Ruling: TJX No Longer A Federal Case

Written by Evan Schuman
December 12th, 2007

The federal judge overseeing the TJX cases in effect fired himself as TJX judge on Tuesday and ordered the case out of federal court and into Massachusetts state court.

The move, which had been expected ever since U.S. District Court Judge William Young ruled that the case shouldn’t be considered a class-action, will mean a different set of rules for the few financial entities that decide to pursue the case anew.

"I am transferring, remanding, dismissing this case only because I feel that, I rule that I don’t have any subject matter jurisdiction," Young told lawyers from the bench, potentially closing the federal aspect of this case, which involves the worst data breach in credit card history.

There’s still a slight chance of the case returning to federal court, as attorneys for some of the banks suing TJX have said they would appeal the case to the U.S. Court of Appeals. But barring Young being overturned by that appellate panel, the federal aspect of the TJX case appears to be over.

In wrapping up the case, the judge had quite a few words of praise for credit-card giant, Visa, which the judge suggested was "a hero."

"If ever there’s a hero here, we ought to look at the Visa system. They have done their own investigation. They’ve come to their own conclusions. They, and I find this very significant, they’ve worked out a settlement with an opt-in class. Opt-in classes are very desirable."

The judge was referring to an agreement that Visa worked out with TJX where TJX would directly pay some of the plaintiff banks.

Young said that he was impressed with how well the Visa agreement seemed to work. But he added that part of the credit goes to the fact that both the $16 billion retail chain TJX and Visa—which bills itself as the world’s largest payments company handling more than $3.34 trillion in payments—are powerful and large companies.

"The sad thing is that that system, which appears to me to work so well, works when you have entities of more or less equal bargaining power, very large retailers one side, banks on the other, it works well," Young said. "And the tragedy is that we haven’t been able to import anything close to the Visa system in our alternative dispute resolution mechanisms beyond those situations where the parties are economically more or less equal. Instead, we have large entities with economic power imposing on consumers, arbitration and other forms of second-class justice, with the barest nod to any real negotiation."

Young promised to issue the order sending the TJX case to state court within a week.


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