Retailers are jubilant after a ruling by the U.S. Court of Appeals for the Second Circuit in New York striking down the 2012 settlement of a class action lawsuit against Visa and MasterCard. The antitrust class action was brought on behalf of approximately 12 million merchants against Visa and MasterCard alleging a conspiracy in violation of Section 1 of the Sherman Act.
After nearly ten years of litigation, the parties agreed to a settlement that released all claims in exchange for disparate relief to each of two classes: up to $7.25 billion would go to an opt‐out class, and a non‐opt‐out class would get injunctive relief. The district court certified these two settlement‐only classes, and approved the settlement as fair and reasonable.
On the appeal, numerous objectors and opt‐out plaintiffs argue that this class action was improperly certified and that the settlement was unreasonable and inadequate.
The court concluded that the class plaintiffs were inadequately represented in violation of Rule 23(a)(4) and the Due Process Clause.
“This ‘settlement’ was never a settlement on behalf of the retail industry but rather a backroom deal that failed to represent the interests of retailers,” NRF Senior Vice President and General Counsel Mallory Duncan said. “It would have given merchants pennies on the dollar for the price-fixing they have suffered at the hands of the big credit card companies and would have done nothing to end price-fixing or to lower swipe fees going forward. Now it’s time to seek real reform of these still-skyrocketing fees whether it be in court or in Congress.”
The Retail Industry Leaders Association enthusiastically welcomes the circuit court’s decision to throw out this harmful settlement,” said Deborah White, executive vice president and general counsel. “Quite simply, the settlement orchestrated by the card networks and banks would have undermined merchants’ legal rights forever and would have allowed Visa and MasterCard to impose higher and higher swipe fees with impunity. Today’s decision is a victory for all merchants and consumers.”
Visa and MasterCard are considering options in the lower court, seeking terms of a new settlement, or whether to take the case to trial.
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