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Last month, we wrote about Target's $10M settlement agreement with customers after the massive 2013 data breach. This week, Target has settled another lawsuit, but its legal troubles are far from over.
In a separate lawsuit from the customer class-action suit, financial institutions that issued MasterCard credit cards affected in the data breach sued Target for millions of dollars lost. The banks claimed that they suffered damages reissuing cards and reimbursing consumers for fraudulent charges.
Target agreed to settle the lawsuit for $19M. The settlement offer is contingent on 90 percent of eligible MasterCard accounts affected by the breach signing on to the settlement and releasing Target from liability. If the settlement agreement goes through, financial institutions can expect to receive their portion of the prize by the end of the second quarter this year.
However, it's unlikely that the settlement agreement will be approved any time soon.
Charles Zimmerman, lead counsel on the lawsuit, is objecting to the settlement agreement as a secret deal only offering too little to cover the damages. Zimmerman claims that the loss the banks suffered may be as high as $1 billion. The Star Tribune reports that Zimmerman said, "What you have is a behind-the-curtain cheap settlement that isn't anywhere near capturing what financial institutions have suffered."
He is urging financial institutions involved in the lawsuit to not sign on to the settlement.
Objecting to a Settlement Agreement
Usually a settlement agreement must first be approved by a judge before it becomes final. Before the judgment is approved, participants in the lawsuit can argue for or against the settlement.
In another case, a proposed settlement of $324 million was rejected by the judge after one of the named plaintiffs objected to the low amount. The plaintiff argued that the settlement was too low compared to the estimated $3.05 billion in damages. The judge agreed and rejected the settlement offer.
In this case, Zimmerman will be formally making his objections to the judge at an upcoming hearing. If the judge does reject the settlement agreement, Target may still settle with MasterCard, but for a higher amount.