“Fair, Reasonable and Adequate”: Judge Says Equifax Settlement Provides More than Consumers Would Get in Court

It’s safe to say that many consumers and legal experts—along with the nearly 400 individuals who submitted formal objections—are not fans of the unprecedented and now-final $425 million settlement over the Equifax data breach. But the federal judge who ultimately signed off on the settlement feels the agreement is just fine and, in fact, a much better result than consumers could have expected had the litigation gone to trial.

In a hefty 122-page opinion detailing the settlement’s final approval, United States Chief Judge Thomas W. Thrash, Jr. said the deal between consumers and the credit reporting agency is “fair, reasonable, adequate and should be approved.” The settlement, which put a bow on the 2017 Equifax data breach and the subsequent legal fallout over the disclosure of the private information of around 147 million citizens, represents “the largest and most comprehensive recovery in a data breach case in U.S. history,” Judge Thrash wrote, adding that the specific benefits class members can receive “meet or substantially exceed” those afforded through prior data breach settlements.

It’s nobody’s idea of fun to go through a hundred-plus-page legal document when all they really want to know is when they’ll get their settlement money. With that in mind, ClassAction.org did it for you. Here’s a breakdown of the reasons why Judge Thomas Thrash put his stamp of approval on the Equifax data breach settlement.

All for One, One for All

There are a number of benchmarks that must be met in order for a class action settlement to warrant final approval from a judge. One of those requirements concerns whether the group of consumers benefiting from the deal was adequately represented in settlement negotiations by the attorneys and the individuals filing the case.

Judge Thrash wrote that for the Equifax settlement, the 147 million consumers whose information was compromised in the breach were adequately represented by plaintiffs who shared the same interests and suffered the same injuries.

“Like the rest of the class, the class representatives’ personal information at issue was stolen and they all allege the same risk—that their information may be misused by criminals in the future,” Judge Thrash wrote.

Moreover, the legal counsel handling the case was found to be diligent in bringing the case to a “successful resolution.” Judge Thrash went so far as to commend the plaintiffs’ attorneys for their “excellent job” in demonstrating why the settlement was in everyone’s best interests.

Everything Out in the Open

In weighing whether to approve a settlement, the court must find that the deal was reached without fraud, collusion or improper influence among the parties handling the negotiations. On that front, Judge Thrash found that the Equifax settlement checks out and was reached with all parties operating above board.

Judge Thrash noted that retired federal judge Layn Phillips, well experienced in data breach lawsuits and the mediator of the settlement, attested to “the history of contentious negotiations” and “level of advocacy on both sides of the case.” His opinion, court documents state, is that the Equifax settlement, with support from the attorneys general of 48 states and the District of Columbia, the Federal Trade Commission, and the Consumer Financial Protection Bureau “represents a reasonable and fair outcome.”

The Best in a Less-than-Ideal Situation

Though some may feel differently once they receive their piece of the settlement, Judge Thrash opined that the agreement is adequate in that the size of the monetary fund exceeds that of all previous data breach deals. The settlement affords consumers specific monetary and nonmonetary benefits that “meet or substantially exceed” what’s been recovered in similar prior litigation.

Judge Thrash highlighted that all valid claims for traceable out-of-pocket losses, such as the cost of freezing or unfreezing credit and buying credit monitoring, as well as expenses related to identity theft or fraud, “likely will be paid in full.” He also noted that 3.3 million consumers have already submitted claims for credit monitoring, which has a rough retail value of $6 billion. Further, all class members, the judge wrote, will have access to identity restoration services for seven years in the event they need help dealing with identity theft. On top of that, Equifax is required to spend at least $1 billion bolstering its data security and comply with “comprehensive data security measures” subject to both independent assessment and judicial enforcement.

All told, while the minimum cost of the settlement to Equifax is around $1.38 billion, Judge Thrash noted that the deal, when valued together, is worth far more:

The benefit to the class—even when only considering the value of the $380.5 million minimum settlement fund, the minimum $1 billion Equifax is required to spend on data security and related technology, and the retail value of the credit monitoring already claimed by class members—exceeds $7 billion.”

Even further, the judge wrote that the settlement’s awards have “added value” in that they’re available to consumers right now, and not years down the line after continued litigation.

Perhaps most importantly, Judge Thrash concluded that the relief available through the settlement “likely exceeds what could be achieved at trial” and represents “the high end range of what could be achieved through continued litigation.”

Think It’s a Raw Deal? Consider the Alternative, Judge Says

Consumers are often unaware that many settlements are given the green light in the face of potentially years of prolonged litigation likely to cost those involved—and ultimately consumers themselves—tens of millions in legal fees and other expenses. Judge Thrash stated that without a settlement in hand, a trial over the Equifax data breach likely would not have occurred earlier than 2021, four years after the breach went down, with appeals to “almost certainly” delay any final outcome until “a year or more after that.”

And that says nothing of the high risk plaintiffs face in taking a case such as this to trial. The judge wrote in his opinion that, in plain terms, Equifax does have certain nuanced legal arguments at its disposal that it could use in an attempt to challenge its responsibility to safeguard consumers’ information. Further, the judge noted that class certification – a stage of the lawsuit process that typically signifies a win is near for consumers – would likely pose “a significant challenge” outside of settlement talks.  

Even if the plaintiffs won at trial, Judge Thrash added, consumers would still face the risk that an appellate court might reverse the favorable judgement. Considering such risks, Judge Thrash stressed in his opinion that the settlement is simply the best consumers could hope for.

“The reality is that, if the Court does not approve the settlement in this case, there is a serious risk that many if not all class members will receive nothing,” the judge stated.

Objections Denied

According to Judge Thrash, 388 consumers directly objected to the terms of the settlement. Each and every objection was overruled by the court, as the judge stated that many repeated “false and misleading assertion as fact” and challenged the deal on an inaccurate basis. Similarly, more than 700 objections filed en masse online via chat-bot were ruled invalid.

What’s Next?

With the court’s final judgment on the books, credit monitoring services claimed by class members will go into effect and cash payments for valid claims will begin to be disbursed. According to the FAQ page on the official Equifax settlement website, those who filed claims for credit monitoring will receive information on how to activate the services. Checks or pre-paid cards for out-of-pocket losses, time spent handling identity theft or fraud, and claims for alternative reimbursement compensation—cash—will be mailed out by the settlement administrator soon enough. All consumers can do now is keep an eye on their mailboxes.

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