Financial institutions reject Target and MasterCard proposed settlement

Posted on: May 28th, 2015 by Steve Larson
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targetEarlier on this blog, I noted that MasterCard and Target had entered into a proposed settlement relating to the 2013 breach of Target customers’ data that many financial institutions objected to.  The settlement provided for a $19 million payout, but at least 90% of the banks and credit unions had to sign up for the settlement by last week if it was to go forward.  Target announced that MasterCard informed Target that it didn’t get enough banks to sign onto the $19 million payout to settle the proposed class action in Minnesota federal court.

Opposition to the proposed settlement had been mounting since Target and MasterCard announced it on April 15. Lawyers seeking to represent the class have said that they were not involved in the settlement talks and accused Target of unfairly seeking a full release of the financial institutions’ claims against the retailer.  Judge Magnuson kept the settlement proposal intact in a May 7 ruling. At the time, he said it was unsurprising that lead counsel for the financial institutions were discomfited by the deal, given that they weren’t involved or told about the settlement before the public announcement and given the deal’s short time frame.

Even so, Magnuson said there was nothing he could do without class certification. Otherwise, he said he could only intervene if there were misleading or coercive communications to the proposed members, which there was no evidence of.

The case is In re: Target Corp. Customer Data Security Breach Litigation, case number 0:14-md-02522, in the U.S. District Court for the District of Minnesota.