The proposed $19 million settlement between MasterCard Inc. and Target Corp. over the retailer’s 2013 data breach failed because not enough banks accepted the settlement. The agreement, announced in April, would have provided up to $19 million to banks and credit unions that sued Target in federal court in Minnesota over the breach. Lawyers in our firm who are involved in the litigation representing banks and other financial institutes opposed the settlement and were not surprised that the required number of acceptances fell far short.
The lead lawyers for the banks had argued that the settlement with MasterCard, which was not a party to the lawsuit, was an attempt to undercut their claims for damages. A federal judge in early May rejected the banks’ attempt to block the settlement, even though he expressed real concerns about its fairness. But, the settlement was contingent on banks that issued at least 90 percent of the MasterCard accounts signing on to the agreement by May 20. Any bank that accepted the settlement was required to drop further claims against Target. A MasterCard spokesman had confirmed that the threshold was not met.
The development means that the banks will continue to litigate their claims against Target in the lawsuit. In a statement, the lead lawyers for the plaintiffs said:
We are pleased that financial institutions have resoundingly rejected Target and MasterCard’s attempt to avoid fully reimbursing the losses suffered during one of the largest data breaches in U.S. history.
Lawyers for the banks have estimated the total losses at more than $160 million, with approximately half that amount lost to fraud and half to the cost of reissuing nearly 9 million credit cards. In 2013, Target said the breach during the holiday shopping season compromised at least 40 million credit cards and may have resulted in the theft of personal information from as many as 110 million people. Target is still negotiating with Visa Inc. over losses from the breach.
As the result of a recent court order, Target Corp. will have to tell financial institutions suing over the retailer’s massive 2013 data breach whether it suffered similar attacks in the past and if so, how it responded to them. Magistrate Judge Jeffrey J. Keyes ruled in the MDL litigation on May 27. He partially granted the bank plaintiffs’ motion to compel discovery, giving Target seven days to either make a sworn statement that there were no data breaches between 2005 and 2010 or give up the details of the incursions. This was a very good ruling.
If you need more information on this litigation, contact Dee Miles, who heads up our firm’s Consumer Fraud and Consumer Litigation Section, and is one of the lead lawyers in this litigation.
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