June 30, 2016
In a ruling made on Thursday June 30th, 2016 by the Second District U.S. Court of Appeals in Manhattan, the previous approval of the Visa/ MasterCard settlement has been reversed, and the district court’s certification of the class has been vacated.
Discussions are currently underway between the parties concerning changes that could be made to the settlement, in order to address the concerns raised by the Appellate Court. The next formal action by the district court will be a conference / hearing with all parties representing the plaintiffs and defendants, and has been set for August 11, 2016.
BMS is not a party to this litigation for settlement, and we do not have an opinion as to whether the previously approved settlement was appropriate / fair for merchants. BMS provides a service to notify merchants when they are eligible to recover cash from this settlement, and to maximize returns for those who wish BMS to represent them to pursue a claim on their behalf.
District Court Findings:
In summary, the Court of Appeals deemed the Visa/MasterCard settlement to be disproportionally in favor of Visa and MasterCard, by releasing these parties in perpetuity from any future claims by merchants. The Appeals Court also found that remedies for merchants not yet accepting Visa and MasterCard payments prior to November 2012 were not adequate / fair. The judges also found that the merchants who accepted Visa or MasterCard from January 2004 to November 2012 and would share in as much as $7.25 billion or could opt out of the settlement; should not have been represented by the same law firms that were representing merchants that accepted Visa and MasterCard’s after 2012.
Merchants that began accepting Visa and MasterCard’s after 2012 under the proposed settlement were entitled to receive injunctive relief in the form of rule changes, expiring in July 2021. These parties could not opt out of the class and forfeited their future right to bring litigation against Visa or MasterCard.
Writing for the appeals court, Circuit Judge Dennis Jacobs said these two groups divergent interests meant they should not have been represented by the same law firms. While making clear he did not question the law firms’ motives, Jacobs said that the conflict, “sapped” these firms’ incentive to zealously represent the retailers obtaining only injunctive relief , and led to terms that benefited cash settlement merchants at the expense of the injunctive relief class.
What is Next?
The case will return to the Brooklyn federal court, where future proceedings will be overseen by U.S. District Judge Margo Brodie. The case is In Re: Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, 2nd U.S. Circuit Court of Appeals, No. 12-4671.
Link to pdf of actual court document: