In re: Target Corporation Customer Data Security Breach Litigation

This case is back to us after our reversal of the certification of a class

composed of individuals whose payment card information was compromised as a

result of the 2013 Target security breach. See In re Target Corp. Customer Data Sec.

Breach Litig., 847 F.3d 608, 613 (8th Cir. 2017). On remand, the district court2 recertified

the class after conducting a rigorous analysis. Class member Leif Olson

again objects to the certification on a number of grounds. In addition, class member

Jim Sciaroni objects to the district court’s approval of the settlement agreement. We

see no error and affirm.

1The Honorable Leonard T. Strand, Chief Judge, United States District Court

for the Northern District of Iowa, sitting by designation.

2The Honorable Paul A. Magnuson, United States District Judge for the District

of Minnesota.

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I. Background

In 2015, the district court certified a class of “[a]ll persons in the United States

whose credit or debit card information and/or whose personal information was

compromised as a result of the data breach that was first disclosed by Target on

December 19, 2013.” As has become common, the class was certified solely for the

purpose of entering into a settlement agreement. The parties presented such an

agreement to the court in short order.

Under the terms of this agreement, Target agreed to pay $10 million to settle

the claims of all class members and waived its right to appeal an award of attorney’s

fees less than or equal to $6.75 million. For 3 those class members with documented

proof of loss, the agreement called for full compensation of their actual losses up to

$10,000 per claimant. For those class members with undocumented losses, the

agreement directed a pro rata distribution of the amounts remaining after payments

to documented-loss claimants and class representatives. Additionally, Target agreed

to implement a number of data-security measures and to pay all class notice and

administration expenses.

There were two primary objectors to the court’s certification of the class and

approval of the settlement agreement: Leif Olson and Jim Sciaroni. In the original

appeal of this matter, Olson argued that the court failed to conduct the appropriate

pre-certification analysis, and Sciaroni objected to the court’s approval of the

settlement. We agreed with Olson’s argument and therefore remanded to the district

court without considering Sciaroni’s objections.

3Under the agreement, the $10 million class fund is entirely separate from any

award of attorney’s fees and costs.

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On remand, the court again certified the class. Olson appeals that decision,

claiming the district court factually misunderstood the settlement agreement and

failed to account for a number of alleged conflicts of interest between class counsel

and class members and among competing subgroups of class members. In addition,

Sciaroni’s original objections to the settlement are before us. We first address

Olson’s claims before moving to Sciaroni’s objections.

II. Olson

On appeal, Olson raises two principal challenges to the district court’s

certification order. First, he contends the district 4 court fundamentally misunderstood

the structure of the settlement agreement. Next, he argues that there is an intraclass

conflict between class members who suffered verifiable losses from the data breach

and those, like Olson, who have not, and that this conflict necessitates separate legal

4Olson raises two additional arguments that can be quickly disposed of. First,

he contends there are no named class representatives from the zero-loss subclass. See

Fed. R. Civ. P. 23(a)(4) (requiring, as a prerequisite to class certification, that “the

representative parties will fairly and adequately protect the interests of the class”).

This argument is belied by the record. Olson concedes in his brief that, as of the time

the suit was filed, there were thirteen named plaintiffs who had not submitted claims

for reimbursement. Moreover, as of the moment the district court certified the class,

there were four named plaintiffs who had claimed no out-of-pocket losses. Next,

Olson claims that there is an intraclass conflict between those individuals who reside

in states that offer statutory causes of action and those who do not. On this point,

Olson asserts that class members from states such as California, Rhode Island, and

the District of Columbia are being forced to forego their state-law statutory claims in

return for “marginal compensation” under the terms of the settlement. But Olson—a

resident of Texas, which does not offer a statutory cause of action—has no standing

to assert a conflict on behalf of residents from states offering such relief. See In re

SuperValu, Inc., 870 F.3d 763, 768 (8th Cir. 2017) (“The requirements for standing

do not change in the class action context.”); Huyer v. Njema, 847 F.3d 934, 941 (8th

Cir. 2017) (“Njema is not a named plaintiff, so he is not injured by the district court’s

decision not to award larger sums [to the named plaintiffs].”).

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counsel. We address each argument in turn, applying 3 the deferential abuse of

discretion standard. See Petrovic v. Amoco Oil Co., 200 F.3d 1140, 1145 (8th Cir.

1999).

A.

Olson first launches a factual challenge to the district court’s order. Under the

terms of the settlement, the proceeds are first distributed to those individuals who

submit proof of actual loss, up to a total amount of $10,000 per claimant. Next, the

class representative awards are paid. Then any remaining proceeds are distributed in

equal amounts to those claimants with undocumented losses. The district court

accurately presented this structure on page 3 of its order, but it later made two

comments which form the basis of Olson’s attack:

Plaintiffs who have not suffered any monetary injury likely have no

claim to any future payment and thus the equitable relief from the

settlement, in addition to the possible pro-rata share of the remaining

settlement fund, constitutes all of the relief they could hope to reap from

this litigation.

. . . .

Plaintiffs who have no demonstrable injury receive the benefit of

Target’s institutional reforms that will better protect consumers’

information in the future, and will also receive a pro-rata share of any

remaining settlement fund.

Proceeding from these statements, Olson contends the district court fundamentally

misunderstood the settlement structure because it apparently believed that those

claimants in the zero-loss subclass would receive a share of remaining settlement

proceeds. Under Olson’s view, “that error alone warrants reversal.” We disagree.

3Olson does not draw such neat lines between his arguments, but we are

satisfied that dividing them in this way addresses all of his claims.

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To be sure, as Olson points out, we have stated that “[t]he district court . . .

abuses its discretion if its conclusions rest on clearly erroneous factual

determinations.” Blades v. Monsanto Co., 400 F.3d 562, 566 (8th Cir. 2005). But

here we have no indication that the district court rested its conclusions on the above

statements. In fact, the court had already determined that no intraclass conflict

existed four pages prior to making the above statements, so it stretches credulity to

assert that its conclusion depended on a statement made thereafter. We need not

define at what point an erroneous factual statement constitutes reversible error. In

this case, it was obvious that the district court did not rely on an erroneous

understanding of the settlement, and thus no abuse of discretion occurred.

B.

Olson next argues that there is an intraclass conflict between class members

who suffered verifiable losses from the data breach and those, like Olson, who have

not. Olson uses different names for this latter subclass, sometimes referring to it as

a zero-recovery subgroup and other times calling 4 it a future-damages subclass. In

4Littered throughout Olson’s materials is his assertion that class members with

no proof of loss—documented or undocumented—are barred from receiving anything

of value under the agreement. This is, perhaps, why he has chosen to label those class

members as the “zero-recovery subgroup.” But the injunctive relief offered under the

settlement has value to all class members. See Marshall v. Nat’l Football League,

787 F.3d 502, 509 (8th Cir. 2015) (“[T]he financial payment to the third-party

organization is not the only, or perhaps even the primary, benefit of the settlement

agreement. All class members receive a direct benefit from the settlement: the

opportunity to license their publicity rights through the established Licensing Agency,

as well as the payments by the NFL to the Licensing Agency.”), cert. denied, 136 S.

Ct. 1166 (2016); see also Sullivan v. DB Invs., Inc., 667 F.3d 273, 329 (3d Cir. 2011)

(“This argument fails to acknowledge the injunctive relief offered by the settlement,

however, which is intended to benefit all class members regardless of individual

monetary recovery.”). As a result, we choose to refer to these class members as the

“zero-loss subgroup” because that accurately reflects the reality that these members

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substance, Olson’s contention is that under the Supreme Court’s asbestos decisions

in Amchem and Ortiz, the district court’s ruling was legally deficient because, even

assuming there were named representatives from the zero-loss subclass, separate legal

counsel was required to protect that subclass’s interests. See, e.g., Ortiz v. Fibreboard

Corp., 527 U.S. 815, 856 (1999) (“[I]t is obvious after Amchem that a class divided

between holders of present and future claims (some of the latter involving no physical

injury and attributable to claimants not yet born) requires division into homogeneous

subclasses under Rule 23(c)(4)(B), with separate representation to eliminate

conflicting interests of counsel.”).

We need look no further than the language of Amchem itself to refute this

assertion. Describing the then-current state of asbestos litigation, the Court noted:

[This] is a tale of danger known in the 1930s, exposure inflicted upon

millions of Americans in the 1940s and 1950s, injuries that began to

take their toll in the 1960s, and a flood of lawsuits beginning in the

1970s. On the basis of past and current filing data, and because of a

latency period that may last as long as 40 years for some asbestos related

diseases, a continuing stream of claims can be expected. The final toll

of asbestos related injuries is unknown. Predictions have been made of

200,000 asbestos disease deaths before the year 2000 and as many as

265,000 by the year 2015.

in fact suffered no monetary injury from the data breach. Citing Dewey v.

Volkswagen Aktiengesellschaft, 681 F.3d 170, 187 (3d Cir. 2012), Olson briefly

argues that there is an intraclass conflict between the subgroup with losses and the

zero-loss subgroup because the latter receives no compensation. But Dewey’s

analysis on this point turned on that court’s conclusion that there were no named class

representatives from a certain subgroup. As we stated above, we have named class

representatives from both subgroups present in the current case, see supra note 4, so

Dewey is inapplicable. Moreover, even the Third Circuit would recognize that the

injunctive relief offered in the settlement has value to all class members. See

Sullivan, 667 F.3d at 329.

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Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 598 (1997) (alteration in original)

(internal quotation marks omitted). Against this backdrop, the Court was confronted

with a class certification and settlement offer that “proposed to settle, and to preclude

nearly all class members from litigating against [certain asbestos] companies, all

claims not filed before January 15, 1993, involving compensation for present and

future asbestos-related personal injury or death.” Id. at 603.

After finding that Rule 23(b)(3)’s predominance requirement was not satisfied

by the proposed class, the Court focused on Rule 23(a)(4)’s adequacy inquiry with

the goal of uncovering whether there were “conflicts of interest between named

parties and the class they seek to represent.” Id. at 625. Because “named parties with

diverse medical conditions sought to act on behalf of a single giant class rather than

on behalf of discrete subclasses,” the Court found that such conflicts existed. Id. at

626. More specifically, the Court reasoned that “for the currently injured, the critical

goal is generous immediate payments[,] [and] [t]hat goal tugs against the interest of

exposure-only plaintiffs in ensuring an ample, inflation-protected fund for the future.”

Id. In the context of a nationwide phenomenon involving “millions of Americans”

and “a latency period that may last as long as 40 years for some asbestos related

diseases,” id. at 598 (internal quotation marks omitted), this conclusion is sound

because there was a real expectation that the exposure-only plaintiffs would fall ill

after the date specified in the settlement. As a result of the fact that no exposure-only

plaintiff could estimate with any certainty the extent of his or her future injury, the

settlement offered no assurance that sufficient funds would remain to protect the

interests of that group.

Olson struggles to analogize the present case to Amchem and Ortiz, asserting

that class members with verified losses are attempting to maximize their recovery at

the expense of those who “might only have future . . . damages.” His attempts are

futile. As the Supreme Court noted, “[i]n contrast to mass torts involving a single

accident, class members in this case were exposed to different asbestos-containing

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products, in different ways, over different periods, and for different amounts of time;

some suffered no physical injury, others suffered disabling or deadly diseases.” Id.

at 609 (citing Georgine v. Amchem Prods., Inc., 83 F.3d 610, 626, 628 (3d Cir.

1996)). We therefore believe the present case is more similar to our decision in

Petrovic, 200 F.3d at 1146, where we distinguished Amchem and Ortiz by “not[ing]

that the injuries involved in those cases were extraordinarily various, both in terms

of the harm sustained and the duration endured.”

Here, we have “a discrete and identified class that has suffered a harm the

extent of which has largely been ascertained.” Id. As Olson himself states, “all class

members suffered the same injury, i.e., compromise of their personal and financial

information from the data breach.” Thus, similar to the mass tort cases the Supreme

Court discussed in Amchem, we have one accident here—the data breach—that

caused a series of events leading to the plaintiffs’ injuries. But all class members had

the ability to register for credit monitoring, and all of the compromised payment cards

undoubtedly were cancelled and replaced by the issuing banks. Any risk of future

harm is therefore entirely speculative, which is perhaps best illustrated by Olson’s

inability to direct the court—even generally—to a concrete type of future harm that

the settlement fails to consider.

Of course, it is hypothetically possible that a member of the zero-loss subclass

will suffer some future injury; for example, a line of credit could be opened using the

personal information compromised in the breach. But this is just as likely to happen

to a member of the subclass with documented losses. Accordingly, the interests of

the two subclasses here are more congruent than disparate, and there is no

fundamental conflict requiring separate representation. See DeBoer v. Mellon Mortg.

Co., 64 F.3d 1171, 1175 (8th Cir. 1995) (“There is no indication that DeBoer’s

interest was antagonistic to the remainder of the class or that the claims were not

vigorously pursued.”); cf. Dewey, 681 F.3d at 185-86.

The district court did not abuse its discretion in certifying the class.

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III. Sciaroni

Having found the district court properly certified the class, we now turn to

Sciaroni’s challenges to the district court’s original order concerning the settlement

in this case. Sciaroni first launches a two-fold challenge to the court’s award of

attorney’s fees, arguing at the outset that the court erred by considering the costs of

notice and administration expenses as a benefit to the class and then challenging the

overall reasonableness of the award. Next, Sciaroni contends that the court erred in

approving the settlement.

A.

Sciaroni first urges us to adopt the Seventh Circuit’s approach to determine

whether administrative fees and costs are a benefit to the class as a whole. See

Redman v. RadioShack Corp., 768 F.3d 622, 630 (7th Cir. 2014) (“[T]he roughly $2.2

million in administrative costs should not have been included in calculating the

division of the spoils between class counsel and class members. Those costs are part

of the settlement but not part of the value received from the settlement by the

members of the class.”). During the pendency of this case, however, we issued two

opinions that reached the opposite conclusion. See Huyer v. Buckley, 849 F.3d 395,

398 (8th Cir. 2017) (“[T]he district court did not abuse its discretion by basing its fee

award on the total settlement fund, which included administrative costs.”); In re Life

Time Fitness, Inc., Tel. Consumer Prot. Act (TCPA) Litig., 847 F.3d 619, 623 (8th

Cir. 2017) (“[T]he district court did not abuse its discretion by including

approximately $750,000 in fund administration costs as part of the ‘benefit’ when

calculating the percentage-of-the-benefit fee amount.”). Accordingly, the same is true

here: the district court acted within its discretion when it included notice and

administrative expenses in its calculation of the total benefit to the class.

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Sciaroni next challenges the reasonableness of the total fee award. “Decisions

of the district court regarding attorney fees in a class action settlement will generally

be set aside only upon a showing that the action amounted to an abuse of discretion.”

Petrovic, 200 F.3d at 1156. The court awarded counsel attorney’s fees and expenses

of $6.75 million, determining that amount was “not unreasonable under either the

lodestar or percentage-of-the-fund methodology.” Under our precedent, the district

court has discretion to use either method, and the ultimate reasonableness of the

award is evaluated by “consider[ing] relevant factors from the twelve factors listed

in Johnson v. Ga. Highway Express, Inc., 488 F.2d 714, 719-20 (5th Cir. 1974).”

Keil v. Lopez, 862 F.3d 685, 701 (8th Cir. 2017).5

Perfunctory as its analysis may have been, we cannot say the district court

failed to meet its burden “to provide a concise but clear explanation of its reasons for

the fee award.” Hensley, 461 U.S. at 437. The court voiced its opinion that this “case

has been hard-fought and heavily litigated since its inception” and that the award was

“reasonable in light of the complexities and vagaries of this case.” Though it did not

mention Johnson, the court expressed its view—based on the above statements—that

5The factors are:

(1) the time and labor required; (2) the novelty and difficulty of the

questions; (3) the skill requisite to perform the legal service properly;

(4) the preclusion of employment by the attorney due to acceptance of

the case; (5) the customary fee; (6) whether the fee is fixed or

contingent; (7) time limitations imposed by the client or the

circumstances; (8) the amount involved and the results obtained; (9) the

experience, reputation, and ability of the attorneys; (10) the

“undesirability” of the case; (11) the nature and length of the

professional relationship with the client; and (12) awards in similar

cases.

Winter v. Cerro Gordo Cty. Conservation Bd., 925 F.2d 1069, 1074 n.8 (8th Cir.

1991) (quoting Hensley v. Eckerhart, 461 U.S. 424, 430 n.3 (1983)).

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the award was justified by the time and labor required, the difficulty of the matter, the

skills necessary to prevail (or to reach the current settlement agreement), and the

length of the representation. Additionally, the court noted that “[t]he request amounts

to a negative lodestar multiplier of .74, and . . . is 29% of the total monetary payout

Target is required to make as part of the settlement.” Both of these figures are well

within amounts we have deemed reasonable in the past. Cf. Huyer, 849 F.3d at 399-

400 (collecting cases and noting “courts have frequently awarded attorneys’ fees

ranging up to 36% in class actions” and that a lodestar “multiplier [of 1.82] is well

within the range of multipliers awarded in this and other circuits”). The court did not

abuse its discretion.

B. Approval of the Settlement

Finally, Sciaroni takes issue with the district court’s approval of the settlement,

arguing that the court awarded “worthless objective relief,” inadequately

compensated class members, and ignored “subtle signs of collusion.” Looking past

the labels he uses, the thrust of Sciaroni’s argument is that the settlement was unfair.

As a prerequisite to approval, a district court must find that a settlement is “fair,

reasonable, and adequate,” and we will set aside this finding “[o]nly upon the clear

showing that the district court abused its discretion.” Prof’l Firefighters Ass’n of

Omaha v. Zalewski, 678 F.3d 640, 645 (8th Cir. 2012) (internal quotation marks

omitted). On review, “[w]e afford the district court’s views ‘[g]reat weight’ because

the district court ‘is exposed to the litigants, and their strategies, positions and proofs.

[It] is aware of the expense and possible legal bars to success.” Id. (alterations in

original) (quoting Reynolds v. Nat’l Football League, 584 F.2d 280, 283 (8th Cir.

1978)).

In determining whether a settlement agreement is fair, “a district court should

consider (1) the merits of the plaintiff’s case[] weighed against the terms of the

settlement, (2) the defendant’s financial condition, (3) the complexity and expense

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of further litigation, and (4) the amount of opposition to the settlement.”6 In re

Uponor, Inc., F1807 Plumbing Fittings Prods. Liab. Litig., 716 F.3d 1057, 1063 (8th

Cir. 2013) (alteration in original) (internal quotation marks omitted). “The first

factor, ‘a balancing of the strength of the plaintiff’s case against the terms of the

settlement,’ is ‘[t]he single most important factor.’” Keil, 862 F.3d at 695 (alterations

in original) (quoting Van Horn, 840 F.2d at 607). “[M]indful of the limited scope of

our review . . . [w]e ask whether the District Court considered all relevant factors,

whether it was significantly influenced by an irrelevant factor, and whether in

weighing the factors it committed a clear error of judgment.” Marshall v. Nat’l

Football League, 787 F.3d 502, 508 (8th Cir. 2015) (alterations in original) (internal

quotation marks omitted).

The district court did not abuse its discretion. Indeed, despite the brevity of its

reasoning on other questions, the court gave a carefully reasoned and complete

analysis of all four Van Horn factors. On the first, it accurately noted the uphill battle

facing the plaintiffs if this litigation were to proceed: standing issues being the most

prevalent given the glaring fact that most of the plaintiffs suffered no concrete injury

as a result of the breach. Weighed against this consideration, the monetary and nonmonetary

relief offered under the settlement likely offers the plaintiffs “the only

conceivable remedies they could expect.” See In re Uponor, Inc., 716 F.3d at 1063.

It thus is unclear why Sciaroni strenuously argues that the non-monetary relief is

inadequate, especially in light of his concession that “[w]hile some class members

filed a claim, the vast majority of the millions of the class members are entitled only

to injunctive relief.” Cf. Marshall, 787 F.3d at 509 (“[W]e have never required that

a settlement agreement specifically provide for a direct financial payment to each

class member, and the mere fact that some members of a class may not receive a

direct payment is not dispositive.”).

6Our precedent collectively refers to these as the Van Horn factors, alluding to

their genesis in Van Horn v. Trickey, 840 F.2d 604 (8th Cir. 1988).

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Discussing the second factor, the court noted that Target has ample means to

pay the settlement and therefore considered this neutral in the analysis. The court

then discussed the third factor, commenting that “[f]urther litigation . . . would

undoubtedly be expensive and complex” in light of the impending “voluminous

discovery” and the fact that the plaintiffs’ consumer-protection claims arise under

state law in nearly every jurisdiction in the country. Cf. Keil, 862 F.3d at 698 (“Class

actions, in general, place an enormous burden of costs and expense upon parties.

Here, the application of numerous states’ laws made this a particularly complex case.”

(citation omitted) (internal quotation marks omitted)). Finally, the fourth factor

weighed in favor of the settlement given that only 11 people out of the 80 million

class members objected to the settlement. Cf. id. (“[O]ut of a class of approximately

3.5 million households, . . . only fourteen class members submitted timely

objections[,] [and] none of the named plaintiffs objected to the settlement. Thus, the

amount of opposition is minuscule when compared with other settlements that we

have approved.”).

Sciaroni argues the worthless objective relief, combined with the presence of

“clear-sailing” and “kicker” clauses in the agreement, subtly shows that the settling

parties are guilty of collusion. A clear-sailing provision is one where “the defendants

agree[] not to oppose the request for attorney fees,” Johnston v. Comerica Mortg.

Corp., 83 F.3d 241, 243 (8th Cir. 1996), and a kicker provision means that unused

assets from the settlement are returned to the defendants instead of being distributed

to the class, In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d 935, 947 (9th Cir.

2011). Although Sciaroni’s principal brief expressly states that both types of

provisions are found in the current agreement, his reply brief substantially backs off

of those assertions by conceding that the agreement “may not have a ‘strict’ clear

sailing provision” and only “effectively” has a kicker clause. At any rate, Sciaroni’s

position simply voices generalized grievances with these provisions: nowhere does

he explain how the clauses, even assuming they are present, operated to the detriment

of the class. Sciaroni directs us to no authority that such provisions are per se

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unlawful, and he has likewise failed to provide any clear evidence of collusion.

Accordingly, because he has not demonstrated that the settlement was unfair or

inequitable, we affirm the court’s approval of the settlement agreement.

For the aforementioned reasons, we affirm the rulings of the district court.