Wednesday, March 22, 2023
The National Retail Federation, the National Association of Convenience Stores and other trade groups helped to spearhead the class-action lawsuit by businesses alleging that Visa, Mastercard and biggest bank issuers of Mastercard and Visa cards conspired to overcharge retailers on interchange in violation of federal antitrust law.
The lawsuit, filed in 2005, also took issue with Visa and Mastercard rules that prevented retailers from directing customers to cheaper means of payment.
The parties to the lawsuit reached an out-of-court settlement totaling $7.25 billion, and the arrangement was approved by a judge in U.S. District Court for the Eastern District of New York in 2012. The court then reduced the settlement to between $5 billion and $7 billion after several large retailers opted to pursue their own claims against the card brands.
But the 2012 settlement was voided three years later by the appeals court, which determined the deal shortchanged some retailers. The case was sent back to district court as two separate lawsuits—one dealing with interchange, the other challenging Visa and Mastercard rules.
The district court subsequently approved a $5.6 billion settlement in the interchange settlement in 2019. (The total was reduced after several large retailers opted out of the deal.) The court also nearly halved the $900,000 award to the retailers' attorneys.
About 12 million merchants who did not opt out will receive money from the settlement based on their Visa and Mastercard transaction values between January 2004 and January 2019. Merchants who accept the settlement must agree not to pursue additional legal action against Visa, Mastercard and their bank partners for anything that happened between January 2004 and January 2019.
NACS and several other organizations, including large gas station chains, challenged the 2019 deal, arguing that the class action never should have been certified. They challenged the total awarded to the retailers' legal team. And they argued that the settlement did not dictate whether oil companies or the franchises that operate service stations should get the financial benefits.
Three appeals court judges rejected those challenges, and affirmed the district court's ruling on March 15, including the scalpel that was taken to attorneys' fees. Addressing the matter of legal fees, the court's written decision noted that "the original class size was increased by time spent in lobbying efforts that would not increase the recovery of damages."
The appeals court also decided that questions regarding which businesses would benefit from the financial settlement could be decided later, on a case-by-case basis, by a court-appointed special master.
NACS, in a post to its website, said "The decision leaves many retailers uncertain about whether they will receive settlement funds or not. It heightens the importance of the claims process – businesses must submit a claim to have a chance to receive any funds from the class settlement." 
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