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Target's Data Breach Settlement Blocked by Appeals Court

By William Vogeler, Esq. on February 07, 2017 | Last updated on March 21, 2019

A federal appeals court has delayed a $10 million settlement for customers whose records were hacked at Target, sending the case back to a judge to consider a separate group of customers who were not affected by the breach.

The U.S. Eighth Circuit Court of Appeals said the trial judge did not adequately consider whether the settlement fairly represents customers who may have problems from the breach in the future. They want out of the class action settlement, and want to proceed as a sub-class.

"We hold that the district court abused its discretion by failing to rigorously analyze the propriety of certification, especially once new arguments challenging the adequacy of representation were raised after preliminary certification," the panel said.

Big Bond, Little Cost

Appellant Leif Olson objected to the class certification, while Olson and appellant Jim Sciaroni also objected to the settlement. Both challenged the trial court's bond requirement for the appeal as well.

The trial judge set the bond at $46,872, to cover "the financial harm the class will suffer as a result of the delay caused by the appeal." The trial judge said the appeal would disrupt the claims process, hinder distribution of settlement funds, and the increase administrative costs for maintaining the settlement website and toll-free telephone number.

However, the appeals court noted, the parties agreed that the direct cost of the appeal was only $2,284. Appellants argued that no applicable statute or federal rule allowed additional "delay costs." In response, Targets' lawyers cited an unpublished opinion from the U.S. Third Circuit Court of Appeal.

First Impressions

"The issue is one of first impression in our Court: whether costs associated with delays in administering a class action settlement for the length of a class member's appeal may be included in an appeal bond under Federal Rule of Appellate Procedure 7," Judge Bobby E. Shepherd wrote for the unanimous court.

The appeals panel said that imposing delay costs on appellants could create "overly burdensome bonds" and an impermissible barrier to appeal.

"Accordingly, we hold that 'costs on appeal' for Rule 7 purposes include only those costs that the prevailing appellate litigant can recover under a specific rule or statute applicable to the case at hand," they said.

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