Tuesday, December 4, 2007

Bankers' Class Action Rejected

Last Thursday, the judge in the ongoing TJX litigation denied the motion for class certification by financial institutions seeking to recover damages caused by cancelling and reissuing credit cards. The primary reasons given by the court for denying class certification was that the issues of whether any individual banks relied on TJX's maintaining adequate security, and whether any losses for individual banks were caused by TJX's security breach (as opposed to, for example, unrelated fraud) predominated over issues common to the class seeking to sue TJX.

Assuming that the court adheres to its denial of class certification (there is a pending motion to amend the banks' complaint, and there will likely be an appeal of the denial of class certification) the result will be that individual banks will have to either drop their litigation against TJX, or pursue their cases on an individual basis. Realistically, many of the bankers' claims will likely be too small to justify the costs of pursuing individual litigation, meaning that the denial of class certification could effectively end TJX's current legal troubles. Accordingly, this decision should be seen as a big (albeit potentially temporary) win for TJX, and a similarly large setback for those seeking to recover costs caused by that breach.

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