Will home turf matter for Target?

The lawsuits filed against Target Corp. claiming the retail giant didn’t do enough to protect the personal and financial information that resulted in the largest theft of retail data in history will be consolidated in federal court in Minneapolis.

Having the pretrial phase consolidated in Minneapolis is what Target and the Minnesota banks and consumers who are suing the company wanted. Who benefits from the location remains to be seen.

Earlier this month, the Judicial Panel on Multidistrict Litigation transferred 33 lawsuits from 18 federal districts to U.S. District Court Judge Paul Magnuson. Cyberthieves stole as many as 110 million personal records — 40 million of those were credit cards — during the Christmas shopping season.

At the panel hearing last December, Target asked that for the pretrial phase lawsuits from the banks and the consumers be consolidated and transferred to Minneapolis. A group of attorneys that represented Minnesota-based plaintiffs also argued to send the case to Minneapolis. Other plaintiffs’ lawyers argued for Colorado, the northern district of Illinois and districts in both Louisiana and California.

The panel said that out of convenience Minneapolis was the best choice and the best use of resources and time. Target did not comment for this story, but at the December hearing, a Target attorney said the company has a “substantial connection” to Minnesota. The company’s IT department is in Minneapolis as well as the majority of the senior leadership who will be witnesses in the case.

Three groups have filed suits against Target in the aftermath of the breach: consumers who lost money and their personal information, banks who had to deal with the fraud, and shareholders filing derivative suits. Some investors claim the company ignored warning signs about the breach and mislead consumers once the problem surfaced. As a result, the company lost even more money.

Assigning the case to Minnesota could also benefit the plaintiffs, specifically the banks, said Bryan Bleichner, an attorney at Chestnut Cambronne in Minneapolis. His firm filed complaints on behalf of two banks. Bleichner said there is Minnesota statute that if applied would be favorable to the banks.

State law says that if there is a retail security breach, banks can be reimbursed for costs like canceling and reissuing credit or debit cards, closing and reopening banking accounts, refunding money to customers to cover fraudulent transactions and for notifying customers of the problem.

Other states do not have those statutory remedies, Bleichner said.

“The statute is unique and it anticipated a case like this,” he said.

One of Magnuson’s tasks in the MDL will be to lay out the steps that consumers, banks and shareholders will need to complete to prove that the data was breached, that Target was liable, and that the plaintiffs suffered damage as a result. There could be different requirements for consumers and for the banks.

“The goal is to make it as efficient and streamlined as possible, and then it will be up to [Magnuson] to decide how it will proceed with the different groups of plaintiffs,” said Garrett Blanchfield, an attorney at Reinhardt Wendorf & Blanchfield in St. Paul. His firm has filed a claim on behalf of five banks.

Maslon Edelman Borman & Brand attorney David Herr has written a book on the MDL panel called “Practice Before the Judicial Panel on Multidistrict Litigation.” He said defendants in large, complex cases are happier on their home field, but the Minnesota-based plaintiffs are happy as well.

The decision is based on consistency and efficiency, he said. The MDL is designed to consolidate the issues and the evidence so judges in a dozen different states aren’t answering the same questions in different ways. The MDL stays intact up through the summary judgment phase.

Herr said with this many claims coming in from all over the U.S., the panel could have realistically sent the case anywhere, but “this might be one of those cases were there weren’t a lot of other logical forums,” he said.

Because these cases place big burdens on judges and their staffs, the panel prefers to send MDLs to a judge that has experience in large, complex cases and has the time and resources available, Herr said. Magnuson also has experience with MDLs. He oversaw a lawsuit brought against Pfizer . In 2006, a group of plaintiffs argued Pfizer’s drug Viagra caused them to suffer vision loss.

Just getting the case organized will be a big first step, said Vincent Esades, an attorney at Heins Mills & Olson in Minneapolis. He has filed claims on behalf of a handful of consumers. He said that new cases are being filed and transferred daily and that, at some point, the court will have to decide which claims will go forward first.

“There is such a huge administrative task right out of the gate, that will dominate the early part of this,” he said.

Inver Grove Heights attorney Greg McEwen has filed claims on behalf of six consumers who found out their personal information had been stolen. He said there is a lot of work to do in the pretrial phase that will go a long way toward setting the tone for the case. This case is unique, he said, because Target has already admitted publicly that, yes, the personal information was stolen. But there are still a lot of questions to be answered.

“The first issue is how this happened, how much notice did Target have, and then once they knew about it, could they have done anything to stop it before it exploded,” McEwen said. “They noticed some irregularities, but they claimed drastic action was not needed. Well obviously they were wrong … how come no one did anything?”

Minnesota Star Tribune – April 10, 2014 – By Patrick Thornton