NEW YORK — A federal appeals court is letting stand a $5.6 billion antitrust class action settlement involving more than 12 million retailers that accused Visa Inc. and Mastercard Inc. of improperly fixing credit and debit card fees.
The U.S. Court of Appeals for the Second Circuit of New York denied a bid to dismantle the class action settlement by gas station operators that objected to it. The agreement, which was priced at about $6.2 billion before opt-outs, includes $523 million in legal fees, reported Bloomberg Law.
The Brooklyn-based federal judge who approved the settlement acted "reasonably in a sprawling case with many interested parties, in which neither the district court nor class counsel can be expected to predict and preempt every issue that might arise," Judge Dennis Jacobs wrote for the appeals court on March 15.
The settlement resolved claims that Visa and Mastercard overcharged retailers on interchange fees, or swipe fees, when shoppers used credit or debit cards, and barred retailers from directing customers toward cheaper means of payment.
Visa and Mastercard agreed to a $5.3 billion settlement in 2012, but the Second Circuit rejected the deal, citing conflicts between businesses seeking to maximize their cash compensation and others focused on forward-looking changes.
The court gave preliminary approval to the multibillion-dollar settlement on Feb. 22, 2019. Under the settlement, Visa, Mastercard and the other bank defendants agreed to provide approximately $6.24 billion in class settlement funds. Those funds were subject to a deduction to account for certain merchants that exclude themselves, but in no event will the deduction be greater than $700 million, as Convenience Store News previously reported.
The value of each claim is based on the actual or estimated interchange fees attributable to the merchant's Mastercard and Visa payment card transactions from Jan. 1, 2004 to Jan. 25, 2019.
The settlement had won approval from U.S. District Judge Margo Brodie in Brooklyn in December 2019, three-and-a-half years after the appeals court voided a $7.25 billion accord approved by a different judge because it shortchanged some retailers, according to a report from Reuters. The $6.24 billion deal reduced to $5.6 billion.
Visa is represented by Holwell Shuster & Goldberg LLP and Arnold & Porter Kaye Scholer LLP. Mastercard is represented by Paul, Weiss, Rifkind, Wharton & Garrison LLP. Robbins Geller Rudman & Dowd LLP, Robins Kaplan LLP and Berger Montague PC are class counsel for the businesses.
The gas station retailers are represented variously by Hagens Berman Sobol Shapiro LLP, the Class Action Fairness Group and solo practitioners.
The case is In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, 2nd U.S. Circuit Court of Appeals, No. 20-339.