Wednesday, December 5, 2007

The Forgotten Side of the TJX Litigation

As it happens, the TJX litigation isn't only about TJX. That litigation is actually about lawsuits against both TJX and Fifth Third, TJX's bank. The relationship between Fifth Third and TJX was that, when a consumer would make a credit card purchase, the information from that purchase would be sent from TJX to Fifth Third. The information would then be sent to the bank that issued the credit card to the consumer, who would say either yea or nay, then the information would be passed back to TJX through Fifth Third. For some purposes in the litigation, TJX and Fifth Third could be (and were) given the same treatment. However, the unique status of Fifth Third came to the fore when the judge in the TJX litigation decided to deny class certification to the issuing banks in their suit against TJX. For class certification, it was necessary that there be some assurance that the issuing banks would vigorously prosecute the litigation, and that there be no conflict between the members of the class as a whole. The problem raised by Fifth Third's relationship with TJX is that some of the issuing banks suing TJX were also acquiring banks, that is, they functioned in the same capacity for their customers as Fifth Third had for TJX. The result was that the court found that a verdict which imposed liability on Fifth Third could actually be negative for some of the banks filing suit - leading to a conflict between those banks and the banks which only issued credit cards, but did not act as acquiring banks. For the court, that conflict provided an independent reason why class certification in the parallel action against Fifth Third was inappropriate.

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