Although he wants some more time to think about it, U.S. District Court Judge William Young indicated that he would likely approve TJXs revised $200 million consumer settlement of the nations worst data breach.
After hearing about a revised proposed settlement that supplements $30 in-store vouchers with $15 checks—along with other changes, such as increasing the voucher cap from $7 million to $10 million—Young said, "Im tentatively [a] go," to indicate that he was inclined to approve the deal but wanted to consider the options just a bit longer.
Much of the Wednesday hearing before the judge in the Boston federal courthouse focused on whether TJX could contact most of the consumer victims by mail, instead of TJXs preferred approach of advertisements and selected mailings.
TJX lawyers submitted an affidavit of a TJX executive and argued that it wouldnt be practical because too many people were hurt and that TJX cant justify spending the money to contact all of them directly. Also, they said that many of the consumers involved had not been truly impacted, for example those customers whose credit cards had already expired at the time of the breach.
"This group would not only be enormous. Its everybody who shopped," said TJX attorney Harvey Wolkoff. "It would be millions and millions and millions of people. But it also would be way over inclusive," he said.
Click here to read more about TJXs revised settlement offer. "It would include many, many, many people, your Honor, who wouldnt be entitled to a voucher because they didnt experience any kind of out-of-pocket loss, they didnt experience any lost time. Many of them didnt experience anything or, at most, what they experienced is possible exposure," Wolkoff said.
Wolkoff argued—pointedly—that being forced to contact all of the consumer victims would likely kill the settlement offer because it would then be cheaper to go to trial.
He compared it to another case—overseen by the same judge—involving consumers who were over-charged for prescriptions.
In the prescription case, "you had ten drug store chains that were responsible for some very large percentage of the prescriptions. Here, we have hundreds and hundreds of banks. We have big banks, we have small banks, we have medium size banks," Wolkoff said. "The cost to do that, your Honor, would be horrendous and, frankly, it would, with all due respect, it would likely crater the settlement."
The judge—who thanked Wolkoff for delivering "the candor Im looking for"—seemed to accept the argument.
"You say that if I force this and (even if) it didnt crater the settlement, it nevertheless would be a whole lot of waste of time," the judge said, "because people whose credit card had expired, people who had no legitimate claim under this settlement, would come out of the woodwork unnecessarily and would have to be broomed off and it would not be helpful. I hear that argument. And I need to reflect on that."
Read more here about about the cost of the TJX consumer data breach.
Part of the cost debate brought out arguments over how TJX tries to identify some consumers who do not use loyalty cards. Wolkoff described TJX cashiers who periodically ask for a customers telephone number.
Wolkoff—who then said he "never" gives the cashier his phone number "in part because I have trouble remembering it"—said TJX then sends the number immediately to a company. "They attempt to, and dont nearly always succeed, to make a match between the telephone number that you gave and the name and address," he said.
His point was that TJX has inconsistent contact information on a handful of impacted people, specifically the consumers who were asked to give their telephone number, who gave it and who were then identified. "So were getting into a subset of a subset of a subset (where) we have the names and addresses of those people," Wolkoff said.
In another development at the hearing, TJX Vice Chairman Donald Campbell, a 34-year TJX veteran, issued a sworn statement indicated that consumers havent stopped shopping at the store chain since the breach. Its the most explicit statement from TJX yet that consumers have gone out of their way to not punish TJX for the data breach.
TJXs "sales have increased each quarter since the intrusion was first reported and TJX has continued to meet or exceed its sales expectations in each quarter," Campbell said. "TJXs foot traffic levels continue to be very high and our number of customer transactions continues to increase, indicating that there have been very few who choose no longer to shop at TJX because of the intrusion."
Retail Center Editor Evan Schuman can be reached at Evan.Schuman@ziffdavisenterprise.com.
Check out eWEEK.coms for the latest news, views and analysis on technologys impact on retail.