On April 20, 2022, the US District Court for the Eastern District of Pennsylvania issued its final approval for a class action settlement with Wawa, Inc., resolving consumer claims against the company arising out of a data breach discovered in December 2019.
Wawa, a privately held company that owns and operates over 850 convenience stores and gasoline stations, learned on December 10, 2019 that hackers had breached its point of sale computer networks months earlier. The company neutralized the hackers’ malware within days, and shortly thereafter was able to delete the malware from all Wawa systems. The company later informed the public of the breach and consequent risk of fraud.
Soon after announcement of the data breach, individuals and entities filed several class action lawsuits, which were consolidated by the court into one lawsuit with three tracks, comprising financial institutions, employees and consumers. The current settlement is with the consumer track plaintiffs, for which the court granted preliminary approval on July 30, 2021. Only a handful of consumers opted out of the class, which was estimated to contain 22 million members, and encompassed US residents who used a payment card at a Wawa convenience store between March and December 2019. Depending on the consequences of the breach to the claimant, the settlement provides for compensation in the form of Wawa gift cards or cash. The settlement also requires Wawa to strengthen its data security systems, enhance point of sale security, and widespread notifications regarding the settlement.
In order to certify the consumer track class, the court assessed whether the numerosity, commonality, typicality and adequacy requirements of Federal Rule of Civil Procedure 23(a) were satisfied. Finding that the class includes 22 million payment card users who present common claims regarding the use of payment cards at Wawa stores and regarding Wawa’s alleged breach of fiduciary duty toward consumers, and that the class representatives’ circumstances reflect those of Wawa payment card users generally, and further, that the class representatives and their counsel are committed to the interests of the class, the court certified the class.
The court proceeded to a fairness analysis based on the nine factors enumerated in Girsh v. Jepson, 521 F.2d 153 (3rd Cir. 1975). Accordingly, the court found that:
- The complexity, expense and likely duration of the litigation weighed in favor of settlement;
- The reaction of the class was favorable to the settlement, given that only 6 consumers out of a potential class of 22 million elected to opt out;
- The efficient targeted informal discovery conducted by the parties sufficed to give them an adequate appreciation of the merits of their case;
- The risk factors surrounding the establishment of liability and damages, and maintaining the class action through the trial process pointed in favor of final approval;
- Both the range and reasonableness of the settlement, which resulted from arms-length negotiations under the supervision of an experienced mediator, were deemed by the court to be fair.
Only the ability of the defendants to withstand a greater judgment (in light of Wawa’s $11 billion annual revenue) weighed – although not heavily – against approval of the settlement.
The court also considered some of the prudential factors described in In re Pet Food Prods Liab. Litig, 629 F.3d 333 (3rd Cir. 2010) and In re Gen. Motors Corp. Pick-Up Truck Fuel Tank Prods Liab. Litig, 55 F.3d 768 (3rd Cir. 1995). In particular, the court evaluated the existence and probable outcome of claims by the three consumer track subclasses, and by the other litigation tracks identified in the case. Noting that both the employee and financial institution tracks were still in the discovery phase, and that the tiered compensation structure within the consumer track fairly distinguished between levels of damage suffered by each subclass, the court concluded that the proposed consumer track settlement is fair and reasonable.
Finally, the court reviewed the provisions for attorneys’ fees and class representative awards, and found them to be justified and fair.
The court therefore issued an order approving the final consumer track settlement agreement in its entirety.