Target data breach settlement needs subclasses, group argues to Eighth Circuit

By Kathy Kaye | Sep 13, 2017

ST. LOUIS (Legal Newsline) – A group objecting to a $10 million class action settlement stemming from a 2013 Target data breach has asked the U.S. Court of Appeals for the Eighth Circuit to vacate the class certification order.

ST. LOUIS (Legal Newsline) – A group objecting to a $10 million class action settlement stemming from a 2013 Target data breach has asked the U.S. Court of Appeals for the Eighth Circuit to vacate the class certification order.

A brief filed by the Competitive Enterprise Institute, representing Leif A. Olson, asks the court to hold that the single settlement class cannot be certified and remand for certification of separate subclasses with separate representatives and separate counsel.

“The Target class action settlement unfairly freezes out millions of people from getting any settlement relief,” said CEI attorney Melissa Holyoak in an Aug. 15 statement

“This is a matter of fundamental fairness under the law. Under the current settlement terms, people who had their financial data stolen are forced to release statutory claims or claims for damages incurred after July 2015 in exchange for nothing.”

In 2013, Target's systems were hacked, compromising the financial or personal information of some 100 million customers.

In the years since the hacking, the retail giant has paid banks and credit- and debit-card issuers about $110 million for fraud losses, card replacement costs and other damages they endured.

Nearly two years ago, Target reached a settlement for a compensation plan for impacted consumers with $10 million set aside.

Olson, a Texas resident, is represented by the Center for Class Action Fairness. The Center is associated with the Competitive Enterprise Institute, a libertarian think-tank.

CEI argues in its press release that the U.S. District Court for the District of Minnestoa, in twice approving the settlement, "got it wrong yet again: the district court fundamentally misunderstood the structure of the settlement as well as Supreme Court precedent on this matter."

First, CEI maintains in its brief that the district court "fundamentally misunderstands the settlement structure. The district court found that there was no intraclass conflict because class members with only statutory or future damages receive a pro rata share of the remaining settlement funds."

Only class members who incurred losses after July 2015 can submit a claim for compensation, the brief states.

CEI also maintains in the brief that the "district court erroneously concluded that because 13 of the 112 class members did not plead immediate out-of-pocket losses, they could adequately represent class members who might only have future or statutory damages. ... The district court’s conclusion is also legally deficient because independent legal counsel was necessary for the zero-recovery subgroups."

In its third point, CEI argues that the "presence of such class representatives is necessary, but not sufficient: it is still error as a matter of law to permit subgroups with unique statutory claims - not merely different potential damages - in a single class," the brief states.

Lastly, CEI alleges in the brief that "the district court erred as a matter of law by not requiring separate representation for class members with future-damages claims - claims for damages incurred after the July 2015 claims deadline. ... Without evidence, the district court questioned the strength of the future-damages claims and shifted the burden to CEI and Olson to prove the value of those future-damages claims, even though they were a central allegation in the complaint."

CEI's press release stated that while the appeals court "initially declined CEI’s request for additional briefing in the case, the court later, on its own initiative, requested additional briefing on the lower court’s renewed certification order. Previously, the 8th Circuit Court of Appeals ruled that the district court had not 'rigorously scrutinized' whether the settlement satisfied class action requirements." 

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Target Corporation U.S. Court of Appeals for the Eighth Circuit

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