Judge denies banks' motion to block MasterCard, Target breach settlement
In the ruling, the judge shared his concerns about the fairness of the settlement terms, however.
A federal judge has ruled that a proposed breach settlement between Target and MasterCard can proceed, though he expressed concerns about the fairness of the settlement terms for banks' and credit unions seeking further claims.
Last month, MasterCard announced that it had reached a multimillion dollar settlement with the retail giant, which suffered a major payment card breach in 2013 affecting around 110 million people. Under the terms of the settlement, Target would make up to $19 million available in “alternative recovery” for eligible banks and credit unions globally in order to settle claims for operational costs and fraud-related losses on MasterCard-branded cards affected by the breach, the company's release said.
Soon after the settlement announcement, however, a group of banks and credit unions filed a motion for preliminary injunction to block the move.
On Thursday, U.S. District Court Judge Paul Magnuson denied the motion, writing in the order that the “plaintiffs' lead counsel's issues with the settlement are understandable, but they are also not susceptible of a legal remedy.”
According to the federal judge, “the law permits a defendant or non-party to communicate with and to settle with putative class members at any time before class certification without court approval or input as long as those communications are not misleading or coercive.” Judge Magnuson noted in the order that the group of plaintiffs had not gained class certification.
Under the terms of the MasterCard-Target settlement, banks accepting payment would be required to do so by next Wednesday, May 20, and would forfeit other claims in the litigation. Judge Magnuson added that “plaintiffs' lead counsel, who were neither involved in nor informed of the settlement before the public announcement, were not surprisingly discomfited, the more so because of the short time-frame in which banks must decide whether to participate in the settlement and thereby give up their claims here.”
Still, he denied the motion to block the settlement, ruling that the court could not enjoin the proposed deal solely because it “suspects that neither the settlement nor the putative class's options are completely fair.” Earlier in the order, Judge Magnuson said that the court agreed with plaintiff's counsel that the terms of the MasterCard-Target settlement “do not appear altogether fair or reasonable.”
“Although the settlement may not ‘pass the smell test,' as the saying goes, it is not serious misconduct,” Judge Magnuson said.