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preliminary approval in September 2018. While the
parties were in agreement as to the settlement, it could
not take effect without approval of the court. The court
Legal ease: had to determine if the settlement was fair, reasonable
and adequate. If the settlement did not meet these three
criteria, it would be a waste of time of the parties and the
court to put the settlement to members of the class for
approval – hence the requirement of settlement to meet a
$6 billion Visa kind of reality check by the court before being rolled out.

Mastercard When considering whether a proposed settlement is fair,
reasonable and adequate, the court takes into consideration
the following, known as the Grinnell factors, after Detroit
settlement update v. Grinnell Corp., 495 F.2d 448, 463 (2d Cir. 1974):
1. The complexity, expense and likely duration of the

By Adam Atlas litigation;
2. The reaction of the class to the settlement;
Attorney at Law
3. The stage of the proceedings and the amount of
SOs being on the frontlines of negotiating and col- discovery completed;
lecting merchant processing fees, are due an update 4. The risks of establishing liability;
on the latest development in the massive proposed
I $5.56 to $6.26 billion settlement to provide pay- 5. The risks of establishing damages;
ments to merchants who accepted Visa and Mastercard at 6. The risks of maintaining the class action through
any time dating from Jan. 1, 2004. the trial;

Background 7. The ability of the defendants to withstand a greater
judgment;
The settlement relates to a class action claim alleging anti- 8. The range of reasonableness of the settlement fund
trust violations brought in 2005 by 12 million retailers in light of the best possible recovery;
versus Visa, Mastercard and card issuing and acquiring
banks including JPMorgan Chase & Co., Citigroup and 9. The range of reasonableness of the settlement fund
Bank of America. to a possible recovery in light of all the attendant risks
of litigation.
The allegations in the claim center around Visa and
Mastercard’s honor-all-cards rules and rules that The parties used highly experienced class action experts
prohibited merchants from steering consumers to use and mediators to convince the court the proposed
forms of payment that were less expensive, such as cash settlement met the above factors.
or cards with lower interchange or discount dates. The Latest development
plaintiffs allege that such practices were anti-competitive
and illegal. On Jan. 24, 2019, the United States District Court for
the Eastern District of New York granted preliminary
This case is poised to be the biggest class-action class approval of the settlement, taking into consideration the
settlement in history. An earlier settlement of the case fell factors set out above. Merchants were able to submit briefs
through because a substantial number of merchants opted to the court concerning the proposes settlement.
out.
The plan for now is that within 90 days of Jan. 24, 2019,
The amount a merchant might receive is a function of class members will be mailed a notice about their legal
the amount that the merchant's processing represents as rights and the release of their claims. Information about
a portion of the entire funds available for the settlement the settlement will also be published in online media as
payment. It has been estimated to be equivalent to the well as in newspapers, consumer magazines and trade
amount of swipe fees a given merchant paid over a two publications.
or three month period. The amount will not be enormous
for a typical small merchant, but the aggregate total is Some 8,000 or so merchants have opted out of the
colossal. settlement, so there might still be ongoing litigation even
after the largest cohort of claims is settled. Other parts
After years of wrangling, the parties reached a proposed of the claim concerning the way interchange works are
form of settlement that they presented to the United States ongoing and will, perhaps, be settled only after the claims
District Court for the Eastern District of New York for related to interchange are settled.

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