F. Bartos

Mila F. Bartos
Finkelstein Thompson LLP

59
 STATEMENT OF RELATED CASES

Pursuant to Ninth Circuit Rule 28-2.6, Plaintiffs are not aware of any related

cases pending in this Court.

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 CERTIFICATE OF COMPLIANCE WITH FED. R. APP. P. 32(A)(7)(C)
AND CIRCUIT RULE 32-1

I certify that pursuant to Fed. R. App. P. 32(a)(7)(C) and Ninth Circuit Rule

32-1, the attached opening brief is proportionately spaced, has a typeface of 14

points or more and contains 13,843 words.

Dated: November 9, 2009 s/ Mila F. Bartos

Mila F. Bartos
Finkelstein Thompson LLP

61
 CERTIFICATE OF SERVICE

I, Mila F. Bartos, hereby certify that I electronically filed the foregoing with

the Clerk of the Court for the United States Court of Appeals for the Ninth Circuit

by using the appellate CM/ECF system on November 9, 2009.

I certify that all participants in the case are registered CM/ECF users and

that service will be accomplished by the appellate CM/ECF system.

Dated: November 9, 2009 s/ Mila F. Bartos

Mila F. Bartos

62