Item 7.01. Regulation FD Disclosure.
This Form 8-K is being furnished as of July 25, 2016, to report the dismissal
with prejudice of certain shareholder derivative claims. Target Corporation (the
"Company") has no liability with respect to these claims, other than a potential
payment of attorneys' fees, as may be determined by the United States District
Court for the District of Minnesota ("Federal Court") or the Hennepin County
District Court, State of Minnesota ("State Court").
Between January 21, 2014 and February 27, 2014, four shareholder derivative
actions were filed against a number of current and former directors and officers
of the Company in the Federal Court. The actions subsequently were consolidated
under File No. 14-cv-00203 ("Federal Derivative Actions"). Plaintiffs filed a
consolidated derivative complaint in the Federal Derivative Actions on July 18,
2014. The consolidated derivative complaint alleged that the defendants had
breached their fiduciary duties to the Company, and wasted corporate assets, in
connection with an intrusion by hackers into the Company's point-of-sale systems
that was announced by the Company on December 19, 2013 (the "2013 Data Breach").
The consolidated derivative complaint alleged that the defendant directors and
officers failed to implement a system of internal controls to protect customers'
personal and financial information, failed to oversee the Company's allegedly
inadequate internal controls, and caused or permitted the Company to conceal the
full scope of the 2013 Data Breach from customers and investors. As relief, the
consolidated derivative complaint sought money damages in an unspecified amount,
certain declaratory and injunctive relief, restitution, and an award of
attorneys' fees, costs, and expenses to plaintiffs' counsel.
On or about February 6, 2014, another shareholder filed a derivative action in
State Court, File No. 27-cv-14-1832 ("State Derivative Action"), against
substantially the same defendants, alleging substantially the same claims, and
seeking substantially the same relief as in the Federal Derivative Actions.
In response to the Federal Derivative Actions, to the State Derivative Action,
and to shareholder demand letters involving similar allegations that had been
received by the Company's Board of Directors ("Board"), the Board on June 11,
2014 established a Special Litigation Committee ("SLC") pursuant to Minnesota
law. The SLC consisted of a retired Chief Justice of the Minnesota Supreme Court
and a corporate law professor at the University of Minnesota Law School. By the
June 11, 2014 Board resolution and a later resolution, the SLC was given
complete power and authority to investigate the claims, allegations, and
requests for relief made in the shareholder derivative actions and the
shareholder demand letters, to analyze the rights and remedies of the Company,
and to determine whether and to what extent the Company should pursue any claims
against its current or former directors and officers relating to the 2013 Data
Over an approximately 21-month period, the SLC, represented by independent legal
counsel of its own choosing and assisted by independent experts, conducted an
exhaustive independent investigation. On March 30, 2016, the SLC issued a
report ("SLC Report") to the Board. The SLC concluded that it would not be in
the best interests of the Company to pursue any of the alleged derivative
claims, and that the derivative actions and the alleged derivative claims should
Thereafter, on May 2, 2016, the SLC filed a motion in Federal Court to dismiss
the Federal Derivative Actions with prejudice. In addition, the Company and
defendants all filed their own motions to dismiss the Federal Derivative Actions
based upon the SLC Report. Plaintiffs did not oppose the motions to dismiss.
On July 7, 2016, the Federal Court conducted a hearing on the motions to
dismiss. By Order entered on July 7, 2016, the Federal Court granted the motions
and ordered that the Federal Derivative Actions be dismissed with prejudice. The
Order directed the Company to furnish this Form 8-K to the U.S. Securities and
Exchange Commission ("SEC") in order to provide notice of the dismissal of the
Federal Derivative Actions to all Company shareholders and other interested
parties, in accordance with Fed. R. Civ. P. 23.1. The dismissal will become
final, and final judgment will be entered in favor of defendants, if no
shareholder seeks to intervene in the Federal Derivative Actions within 30 days
of the date of this Form 8-K.
On July 11, 2016, the SLC filed a motion in State Court to dismiss the State
Derivative Action with prejudice. The parties also filed a stipulation providing
for dismissal of the State Derivative Action upon
approval of the State Court. By Order received on July 25, 2016, the State Court
granted the motion and ordered that the State Derivative Action be dismissed
with prejudice. The Order directed the Company to furnish this Form 8-K to the
SEC in order to provide notice of the dismissal of the State Derivative Action
to all Company shareholders and other interested parties, in accordance with
Minn. R. Civ. P. 23.09. The dismissal will become final, and final judgment will
be entered in favor of defendants, if no shareholder seeks to intervene in the
State Derivative Action within 30 days of the date of this Form 8-K.
The Federal Court and the State Court each reserved jurisdiction to consider any
application that plaintiffs' counsel might choose to file seeking an award of
attorneys' fees, costs, and expenses from the Company in connection with the
derivative actions. The Company will have the right and the opportunity to
oppose such fee applications, if any are made.
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