Calling Target’s claims “absurd,” Minn. judge certifies banks’ class action breach lawsuit

A Minnesota judge certified the class action lawsuit filed by financial institutions against Target Corp. over its 2013 data breach this week, dismissing the retailer’s claims and objections to the lawsuit as “absurdity.”

Target challenged the validity of the financial institutions’ class action saying, among other objections, that the banks were under no obligation to reissue any payment cards that might have been exposed in the breach.

“Target argues that because plaintiffs were not required by contract, law, or regulation to reissue the so-called ‘alerted-on’ cards, reissuance was a business decision and not an injury proximately caused by the breach. What Target suggests is that, because there was no requirement to act, financial institutions should have done nothing in the face of dire alerts regarding the data breach issued by the card-issuing companies and by Target itself and the known potential consequences for the institutions’ customers. The absurdity of this suggestion is evident from the fact that Target itself reissued all of its RedCards, both debit and credit, in the weeks after the breach,” Judge Paul A. Magnuson wrote in his decision.

Target had sought to have the banks’ claims considered on a case-by-case basis to determine causation and injury as a result of the payment card reissuance and fraudulent charges prompted by the breach, since it alleged there could be no “classwide” assertion that all cards reissued were affected by the breach. The defendant also objected to the case being heard in Minnesota – the location of Target’s headquarters, but a state with limited connection to most of the plaintiffs, the retailer said. Minnesota’s Plastic Card Security Act (PCSA) is central to the plaintiffs’ case, but Target alleges that their arguments should fail the standard of whether each bank’s actions following the breach were “reasonable.”

“As is the case with many of Target’s challenges to plaintiffs’ class certification request, Target parses this statute almost beyond recognition,” Magnuson wrote. He determined that the class members’ claims are akin to each other, having arisen out of the same event and circumstances.

“Given the number of financial institutions involved and the similarity of all class members’ claims, plaintiffs have established that the class action device is the superior method for resolving this dispute,” the judge said.

Target reached a settlement in a consumer class action, pending approval, to pay $10 million to affected consumers. A $19 million settlement with MasterCard failed, while a $67 million settlement with Visa was reached last month.