Blue Light Special: Kmart $5.2M Breach Bank Class Settlement Moves

By Jimmy H. Koo

A class of banks affected by a Kmart Corp. payment card data breach is on track to recover $5.2 million in related costs after gaining a federal court’s conditional approval of a no-fault settlement with the discount retailer ( Greater Chautauqua Fed. Credit Union v. KMart Corp. , N.D. Ill., No. 1:15-cv-02228, 5/19/17 ).

The U.S. District Court for the Northern District of Illinois May 19 conditioned the class settlement on final approval of the settlement fund allocation plan, requests for attorneys’ fees and costs, and the setting of incentive awards to the named individual plaintiffs.

According to the class complaint, filed by credit unions, banks, and other financial institutions, Kmart failed to employ adequate security measures despite the known threat of data breaches. As a result of the hacking breach, plaintiffs were forced to cancel or reissue affected payment cards and refund cardholders to cover the costs of unauthorized transactions, the plaintiffs alleged.

Without admitting any wrongdoing, Kmart—which is owned by Sears Holding Corp.—agreed to settle the class allegations by paying $5.2 million and implementing changes to its data security protocols.

A status hearing is scheduled for June 16.

Plaintiffs are represented by Murray Law Firm; Scott & Scott Attorneys at Law LLP; Carlson Lynch Sweet & Kilpela LLP; Hausfield LLP; Lockridge Grindal Naeun PLLP; Lite DePalma Greenberg LLC; and Miller Law LLC. Kmart is represented by King & Spalding LLP and Polsinelli PC.

To contact the reporter on this story: Jimmy H. Koo in Washington at jkoo@bna.com

To contact the editor responsible for this story: Donald Aplin at daplin@bna.com

For More Information

Full text of the settlement minute entry is available at http://src.bna.com/o5d.

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