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Target Close to Settling Consumer Class Action Over Data Breach

In December 2014, Judge Magnuson, of the United States District Court for the District of Minnesota, issued a ruling allowing most of a class of plaintiffs' statutory and common law claims to stand in light of Defendant Target's Motion to Dismiss ("Motion")(2014 U.S. Dist. LEXIS 167802). After that ruling, Target and plaintiffs did not take long to work out a settlement. On March 19, 2015, Judge Magnuson gave preliminary approval to a settlement that would require Target to pay $10 million to a class of approximately110 million people, in addition to attorneys' fees and other related settlement fees.1

In its Motion, Target argued that the plaintiffs did not claim an injury and could, therefore, not establish a case. "Target's central argument was that allegations that unauthorized charges had been made on plaintiffs' payment cards did not plead actionable injury because plaintiffs did not - indeed, likely could not - allege that such charges had not been or would not be reimbursed by the card issuing banks."2 The Court disagreed with Target, and held that illicit charges, blocked accounts, and the inability to pay other bills were all legitimately alleged injuries. Additionally, the Court allowed some of the following claims to survive Target's Motion: state consumer protection claims, data breach notice claims, and negligence claims.3

Class members that are able to provide specific proof of damages are eligible to receive up to $10,000. In order to show proof of harm, class members must be able to show that at least one of the following occurred: unauthorized charges appeared on their credit or debit card statement, they spent time addressing the unauthorized charges, interest rate fees went up on the hacked cards, and/or they incurred credit-related costs, or costs to replace aspects of their identity such as acquiring a new Social Security number.4 "Those plaintiffs without documentation of their losses will be entitled to an equal amount of the remainder of the settlement fund, after service payments to the lead plaintiffs and approved documentary support claims have been paid."5

It is estimated that during the time period of November 27, 2013 to December 18, 2013, the information of over 40 million credit cards was compromised.6 The settlement also requires Target to beef up its information security by creating a new security program to better protect the data of its consumers. The non-economic provisions will hopefully help to better protect future consumers. It is unusual that a major corporation such as Target would agree to such provisions in a settlement.7

Plaintiffs believe that the settlement provides significant benefits to class members because it will allow all class members to recover the majority of their losses. Additionally, plaintiffs note that Target put forward many defenses that would have made proceeding toward a trial a risky endeavor.8

The legal team at SFMS has significant experience litigating class action matters. If you have any questions regarding this subject or this posting, please contact Valerie Chang (vchang@sfmslaw.com) or Michael Ols (mols@sfmslaw.com). We can also be reached toll-free at (866) 540-5505.

Shepherd Finkelman Miller & Shah, LLP is a law firm with offices in California, Connecticut, Florida, New Jersey, New York, Pennsylvania and Wisconsin. SFMS also maintains an affiliate office in London, England and is an active member of Integrated Advisory Group (www.iaginternational.org), which provides us with the ability to provide our clients with access to excellent legal and accounting resources throughout the globe. For more information about our firm, please visit us at www.sfmslaw.com.

SOURCES:

1. http://www.law360.com/classaction/articles/633415/target-will-pay-consumers-10m-to-end-data-breach-mdl

2. http://www.natlawreview.com/article/consumer-claims-survive-motion-to-dismiss-target-data-breach-class-action

3. http://www.natlawreview.com/article/consumer-claims-survive-motion-to-dismiss-target-data-breach-class-action

4. http://www.usatoday.com/story/money/business/2015/03/18/target-hack-breach-10-million/24991847/

5. http://www.law360.com/classaction/articles/633415/target-will-pay-consumers-10m-to-end-data-breach-mdl

6. http://www.usatoday.com/story/money/business/2015/03/18/target-hack-breach-10-million/24991847/

7. http://www.usatoday.com/story/money/business/2015/03/18/target-hack-breach-10-million/24991847/

http://www.law360.com/classaction/articles/633415/target-will-pay-consumers-10m-to-end-data-breach-mdl

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