Court Approves Historic Antitrust Settlement
On December 13, 2013, Judge John Gleeson of the Eastern District of New York granted final approval to the settlement reached by the parties in In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation. The settlement, believed to be the largest private antitrust class action settlement of all time, provides for the creation of two cash funds, estimated at a combined $5.7 billion, as well as significant changes to rules regarding acceptance of Visa and MasterCard credit cards, including the ability for merchants to surcharge certain transactions. Robbins Geller is one of three firms appointed to serve as class counsel.
The court concluded that the “proposed settlement secures both a significant damage award and meaningful injunctive relief for a class of merchants that would face a substantial likelihood of securing no relief at all if this case were to proceed.” As to the rules changes brought about by the settlement, the court noted, “For the first time, merchants will be empowered to expose hidden bank fees to their customers, educate them about those fees, and use that information to influence their customers’ choice of payment methods.”
Noting that the case is extremely complex, with many pending motions that would be appealed, the court held that the “settlement allows class members to take advantage of rules changes now – those changes are already in place – and further provides for significant monetary compensation in the near future.” The court also held “on balance that the reaction of the class favors approval of the . . . settlement.” The court found that in balancing the benefits to the class against the continuing risk of litigation, settlement of the case was in the best interest of the class, as there were significant risks plaintiffs would have to overcome should the case proceed.
The court carefully considered various objections to the settlement and found that the arguments were “largely unpersuasive.” As to the surcharging rules changes, the court noted that the relief, “which the Class Plaintiffs and the Individual Plaintiffs fought very hard to obtain, is an indisputably procompetitive development that has the potential to alter the very core of the problem this lawsuit was brought to challenge.” The court further noted that the surcharging changes were “a critical accomplishment.” Other changes brought about by the settlement, including the right to form buying groups, constitute “meaningful reform that is favorable to merchants,” the court wrote. The court also approved the proposed plan of allocation, finding it to be “fair, reasonable and adequate.”
“This settlement delivers an extraordinary result to the merchant class, both in terms of monetary recovery and in changes to Visa’s and MasterCard’s rules,” said Robbins Geller partner David W. Mitchell. “The massive damages fund and reforms implemented by the settlement provide immediate relief and the tools merchants need to reduce one of their most significant costs.”
On January 10, 2014, the court issued a separate order granting attorneys’ fees and expenses, finding that “this case stands out in size, duration, complexity, and in the nature of the relief afforded to both the injunctive relief and damages classes.” In awarding fees, the court commended class counsel for taking on this “unusually risky” case, “and for achieving substantial value for the class. If not for the attorneys’ willingness to endure for many years the risk that their extraordinary efforts would go uncompensated, the settlement would not exist.” The court further found that “plaintiffs’ counsel litigated the case with skill and tenacity, as would be expected to achieve such a result.”
In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, No. 05-MD-1720 (JG) (JO) (E.D.N.Y.).
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