A class of banks that sued Target Corp. over the huge 2013 data breach has agreed on a settlement amount of $39 million. The settlement will resolve the long-running dispute. It also goes down in history as the first ever class-wide data breach pact reached on behalf of financial institutions. In the 2013 data breach, over 40 million payment cards that were used to make purchases at Target over the course of a specific three week period were compromised. This occurred during the 2013 holiday season.

The terms of the settlement obtained preliminary approval within two hours of the deal being disclosed. According to the terms of the settlement, Target will pay up to $20.25 million directly to class members. The additional $19.1 million will be paid to fund MasterCard’s Account Data Compromise Program in connection to the breach.

The settlement is applicable to all U.S. financial institutions that issued payment cards that have been identified as “at risk” due to the breach so long as they did not already release their claims against the retailer by signing onto deals with other card brands.

Attorneys for the plaintiff indicated that they felt the agreement was an important result not only because it provided compensation well beyond what the card brand networks offered, but because it will set a precedent that the financial institution behind the method of payment is not always the one to be held responsible for extensive costs in connection to merchant data breaches.

The consolidated class action complaint that resulted in the settlement was filed in August 2014 by Umpqua Bank, Mutual Bank, Village Bank, CSE Federal Credit Union, and First Federal Savings of Lorain. The complaint made allegations that Target was negligent in their responsibilities to protect financial institution data on behalf of their customers and that they violated the Minnesota Plastic Card Security Act.

If you have questions regarding the class action process or any other southern California employment law issue, please get in touch with the attorneys at Blumenthal, Nordrehaug & Bhowmik today. We can answer your questions and provide you with the legal counsel you need.