Michelle Reed Quoted by Business Insurance on Target Data Breach Ruling

Business Insurance, for its article “Target’s data breach liabilities mount as credit card issuers’ suit proceeds,” quoted Akin Gump litigation partner Michelle Reed on the significance of a federal court’s decision not to dismiss litigation brought by credit card issuers against Target Corp. in regards to the retail chain’s data breach in 2013.

The article notes that even in the absence of a direct, contractual relationship between Target and the banks, the judge still ruled that the retailer was responsible for the damages caused during the breach. Reed added, “It’s really a significant opinion because, frankly, there’s very little case law on what the relationship is between a retailer and the banks that ultimately issue the cards.”

Reed noted that although Target claimed it lacked a significant enough relationship with the banks, the judge “essentially circumvented that whole analysis” and held that this was a direct negligence case. She continued by noting that Target’s relationship with the banks should not hold any relevance in the ruling from a legal standpoint and that the larger the breach “the more likely the court will find some kind of harm that is not just speculative resulting from the data breach.”

Reed added that this ruling shows the importance of retailers being prepared ahead of time to take immediate action when warning signs appear by having a proper incident response plan and appropriate lines of authority in place.