Banks suing Target Corp. over the 2013 data breach filed a motion for a preliminary injunction to block part of a proposed $19 million settlement the Minneapolis-based retailer reached with MasterCard.
That proposed settlement, which Target and MasterCard unveiled last week, is contingent on 90 percent of eligible card issuers signing on to the plan by May 20. If they opt in, banks and credit unions would have to release Target of all claims, including being part of the federal lawsuit making its way through U.S. District Court in St. Paul. That lawsuit is seeking class-action status.
The banks' lawyers asked the court to throw out the terms that would bar them from being part of the lawsuit. The motion will be discussed at a court hearing Monday.
The financial institutions are also asking the court to step in to curb MasterCard's "misleading and coercive communications" about the settlement. For example, they note that MasterCard has said that the $19 million settlement will cover 71.4 percent of banks' costs to reissue cards and to reimburse consumers for fraudulent charges. But the banks note that percentage is based on a MasterCard formula and is not representative of the actual costs banks and credit unions suffered as a result of the data breach.
Last week, the banks' lawyers slammed the proposed settlement, saying the $19 million represents just "pennies on the dollar" for the financial hit banks took after one of the largest retail data breaches in history.
MasterCard has said the proposed settlement will offer a more certain and quicker resolution for banks, which would be paid by the end of the second quarter. The court case, meanwhile, is scheduled to go to trial in March 2016.
According to court documents, MasterCard has identified about 8.8 million of its accounts that were affected by the data breach. The amount of fraudulent charges MasterCard has tied to the data breach was redacted from the court document as well as the amount MasterCard had previously estimated that banks should be reimbursed.
Target is still in negotiations with Visa.
