Judge dismisses shareholder lawsuit against Heartland (updated)
Dan Kaplan reports:
A U.S. District Court judge in New Jersey has tossed out a class-action lawsuit filed by shareholders against Heartland Payment Systems, the credit card processor announced Wednesday.
The judge granted Heartland’s motion to dismiss the action, which was filed in the wake of Heartland’s massive breach that was reported earlier this year, according to a company statement. No reason was given for the dismissal.
Read more on SC Magazine.
Kaplan makes some statements in the story that are not consistent with other reports on the breach. For example, he writes:
Heartland revealed the breach on Jan. 20. The company learned of the breach about a week earlier, but hackers had been lifting credit card numbers for some nine months prior.
Actually, Heartland was notified of the breach months earlier by Visa and MasterCard, but said it took them several months and three forensics teams to confirm the breach for themselves. Shortly after confirming the breach, they revealed it.
Kaplan also writes:
Heartland did not say how many records were compromised in the breach, but some estimates placed the number around 100 million, making it the largest reported data breach in history.
In indicting Albert Gonzalez earlier this year, the U.S. Attorney’s Office in New Jersey alleged that the number was 130 million. If that is accurate, that makes the largest known single breach. Heartland has never issued any numbers, indicating that they didn’t know.
Heartland issued a brief press release:
Heartland Payment Systems® (NYSE: HPY), a leading provider of credit/debit/prepaid card processing, payroll, check management and payment services, today announced that on December 7, 2009, the United States District Court for the District of New Jersey, granted Heartland’s motion to dismiss the consolidated shareholder class action, titled In Re Heartland Payment Systems, Inc. Securities Litigation, which had been filed against Heartland, Robert O. Carr, Heartland’s Chairman and Chief Executive Officer and Robert H.B. Baldwin, Jr., Heartland’s President and Chief Financial Officer. The case, which arose out of the breach to the company’s processing system previously disclosed by the Company on January 20, 2009, was dismissed in its entirety with prejudice.
Mary Pat Gallagher of New Jersey Law Journal adds more:
U.S. District Judge Anne Thompson in Trenton, N.J., on Monday granted a defense motion to dismiss the case, In re Heartland Payment Systems Inc. Securities Litigation, 09-civ-1043, finding the plaintiffs failed to allege the existence of any material statement or omission or to adequately plead scienter.
Thompson dismissed the suit with prejudice, saying it appeared “further specificity would not cure the Complaint’s deficiencies” and thus, “amendment would be futile.”