Visa and MasterCard Settlement Overturned
On Thursday June 30, 2016, in one of the most significant court decisions, the U.S. Court of Appeals for the Second Circuit reversed the approval the federal district court in Brooklyn, N.Y., had granted in 2013 for a $5.7 billion settlement reached by Visa and MasterCard as defendants and two class of merchants as plaintiffs. The case was over card-network interchange and acceptance rules. The appeals court ruled that the plaintiffs’ attorneys had acted improperly, thereby enriching one class of merchants at the expense of the other so they could reach an agreement and collect their huge legal fees.
In a concurring opinion, appellate court judge Pierre N. Laval said the settlement forced the injunctive-relief merchants (the ones shortchanged) “to give up forever” their potentially valid claims without giving them the opportunity to reject the deal by opting out of the class. Laval wrote: “This is not a settlement; it is a confiscation.”
The aggrieved merchants proved their case to Judge Laval and will have a new chance. This case is far from over. It may take a few years before all the dust settles and new agreements are reached.
For more information, read the following article in Digital Transactions: Uncertainty Shrouds Huge Interchange Settlement After Appellate Court’s Stunning Veto