|Class Action Settlement for Security Breach Squelched|
Trial court refused to adopt a settlement proposed in a class action suit against a brokerage firm that allowed spammers access to their clients’ email information. The proposed settlement did little for those who suffered the security breach; it mainly enriched the lawyers who handled the matter.
Security Breach; Spam; Class Action
|C A S E S U M M A R Y|
A class action suit was filed against TD Ameritrade for a security breach that exposed Ameritrade account holder private information to spammers and left the information vulnerable to others. The agreement called for Ameritrade to post warnings on its website about stock spam; use independent experts to test its security problems; run tests to see if unauthorized persons have acquired customer email addresses; provide each class member a one-year subscription to an anti-virus, anti-spam internet security product; search for evidence of exploitation of data obtained; pay $55,000 to a cyber-security project; and pay claims administration and expenses. The parties moved for final approval of the settlement agreement. The Texas Attorney General objected to the settlement, contending it offered no meaningful relief to class members; it did nothing to compensate affected parties for costs incurred; it was largely a payoff to the attorneys who brought the action, since the attorney fee was $1.87 million.
Motion denied. The proposed settlement does not confer discernible benefits upon the class, so approval is not appropriate. Many of the items Ameritrade promises are computer security issues that any reputable company would undertake routinely. That is largely for the benefit of the firm as it tries to improve its operation. Denial of approval of the settlement means that the class is not certified and no class counsel exists. As proposed by some parties to the litigation, an attorney with class action experience will be appointed to proceed in the matter in an effort to certify a class and obtain an appropriate settlement.
In re TD Ameritrade Accountholder Litigation, ---F.R.D.--- (2010 WL 6057238, N.D. Calif., 2010)
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