Mediant Communications Beats Data Breach Claims in California

March 19, 2020, 4:26 PM

Mediant Communications Inc. won dismissal of a proposed class action stemming from a data breach that allegedly exposed the personal information of thousands of shareholders, after the Northern District of California found it lacks jurisdiction over the company.

Companies and mutual funds retain Mediant to distribute materials to shareholders, coordinate shareholder votes, and tabulate voting results, entrusting it with sensitive shareholder information, the complaint alleged.

Hackers obtained unauthorized access to Mediant’s business email accounts and the personal information of its customers’ investors, compromising the plaintiffs’ personal information in the process, the plaintiffs alleged.

The shareholders failed to show that the company opened itself up to suit in the state by purposefully availing itself of the privilege of doing business in California, the U.S. District Court for the Northern District of California said.

The named plaintiffs are citizens of California and New Jersey. The company is headquartered in New York and incorporated in Delaware.

Mediant didn’t engage in business operations, lobbying, marketing, or advertising in California, the court said.

There is also no contract between the parties, and the plaintiffs aren’t Mediant’s clients, the court said. Instead, they are clients of Mediant’s clients, or of Mediant’s client’s clients, the court said.

And Mediant has no way of determining the location of the shareholders it contacts until it receives their information from clients once its duties on behalf of a fund have begun, the court said.

As to those fund managers with which Mediant contracted, there is no evidence that it conducted negotiations in California or that it directly solicited business in the state, the court said.

Judge Edward M. Chen issued the opinion.

Bonnett Fairbourn Friedman & Balint PC and Stueve Siegel Hanson LLP represent the plaintiffs. Baker Hostetler LLP represents Mediant.

The case is Toretto v. Mediant Commc’ns., Inc., 2020 BL 100350, N.D. Cal., No. 19-cv-05208, 3/18/20.

To contact the reporter on this story: Peter Hayes in Washington at PHayes@bloomberglaw.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Nicholas Datlowe at ndatlowe@bloomberglaw.com

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