Category: Class Action Suit

Legal counsel for both Merchant Classes (“Cash Class” and Injunctive Relief Class”) have agreed to submit any amended arguments to the Defendants in preparation for the next hearing.

In a connected and concurrent action a large group of merchants and the Defendants each submitted briefs to the U.S. Supreme Court on December 01, 2016. These briefs argued that the decision by the U.S. 2nd Circuit Court of Appeals to decertify the Class and send the settlement back to the District Court should be overturned and the terms of the settlement as approved on December 13, 2013 should be reinstated.

On March 27, 2017 the U.S. Supreme Court elected not to hear a request by big banks and large retailers to reinstate a $7.25 billion class action antitrust settlement with Visa and MasterCard over interchange fees. The U.S. Supreme Court’s decision to not hear the certiorari petition leaves in place the U.S. 2^nd Circuit Court of Appeals ruling that the previous settlement did not adequately represent the interest of some merchants.

The U.S. District Court in Brooklyn held a hearing / status conference for the Visa / MC Settlement on December 08, 2016.Judge Orenstein on November 30^th, 2016 ordered the appointment of separate counsel for the Cash Class and the Rules Change Class. The group of attorneys that had been in place for approximately ten years in the original class action settlement and had obtained the settlement thrown out by The 2^nd U.S. Circuit Court of Appeals in New York in June 2016 was re-appointed and will continue to represent the Cash Class. A separate group of three firms were selected to represent the Rules Change Class. The lack of appointment of separate class counsel was a major finding of fault by The U.S. Court Of Appeals For the 2^nd Circuit when they reversed the settlement approved by a lower court.

With Class counsel now appointed by Judge Orenstein, hopefully the entire process of working towards a revised settlement agreement will proceed in an expedited manner. The next hearing is scheduled for February 9^th 2017.

October 25, 2016

The U.S. District Court in Brooklyn NY held a hearing /status conference for the Visa /MC settlement on October 19, 2016 as the parties continue to work through the court procedures dealing with scheduling ,logistics and housekeeping issues.

The primary focus of the hearing was to move forward on the appointment of lead counsel for the putative Rule 23(b) (2) class (the injunctive or “Rules Changes Class”) and the putativeRule23(b) (3) class (the “Cash Class”). Some groups at the hearing argued that the settlement should move forward with only a Cash Class, however that seems unlikely when considering the following comments made by Judge Orenstein: “I absolutely do presuppose a role for the {Rules Change Class} in this case.”

The next order of business is to appoint counsel to represent the Classes. The next hearing is scheduled for December 08, 2016.

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, 2^nd U.S. Circuit Court of Appeals, No. 12-4671.

Link to pdf of actual court document:

U.S. Court Of Appeals For The Second Circuit