Protecting The Class: Why 2nd Circ. Nixed A $7B Settlement

In a June 30, 2016, opinion strongly focusing on whether benefits to class members were adequate, the Second Circuit rejected a $7.25 billion settlement of antitrust claims brought by millions of merchants against Visa, MasterCard and various banks over the alleged artificial inflation of certain credit card transaction fees. The settlement was the largest all-cash antitrust settlement in U.S. history. The court found that the settlement was fundamentally flawed because two classes of merchants with divergent interests had been represented in negotiations by the same lawyers. The conflict "sapped class counsel of the incentive to zealously represent the latter" class, resulting in inadequate representation in violation of both Fed. R. Civ. P. 23(a)(4) and the due process clause. See In re Payment Card Interchange Fee & Merch. Disc. Antitrust Litig., No. 12-4671-CV, (2d Cir. June 30, 2016) (the "Payment Card litigation").