Heartland Security Breach Class Action: Victims $1925, Lawyers $600,000 163
Fluffeh writes "Back in 2007, Heartland had a security breach that resulted in a 130 million credit card details being lifted. A class action suit followed and many thought it would send a direct message to business to ensure proper security measures protecting their clients and customers. With the Heartland case now over and settlements paid out and divided up, the final breakdown is as follows: Class members: $1925 (11 cases out of 290 filed were 'valid'). Lawyers for the plaintiff class action: $606,192. Non-Profits: around $1,000,000 (The Court ruled a minimum of $1 million in payouts). Heartland also paid its own lawyers around $2 million. Eric Goldman (Law Professor) has additional commentary on his Law Blog: 'The opinion indicates Heartland spent $1.5M to advertise the settlement. Thus, it appears they spent over $130,000 to generate each legitimate claim. Surprisingly, the court blithely treats the $1.5M expenditure as a cost of doing business, but I can't wrap my head around it. What an obscene waste of money! Add in the $270k spent on claims administration, and it appears that the parties spent $160k per legitimate claimant. The court isn't bothered by the $270k expenses either, even though that cost about $1k per tendered claim (remember, there were 290 total claims).'"
Re:the court should not care about costs... (Score:5, Insightful)
$2k total out of almost $4m on the case is *justice* when being sued for a credit card breach?
Lawyers (Score:5, Insightful)
Laws are written by lawyers, administered by lawyers, and judged by lawyers.
You can't understand laws without lawyers, you can't hope to defend yourself in court without a lawyer.
You do realize the system is set up to require a lawyer, right?
And no lawyer has any real stake in simplifying or reducing the input of lawyers.
Re:the court should not care about costs... (Score:5, Insightful)
That might be the most idiotic thing I have ever read. What constitutes justice about paying money to a infinitesimal minority of the total affected people?
Because the total affected people were barely affected, and none of them would have been able to get a lawyer to fight this individually for them.
What is justified about paying lawyers a salary for this boondoggle?
They fronted the expense for the lawsuit and fought it... for 5 years. They managed to catch the company doing something really, really wrong, fought them in court, and won, forcing the company to change their ways. What isn't justified about paying them for that 5 years of work?
You're trying to imply there was nothing better that could have been done with millions of dollars?
I'm sure the company's CEO would have liked to buy another jet with it.
The courts shouldn't care about costs. Right. That's a pretty stupid attitude.
Thinking lawyers shouldn't get paid when they force a company to stop being evil is a pretty stupid attitude, too.
Re:This is _all_ class action lawsuits! (Score:5, Insightful)
Most of them end up with the actual aggrieved getting $20 and the lawyers getting the six-figure payout.
Most of them take years and the lawyers don't get paid until the end. What's wrong with someone getting a six-figure payout for, as in this one, 5 years of work? Particularly when that six figure payout is divided among all of the lawyers on the team, their paralegals, their secretaries, their IT guy, etc.? You think IT guys should have to work for free?
Re:that's the free market for you libertarians (Score:5, Insightful)
The current system of class action lawsuits is not libertarian. It is an opt out system. The plaintiffs get to include you in the class seeking the lawsuit without your permission. This is completely backwards on how it would work in a free system. In a free system a plaintiff could ask if you want to join them and you are free to do so. The current system is only supported by regulations that allow a plaintiff to include you without your consent. They just send you a very lengthy scary legal letter that you have to sign to opt out. Most people including myself don't sign them because I don't want to read 20 pages of legal jargon and sign my name to it.
Re:the court should not care about costs... (Score:5, Insightful)
A fair settlement in any data loss case would include significant steps taken towards preventing the same thing from happening again.
Re:that's the free market for you libertarians (Score:4, Insightful)
The legal system is anything but a free market. This is a big payout scheme for lawyers, using public authority as a lever to make a bad-acting company pay off those who were never harmed.
It looks like a corrupt judge to me. How much of the $600k found it's way back to his pocket?
Re:This is _all_ class action lawsuits! (Score:4, Insightful)
What is wrong IMHO is that the lawyers get to put people in the Class by default. You have to specifically sign a document to be removed from the class. Most people just throw those away because they are long and confusing. It would be different if the lawyers had to advertise and convince you to be a part of the class. This could be handled much easier by people taking these companies to small claims court.
Re:the court should not care about costs... (Score:5, Insightful)
If your bank removed all of the fraudulent charges, then you do not have a loss.
As someone who has had a fraudulent charge on my account, and as the person who submitted this story, I am amazed by your statement. I chased my (previous) bank for three weeks, made numerous phone calls and had to go into a branch twice to get my account re-imbursed the charges. If you can call that "no loss" then you must clearly place exceptionally little value on your own time and effort. Even if the bank reimbursed me for my time at my normal salary-per-hour rate, it would have been substancially more than the measly $200 that Heartland paid out to these 11 "valid" claims.
I am also quite curious about how you can claim that out of 130,000,000 credit card details that were stolen, a $2,000 settlement to victims who were really "found" is okay. People who pinch credit card details don't do it because they are bored. They don't do it to see if they can. Someone clever enough to do this sort of operation is very much likely going to sit on the cards for a while, then charge them $1 each with a statement comment of "interest fee" or "aministration fee", sell them to others for a pittance in bunches and have them see what they can rifle through before they are caught (which means that countless individuals again go through a laborious process of showing that it wasn't them spending the cash) or any other number of means to money without getting caught. I would have hoped that this class action case would have been a resounding "Pay attention to security of your customers, else it will cost you a LOT of money" message to all the other merchants out there, but sadly it has been much more of a "Meh, you win some, you lose some, you still foot the bill to the customers in the long run..." message. It is nothing short of shameful.
Re:the court should not care about costs... (Score:4, Insightful)
And who would write a bill to reform the system? Lawyers?
Re:This is _all_ class action lawsuits! (Score:4, Insightful)
If they didn't think the odds of them making a reasonable return on the suit were good they wouldn't start it in the first place. There is something distinctly wrong with people being able to start a legal action, with me as a plaintiff without my permission. Yes it is possible that they are representing the interests of all plaintiffs to the best of their ability, not abusing the huge leeway to put their own interest first. The opposite is also patently true.
What's distinctly wrong about it? Consider, your state attorney general may bring an action against a company doing, say, illegal dumping. The attorney general isn't representing himself, he's representing the interests of all of the people in the state. In fact, the full title of these actions are frequently "the People of the State of X v. EvilCorp." Is that distinctly wrong, even though the attorney general didn't knock on your door and get you to sign on? Or is it somehow different and only distinctly wrong when the government's not involved?
Class action suits are not about compensation, they're about deterring the company from being evil. So the plaintiffs get a $20 check... would they have brought suit on their own for that $20? Or even $50? What about even $2000, as in this article? Would you take weeks off of work to spend those same weeks flying across the country to visit EvilCorp and spend hours taking depositions of their corporate board, digging through thousands of pages of emails looking for one smoking gun, hiring experts to investigate, filing repeated motions in court to oppose their motions, arguing for several days at trial, etc., for $2000? Hell, no. And so, absent class action suits, EvilCorp would get away with screwing you out of $2000, screwing me out of $2000, screwing Bob and Joe and Fred and John out of $2000 each, etc. A couple thousand here and a couple thousand there, and suddenly you're talking real money. Because none of us have the time or money to pursue such a small payout individually, they get away with screwing consumers out of millions and millions of dollars.
In a class action suit, however, the attorneys are acting as private attorneys general. The point is not getting everyone compensated with a $2000 check, the point is punishing the company for screwing their customers and making it so costly that they won't do it again.
Re:the court should not care about costs... (Score:4, Insightful)
"But why should the class action lawyers settle? The longer they drag out the case, the more money they get - regardless of the benefit to the victims."
Not really, if it's a contingency case, which they usually are.
Re:Lawyers (Score:4, Insightful)
Lawyers in modern society fulfill the same role as the various priests and shamans fulfilled in the societies of old: control of access to the "deity" in fashion (in this case the fabled, never seen, mythical "Justice"). Overtly it is to "help" the sheep to access the deity in question, but in reality it is of course merely to satisfy avarice of the priests and their hunger to wield power over others. That is also the reason why priests are always attempting to control politics - in the old days by manipulating pharaohs, kings, emperors and the like or even becoming kings themselves (also see under "The Pope") - but in the modern times they dispensed with intermediaries and half measures and simply took the power directly, in the so called "republics" and "democracies" in which invariably at least two thirds of the power structure consists of the pries ... err ... lawyers.
Which is of course the golden rule of all parasitic priesthoods.
Also note that, just like lawyers, all the priests and shamans in history always claimed to only want to "help" their victims and thus always argue themselves "indispensable" to whatever society they happen to prey on.
Why do you think priests always insist on making the rules of the interaction with the "deity" as arcane as possible? As an example: most of history the Christian priests insisted on having their Bible in a language that common people could not read and which had to be "interpreted" for them, just as modern lawyers insist on "legalese" for the same very reasons. Unlike the Catholic priests however, modern lawyers resort to the methods of other, older, priesthoods by ever expanding and complicating (never simplifying, as you noticed) their arcane manuscripts and rituals. This is because the Judeo-Christians have essentially hobbled themselves with the idea of a "Holy Book", which offers limited room for expansion (although several of the "one, only and 100% true" improvements and revisions have been produced). Fortunately for the Christian priests, the original writers made the thing ambiguous, self-contradictory and - most importantly - voluminous enough to satisfy the purpose it was intended for.
As to "justice", the very first test to see if a society has any is to see if making offerings to and groveling before a priest, i.e. a "lawyer", is a pre-requisite for its supposed dispensation.
Note also how promise of "justice" is a key element in most religions and how much emphasis is placed on it by the religion's priests.
Re:that's the free market for you libertarians (Score:4, Insightful)
Re:Sad state of affairs (Score:4, Insightful)
This is sickening. No one in their right mind would argue otherwise.
Unless, you know, you actually did the math. $600k over 5 years. How much did they have to front for staff salaries? How much did they have to front for transportation? How much did they have to front for other expenses relating to the case?
Are you under the impression that we should cap their salaries, and thus make it so no one wants to take these cases on, and therefore classes of people who are wronged, but not hugely, should just shrug it off, allowing the companies to continue to do that shit?