Home Depot and the Difficulties of Post-Breach Settlements

Source: http://www.businessinsurance.com/article/20160315/NEWS06/160319915/atlanta-based-home-depot-inc-19-5-million-settlement-deal-may-set

Posted: March 15, 2016

Home Depot’s breach in 2014 was settled for a “relatively low” $19.5 million. $13 million will go to reimbursements made to shoppers who suffered losses and $6.5 million will go to funding 1 and a half years of cardholder identity protection services, according to court papers filed in the U.S. District Court in Atlanta. If the people that were affected and participate in the class action settlement number more than 40 million people, the cost of the services will increase at a rate of $16,250 per 100,000 eligible settlement class members over the current total. Class members only have to provide a valid claim form and “reasonable” documentation of substatiated losses. Reimbursement is made available up to $10,000. Class members have until July 18, 2016 to opt out of the settlement. The final hearing will be on August 12th, 2016. The total number of people affected includes 40 million who have had their card data stolen and 52-53 million who have had their email information stolen. There is some overlap between the two groups.

Settlement was not larger compared to other cases because defenders have successfully sought dismissal on the basis that plaintiffs did not have a right to sue ” because they had not yet suffered injury.” There was one exception to this defensive motion to dismiss. This exception deals with the July 2015 ruling by the 7th U.S. Circuit Court of Appeals in Chicago. The ruling stated that the plaintiffs in the Neiman Marcus breach case were exposed to a “substantial risk of harm.” The basis for this ruling was the 2013 ruling in Clapper v. Amnesty International USA.  Roberta Anderson, a partner with K&L Gates L.L.P. said “she could not comment on the specifics of the Home Depot settlement. But the relatively low settlement amount that we see in Target and Home Depot is reflective of the fact that the plaintiffs in these cases face very significant uphill challenges in getting their claims to advance through the judicial system because the vast majority of those plaintiffs lack actual compensatory injuries, so their claims are subject to significant challenges, including standing grounds.” If the case was not settled there was a good chance it would be dismissed in the pleading stage.

Home Depot is settling the case because it is extremely expensive to litigate class action lawsuits, according to the opinion of Linn Foster Friedman, a partner with Robinson & Cole L.L.P, who along with Anderson is not involved in the dealings of the case but only offering professional comment.