$7B Swipe Fee Class Action Settlement Appealed to U.S. Supreme Court

Merchants seeking to wrap up a credit card swipe fee class action settlement are appealing their case to the U.S. Supreme Court.

Plaintiffs are seeking to undo a decision made by the U.S. Court of Appeals for the Second Circuit that would require separate legal counsel for the two subclasses created in the swipe fee class action settlement.

The settlement would split the plaintiffs into two Classes, one that would be entitled to monetary payments out of the more than $7 billion settlement fund, and another that would only be entitled to seek injunctive relief.

The Second Circuit determined that to provide the adequacy of representation required under federal procedural rules, the two Classes would have to be represented by two separate sets of attorneys. That decision is the subject of the current petition before the Supreme Court, brought by plaintiffs who seek to have a single set of attorneys represent both Classes.

The parties originally reached a settlement in this swipe fee class action lawsuit back in 2012. Defendants Visa, Mastercard, and more than a dozen major banks that issue credit cards agreed to pay more than $7 billion back to a Class of millions of merchants who were allegedly overcharged for swipe fees.

The settlement also designated a separate plaintiff Class consisting of merchants who were entitled to injunctive relief only. These Class Members would not be entitled to a share of the settlement funds, however.

The District Court gave the settlement final approval in December 2013. Not all merchants were happy with the deal, however. Hundreds of Class Members complained that the settlement gave Visa and MasterCard too much protection from future litigation.

This past June, the Second Circuit reversed approval of the settlement, finding its terms were unacceptable for the injunctive relief Class. It required injunctive Class Members to give up their rights to sue Visa and MasterCard in the future, without allowing them to opt out of the swipe fee settlement.

In sending the settlement back down to the District Court for further proceedings, the Second Circuit also required the two Classes to be represented by separate sets of attorneys.

The appeals court didn’t like some of the proposed changes in the rules for merchants, like allowing them to pass swipe fees on to their customers via surcharges. Class Members in some states, like New York, are barred by state law from surcharging credit card customers, the court said.

The appeals court also was not satisfied that Class counsel’s attorney fees would be calculated based on the amount of the settlement, which it thought could disengage the attorney’s interests from those of the injunctive relief Class.

Class Members now argue that even though the two Classes’ interests may not be perfectly aligned, requiring separate representation for them would not be worth the administrative hassle.

They argue that the Second Circuit “badly misconstrued” two earlier Supreme Court decisions addressing situations in which two sets of litigants, one who had already been harmed and another who were at risk for being harmed in the future, sought to be represented by the same attorneys.

The settling merchants are represented by Bancroft PLLC, Robins Kaplan LLP, Berger & Montague PC, Robbins Geller Rudman & Dowd LLP and Freedman Boyd Goldberg Urias & Ward PA, among others. Merchants objecting to settlement were represented before the Second Circuit by Goldstein & Russell PC, Quinn Emanuel Urquhart & Sullivan LLP, Constantine Cannon LLP, Clarick Gueron Reisbaum LLP, Vorys Sater Seymour and Pease LLP, Parker Waichman LLP, Thrash Law Firm PA, and Duncan Firm PA, among others.

The Visa and MasterCard Swipe Fee Class Action Lawsuit is In re: Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, Case No. 12-4671, in the U.S. Court of Appeals for the Second Circuit.

UPDATE: On March 28, 2017, the U.S. Supreme Court denied the petition to hear the case.

UPDATE 2: June 2018, Visa and MasterCard are approaching a settlement deal over a swipe fee class action lawsuit after more than a decade of litigation. The settlement amount is estimated to be around $6.5 billion and is expected to be reached by mid-July.

UPDATE 3: On Sept. 18, 2018, Visa, MasterCard, and numerous banks including Bank of America, Barclays, JPMorgan Chase, Citibank, and SunTrust Bank, have reached a new $6.2 billion settlement deal to resolve a massive antitrust swipe fee multidistrict litigation.

UPDATE 4: On Jan. 24, 2019, a New York federal judge preliminarily approved a massive Visa, Mastercard swipe fee settlement, which would add an additional $900 million for merchant Class Members.

UPDATE 5: March 2019, a settlement website has recently been established for Class Members in the Visa, Mastercard swipe fee class action lawsuit. While Claim Forms are not currently available, the website provides an opportunity for Class Members to pre-register to receive one.