Attorneys in a class-action suit against Home Depot over its 2014 data breach asked a judge Tuesday to unwind releases some class members may have signed in connection with an apparent settlement offer from the retailer and MasterCard. Filed with the request were documents that shed some light on where the settlement may be headed financially.
At issue in the injunction request are emails third-party payment processors sent during the week of Thanksgiving notifying institutions that MasterCard and Home Depot had reached a proposed settlement. Those communications omitted crucial information and required institutions to respond within a few days, the attorneys claimed.
"Without such information, financial institution[s] cannot make an informed decision as to whether to accept a settlement, particularly one that has not even been finalized," they wrote.
Specifically, the attorneys said, most class members weren't told how much they'll get under the settlement, nor were the calculation methods communicated. It's also unclear where MasterCard's Account Data Compromise program and Alternative Recovery Offer payments fit in, they argued.
In a declaration filed Tuesday, 1st Community Federal Credit Union Executive Vice President of Lending George Sweet said he got a settlement notice from Fiserv on Nov. 27. The deadline was Dec. 7, according to an email from Fiserv to Sweet, which was filed with the declaration.
"The communication states that payment to 1st Community under the purported settlement will be $1,851.38," he noted.
Although the credit union hasn't calculated its exact damages yet, that amount isn't adequate compensation and no specific information was provided as to how the amount was calculated, Sweet added. The credit union, based in San Angelo, Texas, has $234 million in assets and about 23,000 members.
In another declaration filed Tuesday, Phenix-Girard Bank President Menza Dudley said Jack Henry & Associates informed the bank on Dec. 1 that issuers will receive an "operational reimbursement" of approximately $1.18 per card under the settlement. It wasn't clear whether that included reissue costs, but the bank's card replacement cost is well above $1.18, Dudley said. The deadline to accept the offer was Dec. 8, according to the documents.
The communication to Dudley, which was included in the court documents along with a copy of a settlement agreement between MasterCard, Home Depot and Jack Henry, also said MasterCard offered to pay a total of $314,572.77 for 142,334 qualified accounts sponsored by Jack Henry. The amount is a 110% premium over Home Depot's liability under MasterCard's ADC program, it said. Of the total, $168,095.89 was for operational reimbursement; the remainder was for fraud reimbursement.
Attorneys for the plaintiffs also argued that by negotiating with MasterCard rather than with the members of the class, Home Depot disregarded the court's order that gave the plaintiffs' attorneys sole authority to discuss a settlement on behalf of financial institutions.
"Plaintiffs currently do not know exactly what Home Depot and MasterCard are attempting to do," they said. "It appears, however, that they have hijacked the card recovery process."
In a brief filed Monday in response to a request for an emergency hearing on the matter, Home Depot disputed many of the allegations and called the complaints from plaintiffs' counsel "a desperate attempt to improperly interject itself into the Card Brand Recovery process."
"Home Depot did not send or authorize and was not even aware of the communications they complain about," attorneys Cari Dawson and Kristine Brown, who represent Home Depot, wrote. "Rather, the communications attached to the banks' filing show on their face that they were sent by or on behalf of absent class members to other absent class members. In other words, the banks are complaining about communications that are completely between and among their own absent class members."
On Monday, attorneys Gary Lynch, Kenneth Canfield and Joseph Guglielmo, who are co-lead counsel for the plaintiffs, said in a statement that until Home Depot discloses more about its agreement with MasterCard, institutions should reject any settlement that does not offer significant reimbursement for losses beyond what they are entitled to under MasterCard's rules without releasing their legal claims.
The emergency hearing is scheduled for Dec. 14, a spokesperson told CU Times.
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