The U.S. Supreme Court has denied a petition to review a landmark billion dollar antitrust settlement between Visa and MasterCard and millions of retailers that accused the card networks of improperly fixing interchange fees. Supporters of the settlement - including Visa and MasterCard and a number of large U.S. banks - had filed the petition, arguing that the majority of plaintiffs had agreed to the settlement and that there was no guarantee that the objecting parties would get a better result if settlement negotiations resumed. The decision leaves intact a Second Circuit ruling overturning the settlement, sending both parties back to the bargaining table.
The Retail Industry Leaders Association (RILA) applauded the Supreme Court's refusal to revive what it called the "badly flawed" settlement. Deborah White, senior executive vice-president and general counsel of RILA, noted that merchants now have a "fresh opportunity to curb these unfair practices."
The class action lawsuit was originally filed in October 2005 by 19 retailers and trade associations against Visa, MasterCard and several large banks claiming that the credit card companies unlawfully conspired with major banks to artificially inflate interchange fees. In December 2013, the District Court for the Eastern District of New York approved a settlement - granting both monetary relief and injunctive protection - over the objections of thousands of merchants, banks and health care providers.1 The value of the settlement, initially worth as much as $7.25 billion, fell to about $5.7 billion after approximately 8,000 merchants opted out, including mega retailers such as Home Depot, Walmart and Target.
In June 2016, after a group of objectors appealed the District Court's decision, the Second Circuit overturned the settlement finding that certain merchants were inadequately represented during the negotiations in part because two classes of merchants with diverging interests were represented by the same lawyers. Supporters of the settlement fired back by filing a certiorari petition with the Supreme Court.2 The Supreme Court, however, declined to hear the case and provided no further comment.
In light of the Supreme Court's decision, investors currently trading claims related to the class action litigation should review state law legal doctrines purporting to limit the transferability of litigation claims (e.g., champerty), and, if necessary, seek to avail themselves of statutory safe-harbors to those doctrines, to the extent available.3