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Financial Services Law Insights and Observations

District Court approves e-commerce platform data breach settlement

Courts Privacy/Cyber Risk & Data Security Data Breach Class Action Settlement State Issues

Courts

On November 4, the U.S. District Court for the District of Massachusetts granted final approval to a settlement in a class action against an alcohol e-commerce platform stemming from a data breach that allegedly compromised customers’ personally identifiable information. The plaintiffs’ memorandum of law requested approval of the class action settlement, which included a settlement class of 2.5 million individuals whose information was compromised. Class members claimed that the company did not publicly report the data breach until July 2020, and that customers’ information was available for purchase on the dark web. A complaint was filed against the defendant asserting claims of negligence, negligence per se, breach of implied contract, unjust enrichment, and violations of several state consumer protection statutes. The defendant moved to compel arbitration, citing a provision in its terms of service, as well as a class action waiver that required customers to arbitrate their claims individually. However, the parties entered into settlement discussions and agreed to mediate their dispute. Under the terms of the settlement, which is valued between $3.35 million and $7.1 million, the defendant has agreed to pay all associated administration costs, attorneys’ fees and expenses, and incentive awards. Class members will receive individual cash payments and will also receive a pro rata portion of a pool of up to $447,750 in the form of a credit against the cost of service fees for future orders on the defendant’s platform. The defendant will also implement certain data security measures for two years.

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