Largest Antitrust Settlement in U.S. History Lurches Toward Resolution

In July 2014, the parties in In re Payment Card Interchange Fee and Merchant Discount Antitrust Litig., No. 12-4671 (E.D.N.Y.) announced what was widely reported to be the largest antitrust settlement in U.S. history.  Two years later, the Second Circuit sent the parties back to the drawing board.  See In re Payment Card Interchange Fee & Merch. Disc. Antitrust Litig., 2016 U.S. App. LEXIS 12047 (2d Cir. June 30, 2016) (publicly available here).  The focus of the Circuit Court’s concern was a fundamental tension between sub-classes members seeking injunctive relief (under Fed. R. Civ. P. 23(b)(3)), and those seeking monetary damages (under Fed. R. Civ. P. 23(b)(2).  Between these sub-classes, “[t]he fault lines were glaring as to matters of fundamental importance.”  The (b)(3) class “would want to maximize cash compensation for past harm” and the (b)(2) class “would want to maximize restraints on network rules to prevent harm in the future.”  These disparate interests created an essential tension between the subclasses regarding how the overall value of the settlement would be allocated. 

On remand, the parties and district court sought to address the Second Circuit’s concerns by more distinctly separating the sub-classes.  Most importantly, this separation involved appointing separate class counsel for each, in order to better conduct arms’-length negotiations.  On January 24, 2019 the district court preliminarily approved a $6.26 billion settlement on behalf of the 23(b)(3) sub-class – a billion dollar haircut, but a significant sum nonetheless.  This time, the settlement was carefully drafted to preserve the continuing rights of class members to injunctive relief sought by the 23(b)(2) class. 

Ten months later, this settlement took another step toward final approval, when the district court denied a motion to intervene brought by a group of putative objectors.  And again, the issue before the court was adequacy of representation among differently-situated class members.  Objectors, a group of gas stations, argued that their share of settlement funds would be wrongfully claimed by their own suppliers, who paid interchange fees associated with transactions at the gas stations, but then deducted those fees from remittances made to the stations.  The stations contended that they were, in effect, an unrepresented sub-class of entities to whom the burden of transfer fees had been passed.

In rejecting the motion to intervene, the district court drew a distinction between the conflicting interests of sub-classes that sunk the original settlement, and the potential intra-class conflicts feared by the objectors.  While the (b)(2) and (b)(3) classes had an irreconcilable tension between types of relief sought, the stations and suppliers sought the same thing – monetary damages for fees paid.  A dispute concerning to whom reimbursement should be made does not create a fundamental difference in the interest of class members with regard to Visa and MasterCard, but rather an issue to be resolved according to the contract already existing between the class members.

The (b)(3) settlement is set for a final fairness hearing on November 7.

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Faruqi & Faruqi, LLP focuses on complex civil litigation, including securities, antitrust, wage and hour, personal injury and consumer class actions as well as shareholder derivative and merger and transactional litigation. The firm is headquartered in New York, and maintains offices in California, Delaware, Georgia and Pennsylvania.

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About Adam Steinfeld

Adam Steinfeld is a Partner in Faruqi & Faruqi, LLP's New York office. He practices in the area of antitrust litigation with a focus on competition in the pharmaceutical industry. Mr. Steinfeld has litigated successfully with significant contributions in In re Buspirone Patent & Antitrust Litigation, MDL No. 1410 (S.D.N.Y.) ($220M settlement); In re Cardizem CD Antitrust Litigation, No. 99-MD-1278 (E.D. Mich.) ($110M settlement); In re Relafen Antitrust Litigation, No. 01-12239 (D. Mass.) ($175M settlement); In re Remeron Direct Purchaser Antitrust Litigation, No. 03-cv-0085 (D.N.J.) ($75M settlement); In re Terazosin Hydrochloride Antitrust Litigation, No. 99-MDL-1317 (S.D. Fla.) ($72.5M settlement); In re Tricor Direct Purchaser Antitrust Litig., No. 05-340 (D. Del.) ($250M settlement); and Mylan Pharms., Inc. v. Warner Chilcott, No. 12-cv-3824 (E.D. Pa.) ($12 million settlement).

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