Appeals Court Sends Fiserv Data Breach Case Back to Trial
The Court of Appeals in Tennessee, in a ruling filed July 3, ruled that a lower court erred when it dismissed a suit filed by Copper Basin Federal Credit Union and CUMIS against Fiserv Inc., wherein the plaintiffs alleged that Fiserv’s negligence allowed a data breach to occur on the Copper Basin FCU computers.
Wrote the court: “Plaintiffs alleged in their complaint that Defendant negligently performed professional services concerning the provision and maintenance of web defense software and that Defendant breached its contractual duty to protect the computer system of Copper Basin Federal Credit Union from computer incursion. For the reasons stated herein, we hold that the complaint alleges sufficient facts to allow the case to proceed, and, therefore, dismissal was in error.”
The case earlier had been dismissed by a lower court amid much legalistic to and fro about in what jurisdiction the matter should be heard, and if a statute of limitations for filing had run out before Copper Basin in fact filed suit.
In the mix was also a claim that, by contract, New York law had to apply. Fiserv also eventually alleged that a typographical error in its filing had distorted its meaning.
That web is tangled. What appears more straightforward is the background of the case, caused by a substantial loss suffered by Copper Basin FCU.
A $27 million credit union in Copperhill, Tenn., Copper Basin had contracted with Fiserv for various computing services and as part of the package Fiserv required Copper Hill to purchase antivirus software, which it did.
The way the story is told, a few years later Copper Hill suffered a serious hack that drained substantial funds from the institution and when it was investigated, apparently Fiserv had not activated the antivirus software Copper Hill had purchased. The institution had been left unprotected.
Cooper Basin was able to reclaim some of the illegally transferred monies but in the end it was out $544,789.41.
After reviewing the case law pertinent to the case, the conclusion of the appellate court was blunt: “The trial court’s order dismissing Plaintiffs’ claims against Fiserv is vacated, and the case is remanded for further action consistent with this opinion.”