Ace in the Hole: Target Data Breach Insurance Coverage Case

Update (February 8, 2021): The post, immediately below, was a complete “prediction failure.” U.S. District Court Judge Wilhemina M. Wright (D. Minn.) rejected Target’s motion for partial summary judgment in this insurance coverage dispute over Target’s losses from a huge data breach and granted the insurer’s motion.

We’ll see if Target appeals the decision and if prediction might prove accurate after the appeal…

Original post (July 29, 2020): “Ace in the hole” is a poker term, meaning a “face-down” ace (in stud poker). The term has expanded beyond that context, to mean, more generally, a hidden advantage.

Here, we use the expression differently. We refer to Ace Insurance’s defense to Target Corporation’s insurance coverage claim against Ace for multi-million dollar losses in connection with a massive data security breach some years ago related to Target credit card information.

Here, we mean that Ace is in a hole from which, in our view, it will not extract itself. We predict it will lose in its fight to deny Target insurance coverage.

Check out Target’s memorandum of law gutting Ace’s defenses here.

Highlighting one of the most egregious of Ace’s arguments, it argues that canceled credit cards do not result in “loss of use” because the credit cards can be used as ice-scrapers. (See here at page 27.) (Is it less damning if Ace lawyers made this argument as a joke? Or more damning?)

If you are a fan of excellent written legal advocacy, and, even better, if you are interested in insurance coverage disputes, we highly recommend (and commend) Target’s briefing in the parties’ cross-motions for summary judgment to be argued in October by U.S. District Court Judge Wilhemina M. Wright (D. Minn.) and decided thereafter (see here, for example).