Ten AGs don't want class action attorneys fees boosted by sale

John O'Brien Nov. 20, 2007, 3:00pm


BOSTON - Holding sales at its stores should not be part of the consumer class action settlement with TJX Companies, Massachusetts Attorney General Martha Coakley is arguing in federal court.

Coakley wrote U.S. District Judge William Young last week to complain about the sale, part of a multi-state settlement over an alleged security breach. TJX operates T.J. Maxx, Marshalls, Winners, HomeGoods, T.K. Maxx, A.J. Wright and HomeSense stores.

She says because the sale is included in the settlement, attorneys will benefit. The letter can be viewed here.

"The (sale) is nothing more than a retail sale, which would primarily benefit the defendant, TJX Companies," the letter says. "If deemed a benefit to the class, the retail sale also presumably would benefit class action counsel, whose fees would be impacted by a nominally higher valued settlement.

"It is unclear what benefit, if any, the class gains from a retail sale that is open to the general public. TJX should not inure the good will of this court or the public for a sale that enhances its bottom line, nor should the class's attorneys reap large fees for an unquantifiable and dubious benefit."

On Jan. 17, TJX disclosed that a hacker stole credit and debit card numbers and driver's license numbers from its computer system. TJX said it discovered the breach in December.

A class action complaint was filed Jan. 29 by the Boston firm Stern, Shapiro, Weissberg and Garin and the Philadelphia firm Berger and Montague.

Nine other state attorneys general signed the letter authored by Coakley, who is heading the case. They were: Arkansas' Dustin McDaniel, Connecticut's Richard Blumenthal, Illinois' Lisa Madigan, New Jersey's Anne Milgram, Ohio's Marc Dann, Oregon's Hardy Myers, Tennessee's Bob Cooper, Vermont's Williams Sorrell and California's Jerry Brown. Twenty other states were involved in the investigation.

"We are unaware of precedent in which a special event, or any type of sale open to the general public, has been deemed a benefit of a class-action settlement and this court should avoid that precedent. We believe this aspect of the proposed settlement demeans the class-action process, which can be used as a meaningful tool to protect consumers," Coakley wrote.

TJX is also being sued by a group of banks over the security breach. It said the one-day sale would help affected consumers.

"Here, class action counsel anticipates receiving fees of $6.5 million, based, at least in part, on an unquantifiable benefit to the class from the Special Event," Coakley wrote. "This represents a tremendous amount of money to the extent it is linked to the Special Event, or vouchers. We, therefore, urge this Court to reject the Special Event as a benefit of the settlement or, at the very least, subject the Special Event to heightened scrutiny before approval."

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