Significant earthquake-induced settlements occurred in saturated fine-grained soils at the Carrefour Shopping Center in Turkey during the 1999 Kocaeli Earthquake (M=7.4). Most of the settlement was due to the undrained cyclic failure of silt/clay (ML/CL) and highplasticity clay (CH) strata within the subsoil profile. Each suffered about 1% vertical strain. Extensive laboratory testing on undisturbed samples from these silty and clayey strata has been performed to investigate this behavior. The laboratory testing included monotonic and cyclic simple shear tests, triaxial tests and conventional 1-D consolidation tests. Considerable pore pressure increases have been measured during cyclic simple shear test which was later followed by significant reconsolidation settlement. It was found that significant pore pressures begin developing in these soils at cyclic stresses at about 50% of their monotonic shear strength. This transition in behavior with high pore pressure development and subsequent post-cyclic volume changes corresponds to about 0.5% cyclic shear strains. The study demonstrates the limitations of generalized liquefaction screening methods, and dispels the common misconception that high plasticity soils cannot generate high pore pressures and fail under cyclic loading. Test results indicate that the soils at the site can generate significant pore pressures when shaken at levels expected to have occurred during the Kocaeli Earthquake. The findings from this study are inline with the limited number of studies on this topic. Fine-grained soils, if shaken hard enough, can suffer strength loss and reconsolidation settlements. The challenge remains to better understand such phenomenon and incorporate this into engineering practice. This paper presents the observed ground failure at the site, site characterization studies and following laboratory testing program.