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Heartland Security Breach Class Action: Victims $1925, Lawyers $600,000 163

Posted by Unknown Lamer
from the not-sure-why-timothy-came-back-to-slashdot dept.
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).'"
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Heartland Security Breach Class Action: Victims $1925, Lawyers $600,000

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  • by Kid Zero (4866) on Tuesday April 10, 2012 @07:19AM (#39629193) Homepage Journal

    Most of them end up with the actual aggrieved getting $20 and the lawyers getting the six-figure payout.

    • 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: (Score:2, Funny)

        by Anonymous Coward

        I thought that we did.

      • by trout007 (975317) on Tuesday April 10, 2012 @08:08AM (#39629677)

        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.

        • 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.

          Except that it couldn't... The damages for any individual person may be only that $2k... Are you willing to spend two or three weeks producing documents, responding to delaying motions from the other side, attending depositions, arguing in court, filing motions of your own, etc. for $2k? Or, where could you find a lawyer to do that work for you for those weeks for 33% of your $2k compensation?

          You can't. Which is why these small suits would almost never (and, prior to class action suits, did never) get filed. And the companies know this - they know if they do something slightly evil and take a few pennies or dollars from each customer, those customers aren't going to spend the time or money to bring suit, so they'll just let it slide... and with enough customers, that company can make millions upon millions. Call it the Superman III tactic.

          And incidentally, elsewhere in the comments, people mention the one woman who took Toyota to small claims court over her Prius mileage, and how, since she won, there's no need for lawyers and everyone can do the same thing. What they don't mention is that she was an unemployed lawyer with plenty of time to sit in court.

        • by s73v3r (963317)

          You're gonna need a citation to back that shit up, bucko.

      • by N1AK (864906)
        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.
        • 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.

          • by Fnord666 (889225)

            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?

            The situation here is different in one of two ways. First, if this is a criminal action then I as an individual do not have an action to bring to the court. Second, if this is a civil action then it does not preclude me from bringing my own civil action against the company if I feel I have been harmed.

            I think what people are claiming is wrong with the way class action suits are handled is that, by default, if you do not take opt-out then you waive your right to bring a suit to the court in the future.

      • by rwv (1636355)

        What's wrong with someone getting a six-figure payout for, as in this one, 5 years of work?

        The thing that's wrong is that the company who couldn't keep their damned systems secure could have probably made the whole thing go away and saved a lot of money by settling for $2,000 with each of the 290 original claimants which would have cost only $580,000 instead of fighting for 5 years and ending up with 11 people only getting $200 each.

        If the goal for the lawyers is to truly serve their clients... they should be looking to win a quick and fast case. By drawing out the case to 5 years and raking i

        • What's wrong with someone getting a six-figure payout for, as in this one, 5 years of work?

          The thing that's wrong is that the company who couldn't keep their damned systems secure could have probably made the whole thing go away and saved a lot of money by settling for $2,000 with each of the 290 original claimants which would have cost only $580,000 instead of fighting for 5 years and ending up with 11 people only getting $200 each.

          Exactly right. Absent class action suits, the company could have "made the whole thing go away" with a pittance and non-disclosure agreements, and they never would have any incentive to actually fix their systems. You've persuasively argued for immunity from liability for corporations, no matter how evil they are.

        • by s73v3r (963317)

          The thing that's wrong is that the company who couldn't keep their damned systems secure could have probably made the whole thing go away and saved a lot of money by settling for $2,000 with each of the 290 original claimants which would have cost only $580,000 instead of fighting for 5 years and ending up with 11 people only getting $200 each.

          Then bitch at the company, then. The lawyers for the plaintiffs are not at fault for that.

          If the goal for the lawyers is to truly serve their clients... they should be looking to win a quick and fast case.

          That's a pretty stupid comment. The goal is to do things RIGHT, not just fast.

    • by TheRaven64 (641858) on Tuesday April 10, 2012 @08:00AM (#39629587) Journal
      The point of class action lawsuits is not to give a return for the victims, it's to punish people and companies that do a very small amount of harm to a lot of people. There's no point in suing over damages of $10, and little point over $100 unless you can do it in the small claims court and you're unemployed. Even asking a lawyer if it's worth going to court will probably cost more than you'll get back. If someone does something that causes damages worth $10 each to a million people though, that can be quite profitable if none of them is going to sue to recover their loss. If they did all go through the small claims courts, then this would be quite an effective DDoS on the legal system, so it's far from ideal. The class action suit is meant to cost the company enough to discourage this behaviour. If spending about $5m and a load of bad publicity costs more than properly securing your server, then it sounds like it worked just fine in this instance.
    • Thats because in a class action lawsuit, the lawyers are the ones doing the work for you...

      Why shouldn't they get paid? You can always bring your own suit against the plaintiffs rather than take part in their suit....

    • by bryan1945 (301828)

      Reminds me of the Iomega Zip drive failure lawsuit (which I was part of). I got a $5 off coupon for a pack of Zip disks! Which cost like $20 back then, but woohoo me!

  • by Morris Thorpe (762715) on Tuesday April 10, 2012 @07:19AM (#39629195)

    This is sickening. No one in their right mind would argue otherwise. When lawyers make the rules (be it through lobbies or becoming lawmakers themselves), they favor their kind.
    We're becoming more and more a society in which the do-nothings make out like bandits. That can't last much longer, can it?

    Look at the google ads that came up on this page,

    Injury Compensation Claim
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    • by s73v3r (963317) <.moc.liamg. .ta. .r3v37s.> on Tuesday April 10, 2012 @12:08PM (#39633291)

      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?

      • No, I don't think salaries should be capped. And I do think the wronged ought to be compensated. But ultimately, I think, the largest compensees (?) were the wrong party.

  • by trout007 (975317) on Tuesday April 10, 2012 @07:21AM (#39629209)

    This lady opted out of a class action and took Honda to small claims court and won.
    http://www.insurancejournal.com/news/west/2012/02/03/234115.htm [insurancejournal.com]

  • by Troyusrex (2446430) on Tuesday April 10, 2012 @07:23AM (#39629223)
    No one expects the lawyers to work for free but the lack of a true plaintiff in class action suits creates a situation where the lawyers can strike a deal best for them and not the client. What we need is the ability to class action sue lawyers for unfairly enriching themselves via class action suit...
    • by nomadic (141991)
      What do you mean "lack of a true plaintiff"? And just fyi, all settlement agreements have to be approved by the court, AND affected class members get to lodge objections and be heard.
      • "lack of a true plaintiff" means that while there may be a few people named as representatives of the class the lawyers have a much larger stake than any of the class members. In cases like this there are lots of plaintiff's with minimal damages (total awards amounted to less than $.10 per plantiff) and lawyers who stand to make huge money.

        Sure, I can lodge an objection to this but even though it's woefully unfair it's not worth my time and it might be noted but it likely wouldn't be "heard". I'm just one

        • by s73v3r (963317)

          In cases like this there are lots of plaintiff's with minimal damages

          That's the whole fucking point of a class-action, dumbass. It's a way to bring together a lot of people who were harmed, but not by a lot, so that they can collectively take action against the company, and punish the company for harming them. If they all had to bring their own, individual lawsuit, while paying their own legal representation, or taking time off work to act as their own lawyer, how many do you think would actually do it? And the company would continue on doing that bullshit that they've been

  • the whole point of the justice system is to make the process so expensive that a company or individual will think twice the next time about committing a tort or not following the law

    if there is no economic penalty then people will just break the law if it doesn't cost them anything

    • by Jawnn (445279)

      the whole point of the justice system is to make the process so expensive that a company or individual will think twice the next time about committing a tort or not following the law

      if there is no economic penalty then corporations will just break the law if it doesn't cost enough to significantly impact their profits

      TFTFY. OK, so "corporations are people too", but you get the drift.

  • let's get rid of one of the last weapons the people have against corporate abuse

    well other than actual weapons. Let's ask Marie Antoinette how that worked out.
    • by trout007 (975317)

      Or we could make small claims court easier and cheaper. Then people could take these big companies to court themselves. It would be much more expensive to fight 1000 small claims cases then to fight one big case.

  • Lawyers (Score:5, Insightful)

    by tkrotchko (124118) on Tuesday April 10, 2012 @07:28AM (#39629275) Homepage

    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:Lawyers (Score:4, Insightful)

      by IgnoramusMaximus (692000) on Tuesday April 10, 2012 @10:01AM (#39631155)

      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.

      And no lawyer has any real stake in simplifying or reducing the input of 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.

  • by MikeRT (947531) on Tuesday April 10, 2012 @07:36AM (#39629345) Homepage

    The time has come for the legal profession to become fully accountable to the public like the rest of the white collar professions. Lawyers should not sit on the Bar associations; businessmen, doctors, engineers, etc. should be the ones judging the professional conduct of lawyers. Lawyers have little to no education in these matters but deem themselves fit to judge every facet of how we do our work. Why is it then so outrageous to think that similarly intelligent and educated people from different fields should be the ones judging their ethics, billing practices, etc.?

  • I've gotten several letters asking me to join class action lawsuits, and I always send them straight to the trash.

    These suits aren't going to result in any meaningful personal compensation for any harm or inconvenience you have suffered. The only time I would even consider participating is if I thought it was a case of such egregious bad behavior that the company needed to be punished.

    • by trout007 (975317)

      You haven't read the letters. You are already in the class. You have to sign and return the letter to be REMOVED from the class.

      • Generally, you also have to sign and return the letter to be able to collect whatever pittance is granted to members of the class if and when the case finally pays out.

  • I personally haven't experienced abuse of my card details - so far as I know. But if I did, how could I tell who was responsible - especially when there are vast leaks like this? It seems like it would be more fair to have an industry-wide fund to compensate victims, which the leaking companies would pay into proportionately to the number of valid details leaked.
  • My parents lost ~$2.5 million in a ponzi scheme. They caught up with the guys who perpetrated it, and all of the clients were automatically added to a class-action suit against them preventing my parents from pursuing their own legal action. The class-action lawyers actually threatened to inhibit an individual case if my parents opted out.

    Eventually, they won, and they recovered several tens of millions from these people to cover the ~$72 million he bilked the customers for. A percentage of investment that

    • by nomadic (141991)
      "Well, because it was a class-action suit, the lawyers took nigh to 80% of that money."

      Why do I suspect you're exaggerating? 80% contingency fees are per se unethical and would have gotten those lawyers disbarred. If it was pursuant to a settlement agreement there isn't a judge in the country who would approve an 80% fee. If the lawyers really took 80% then report them to the state bar for discipline.
      • You are posting on a case where the lawyers got $660K to the plantiff's $2K. Been a while since I took math, but that is more than 80%. The "but they worked on it for 5 years!" defense strikes me as unlikely, in that it didn't take 5 full years out of their lives - they were running other cases in the meantime. Every case will have substantial downtime waiting for investigators to complete investigations, legal response timeframes to expire, deliberate delays by one side or the other for some tactical re

        • by nomadic (141991)
          I doubt the 660k is a contingency fee; more likely it was actual fees ordered paid.
  • by coldsalmon (946941) on Tuesday April 10, 2012 @08:59AM (#39630341)

    "Discourage litigation. Persuade your neighbors to compromise whenever you can. Point out to them how the nominal winner is often a real loser -- in fees, expenses, and waste of time. As a peacemaker the lawyer has a superior opportunity of being a good man. There will still be business enough."

    --Abraham Lincoln

  • I'm sickened by the pervasive knee-jerk reaction against lawyers I'm seeing in the comments here. The lawyers aren't the problem here. They prosecuted the case for five years, won the case, and still plainly lost money in the pursuit of justice. Greedy? No, you're just being willfully ignorant.

    The real problem is the ruling that screwed over the victims and gave Heartland a slap on the wrist. 130 million credit card numbers stolen, 130 million identities stolen! And how much did it cost them? A pittance. An

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