A federal judge approved a $5.7 billion class action settlement between merchants and Visa Inc., Mastercard Inc., and a number of banks over credit card swipe fees. The settlement is believed to be the largest private antitrust settlement in U.S. history. The judge also approved $544.8 million in attorney fees and $27.04 million in expenses to plaintiffs’ attorneys. That amounts to about 9.56 percent of the settlement fund. The judge denied incentive payments to class counsel.
Merchants first sued Visa and Mastercard in 2005, accusing the two companies of fixing the fees charged to merchants each time their customers used their credit or debit cards. The settlement provides for cash payments to merchants nationwide and lets them begin charging customers an extra fee when they use Visa or Mastercard credit cards. The settlement has been opposed by many of the largest players in the retail industry.
In his order (pdf), U.S. District Judge John Gleeson of the Eastern District of New York, wrote, “Although every case is unique, this case stands out in size, duration, complexity, and in the nature of the relief afforded to both injunctive relief and damages classes. Class Counsel took on serious risk in prosecuting the case.”
“Even with the aid of the Goldberger factors, I have struggled to find a strong normative basis by which to evaluate the requested fee or to generate my own figure. The law sets only minimal constraints on fee awards. Within the boundaries of those constraints, it offers no concrete guideposts. And this case is so large and complex that it has few comparators to guide my own judgment,” Gleeson wrote.
Gleeson adopted the following graduated fee schedule:
Bracket Fee Percentage Marginal Fee
$0-$10M 33% $3.3M
$10-$50M 30% $12M
$50M-$100M 25% $12.5M
$100M-$500M 20% $80M
$500M-$1B 15% $75M
$1B-$2B 10% $100M
$2B-$4B 8% $160M
$4B-$5.7B 6% $102M
TOTALS 9.56% (Average) $544.8M
“In my view, a guidepost is sorely needed. We know from other contexts that the conferral of broad discretion on district judges without providing sufficient guidance for the exercise of that discretion produces unwarranted disparities in outcomes, which undermine justice and the appearance of justice. Broad discretion in this context is certainly appropriate; as Goldberger acknowledges, each case is unique, and district judges should be empowered to set a fee that recognizes those unique circumstances,” Gleeson wrote.
The case is In re Payment Interchange Fee and Merchant Antitrust Litigation. NALFA also reported on this case in “$720M in Attorney Fees Sought in Historic Antitrust MDL Settlement.”
For more on this settlement, visit https://www.paymentcardsettlement.com