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Judge grants banks discovery in proposed Home Depot breach settlement

Judge grants banks discovery in proposed Home Depot breach settlement

A judge has sided with plaintiff attorneys for financial institutions that want more information about a settlement agreement between Home Depot Inc. and MasterCard Inc. over a 2014 cyber breach, which the attorneys argue was secretly negotiated and unfair.

The U.S. District Court judge supervising the case filed against Home Depot Inc. by the financial institutions has signed an order approving discovery regarding the proposed settlement that has been objected to by the plaintiff attorneys.

Plaintiff attorneys representing financial institutions in litigation over Atlanta-based Home Depot’s 2014 cyber breach angrily denounced a contingent settlement reached with MasterCard Inc. they said was secretly negotiated, and recommended their clients reject it.

They filed a motion with the U.S. District Court for the Northern District of Georgia in Atlanta seeking a hearing on the notices and that the retailer be required to provide copies of the proposed settlement in its response.

Notices that were sent to financial institutions by payment processors dated Nov. 25 and Nov. 27, which were included in a Nov. 30 filing, state the proposed settlement will become effective if 65% of all qualified accounts accept it, and that financial institutions have until Dec. 2 or Dec. 7 to respond in order to participate in the settlement.

A Home Depot spokesman said at the time that although the company has a tentative agreement with MasterCard, “we have not communicated, nor were we aware of any communications about the agreement.”

In a subsequent statement, Home Depot charged the plaintiff attorneys with seeking to disrupt its lawful participation in the Card Brand Recovery Process.

Following a hearing Monday, District Judge Theodore W. Thrash Jr. issued an order that said, “while not required, an order governing certain communications with putative class members by both sides regarding settlement offers and release of the claims asserted in this litigation is appropriate moving forward.

“This Order strikes the appropriate balance between restricting communications that will frustrate the policies and purpose of rule 23 of the Federal rules of Civil Procedure and allowing communications going forward.” Rule 23 applies to class actions.

Plaintiff attorneys said in a statement they are “pleased the Court agreed that the communications received by financial institutions about the Home Depot/MasterCard settlement were “misleading and coercive” and warrant further scrutiny.

“The order granting immediate discovery will allow the Court to learn all the facts about Home Depot’s agreement with MasterCard and determine whether to grant plaintiffs’ request to vacate any releases and require a curative notice be sent to class members.

“In the meantime, we recommend that financial institutions not accept any tentative settlement offer until sufficient information is provided that enables them to make an informed decision.”

A Home Depot spokesman said he had no further comment.

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