ST. LOUIS — Schnuck Markets has agreed to a proposed class-action settlement stemming from the breach of its computer systems in which an estimated 2.4 million payment cards were compromised.
The preliminary settlement was presented Wednesday to St. Louis Circuit Judge David Dowd. He is expected to rule on it in the coming weeks.
He also is considering a motion to intervene in the case by a lawyer pursuing one of the related federal lawsuits still pending. The lawyer, Matt Armstrong, argued at the court hearing that the proposed settlement may not be a good deal for consumers.
The Schnucks grocery store at Duck Creek Plaza in Bettendorf is one of 79 company sites where credit and debit cards may have been compromised, according to the company.
Under the proposed settlement, Schnucks would pay up to $10 to customers for each credit or debit card that was compromised and had fraudulent charges posted on it that later were credited or reversed.
Schnucks also would pay customers for certain unreimbursed out-of-pocket expenses such as bank, overdraft and late fees as well as up to three hours for documented time spent at the rate of $10 an hour for dealing with the security breach. There would be a cap on these expenses of up to $175 per class member.
The aggregate cap that Schnucks would pay on the claims would be $1.6 million. If claims exceed that amount, customers still would be guaranteed at least $5 for each compromised card.
Furthermore, Schnucks would pay up to $10,000 for each related identity theft loss, with the total capped at $300,000; up to $635,000 for the plaintiff and settlement attorney fees; and $500 to each of the nine named plaintiffs in the lawsuit.
The proposed settlement says Schnucks denies any wrongdoing but recognizes the uncertainty of continued litigation and considers it desirable that the case be settled and dismissed to avoid further expense and disruption.
The lawsuit, which was filed on behalf of several Schnuck customers, is one of several lawsuits that were brought against the Maryland Heights, Mo.-based grocery chain after its systems were breached by hackers between December 2012 and March 2013.
They claim that Schnucks failed to secure customers’ personal financial data and did not notify them in a clear and timely manner that their information had been stolen.
“Of the cases I’ve had, this is a tremendous settlement,” Ben Barnow, a Chicago attorney representing plaintiffs, said at the hearing.
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Barnow also has helped settle other large security breach-related consumer class actions, including those against TJX Cos. and mortgage lender Countrywide.
But Armstrong, who has brought one of the federal cases against Schnucks, said at the hearing that his client was not being adequately represented by the proposed settlement.
He claimed that proper discovery had not been done in the case so a better sense of the scope of damages and losses has not yet been disclosed. So he filed a motion to intervene in the case.
“Nobody can figure out if this is a good deal,” he said.
Among his concerns is that the proposed settlement could release Schnucks from some federal claims that could hold it responsible for as much as $1,000 for each violation. He was worried that this settlement would submerge his federal case.
But the lawyers for the plaintiffs in the circuit case bristled at Armstrong’s attempted intervention, calling it highly unusual. They also noted that Armstrong had filed the motion before he had even seen the proposed settlement.
That suggests, said John Steward, one of the settlement class’ attorneys, that the motion was more “lawyer-driven.”