Appeals Court Sends Target Settlement Back

Today, the U.S. Court of Appeals for the Eighth Circuit vacated the class action settlement between Target Corp. and consumers whose card data was compromised in the company’s 2013 data breach. 

The settlement agreement required Target to create a $10 million settlement fund for the class of consumers.  Under the agreement, class members with “documented” losses would be compensated first, and any remaining money would be allocated to class members who could not document their losses.  Class members who suffered “no loss” would receive nothing.

A member of the “no loss” group objected, claiming that the named class members—who each suffered at least some pecuniary loss and thus could recover from the fund—did not adequately represent him.  The district court overruled his objection without comment.

The Eighth Circuit vacated the settlement and remanded.  The appellate court reasoned that the district court’s order approving the settlement “lack[ed]” any “legal analysis” and was the product of “summary conclusion rather than rigor.”  Though the district court’s error was largely one of form, rather than substance, the Eighth Circuit noted that the objector raised “importance concerns for the district court to evaluate.”  Namely, there appeared to be an “intraclass conflict” between those class members who “cannot claim money from a settlement” and those who can.