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42
News
Heartland settles
some, loses one
On Dec. 21, 2009, Heartland Payment Systems
Inc. agreed to settle the consumer cardholder
class-action lawsuits that emanated from the
District Court for the Southern District of
Texas. The suits involve claims arising from the data
breach of the Princeton, N.J.-based processor's payment
system reported by Heartland in January 2009.
In accordance with settlement terms, Heartland will pay
between $1 million and $2.4 million to class-action participants
who submit valid claims for losses as a result of the
breach. According to the court, this settlement resolves all
actions and proceedings that were asserted, or could have
been asserted, against Heartland in relation to the breach.
No transparency disparity
Heartland will also pay all costs associated with the
administration of the class-action settlement, including
up to $1.5 million to notify affected cardholders of procedures
to be followed for making claims or opting out of
the settlement. A Web site dedicated to disseminating this
information is included in Heartland's obligations.
The company has also agreed to pay up to $760,000 of
the attorneys' fees and costs of attorneys representing
cardholders victimized by the breach. Lastly, Heartland
will submit the report of an independent expert on the
processor's actions and its plans to enhance the security
of its payment system.
"We are pleased to have reached a fair and reasonable
settlement agreement that helps cardholders recover
losses they may have incurred directly related to the
criminal intrusion," said Heartland's Chairman and Chief
Executive Officer Robert O. Carr. "We are committed
to providing our merchants and their customers with a
secure processing solution that protects them from the
growing threat of cybercrime."
A December to remember
The resolution of this class-action suit follows on the heels
of two other cases settled regarding the Heartland compromise.
On Dec. 7, 2009, the United States District Court
for the District of New Jersey granted Heartland's motion
to dismiss a consolidated shareholder class-action lawsuit
filed against Heartland.
Additionally, ten days later Heartland agreed to pay
American Express Co. $3.6 million, which completed all
"intrusion-related issues" between the two companies.
Carr commented that the settlement with AmEx marked
the first agreement with a card brand related to the breach.
VeriFone prevails
Concluding a tumultuous 2009, VeriFone reported that
Heartland's action to block VeriFone from providing
direct support to Heartland merchant customers was
rejected by a federal court.
After VeriFone filed a lawsuit in September 2009 alleging
Heartland had infringed on a VeriFone patent gained
through the acquisition of Lipman Electronic Engineering
Ltd., VeriFone said it would provide support to Heartland
merchants to prevent disruptions and maintain optimal
service levels. One week later, Heartland requested an
injunction to prevent VeriFone from doing just that.
However, on Dec. 28, in the U.S. District Court for the
District of New Jersey, Judge Mary L. Cooper denied
Heartland's injunction request on the grounds that the
processor's contentions "contradict its own claims in
this case" regarding its ability to service clients who use
VeriFone systems.
The judge said Heartland's assertions in previous court
filings "suggests an ongoing dependence and foreseeable
adverse consequences upon withdrawal of such support."
Cooper also rejected Heartland's assertion that VeriFone
made untrue statements.
"We are pleased that Judge Cooper saw fit not to block