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Case 1:05-md-01720-MKB-JO Document 6638 Filed 08/02/16 Page 1 of 29 PageID #: 88961

UNITED STATES DISTRICT COURT


EASTERN DISTRICT OF NEW YORK

In re PAYMENT CARD INTERCHANGE


FEE AND MERCHANT DISCOUNT
ANTITRUST LITIGATION

This Document Relates To:


ALL ACTIONS.

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MDL No. 1720(MKB)(JO)


Civil No. 05-5075(MKB)(JO)
JOINT STATUS CONFERENCE
STATEMENT
CONFERENCE DATE: August 11, 2016

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Pursuant to the Courts June 30, 2016 Order, the parties submit this Joint Case Status Report
and Proposed Agenda for the Case Management Conference on August 11, 2016.
PROPOSED CONFERENCE AGENDA
The parties jointly and respectfully propose that the Court address the following issues at its
August 11, 2016 conference:
1.

Introduction of Parties and Counsel;

2.

Issues Raised by the Second Circuits Decision;

3.

Discovery;

4.

Pending Motions and Motions Subject to Reinstatement;

5.

Stipulation Regarding Definitive Class Settlement Agreement; and

6.

Third Party Claim Filers.

The parties positions with regard to next steps are detailed separately below.
I.

PARTIES
The parties made efforts to circulate drafts of this report to all interested parties for their

input. The parties submitting this report are:


1.

Class Plaintiffs;

2.

Defendants;1

Visa Inc.*; Visa International Service Association*; Visa U.S.A. Inc.*; MasterCard
Incorporated*; MasterCard International Incorporated*; Bank of America, N.A.*; BA Merchant
Services LLC (f/k/a National Processing, Inc.); Bank of America Corporation*; FIA Card Services,
N.A.*; MBNA America Bank, N.A.; Barclays Bank plc; Barclays Bank Delaware; Capital One
Bank(USA), N.A.; Capital One F.S.B.; Capital One Financial Corp.; JPMorgan Chase & Co.*;
JPMorgan Chase Bank, N.A.*; Chase Bank USA, N.A.*; Chase Manhattan Bank USA, N.A.; Chase
Paymentech Solutions, LLC*; Bank One Corporation; Bank One, Delaware, N.A.; Citibank N.A.*;
Citigroup Inc.*; Citicorp; Citicorp Payments Services, Inc.*; Fifth Third Bancorp; First National
Bank of Omaha; HSBC Finance Corporation; HSBC Bank USA, N.A.; HSBC North American
Holdings, Inc.; National City Corporation; National City Bank of Kentucky; SunTrust Banks, Inc.;
SunTrust Bank; Texas Independent Bancshares, Inc.; Wells Fargo & Company*; and Wells Fargo
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3.

Plaintiffs in 14-md-1720, the Individual Cases, which include several groups, each

with its own Complaint:


(a)

The 7-Eleven Plaintiffs;2

(b)

The Target Plaintiffs;3

(c)

The Tedeschi, Caseys and Au Energy Plaintiffs;4

(d)

The Tavern Hospitality Plaintiffs;5

(e)

Hobby Lobby Plaintiffs;6

Bank, N.A.* Only those defendants identified with a * are named in one of the still-pending
individual actions.
2

This group consists of 7-Eleven, Academy Sports, Aldo, Alimentation Couche-Tard, Alon USA,
Amazon.com, AMC Theatres, Ashley Furniture, Barnes & Noble, Barnes & Noble College, Bealls,
Boscovs, Brookshires, The Buckle, Carters, Childrens Place, Coborns, Costco, Cracker Barrel,
Crate & Barrel, Cumberland Farms, DAgostinos, Dicks Sporting Goods, Dillards, Drury Hotels,
Family Dollar, Family Express, Foot Locker, The Gap, Genesco, GNC, Gulf, HMSHost, IKEA,
Jetro, Lowes, Michaels Stores, Mills Companies, National Association of Convenience Stores,
National Community Pharmacists Association, National Grocers Association, New York &
Company, NIKE, P.C. Richard & Son, PacSun, Panda Restaurant Group, Panera, Ralph Lauren,
REI, Republic Services, Restoration Hardware, Sears, Starbucks, Stein Mart, Swarovski, Talbots,
Thermo Fisher Scientific, Thorntons, Whole Foods, and Yum! Brands.
3

This group consists of Target Corporation; Macys Inc.; The TJX Companies, Inc.; Kohls
Corporation; Staples, Inc.; J.C. Penney Company, Inc.; Office Depot Inc.; OfficeMax Incorporated
(now a subsidiary of Office Depot Inc.); L Brands, Inc.; Big Lots Stores, Inc.; Abercrombie & Fitch
Co.; Ascena Retail Group, Inc.; Saks Incorporated; Lord & Taylor LLC; The Bon-Ton Stores, Inc.;
Chicos FAS, Inc.; Luxottica U.S. Holdings Corp.; American Signature, Inc., together with each of
their subsidiaries.

This group consists of all Plaintiffs in the following actions: Tedeschi Food Shops, Inc. v. Visa
Inc., et al., No. 16-cv-0659 (E.D.N.Y.) (MKB) (JO); Caseys General Stores, Inc., et al. v. Visa Inc.,
et al., No. 16-cv-01604 (E.D.N.Y.) (MKB) (JO); and Au Energy, LLC, et al. v. Visa Inc., et al., No.
16-cv-3360 (E.D.N.Y.) (MKB) (JO).
5

The Tavern Hospitality Plaintiffs are Tavern Hospitality Group Holdings, LLC and Little Pub
Holdings, LLC.
6

Plaintiffs include Hobby Lobby Stores, Inc. and Mardel, Inc., which are pursuing their own
claims against Defendants Visa Inc., Visa U.S.A. Inc., Visa International Service Association,
MasterCard Incorporated and MasterCard International Incorporated. These plaintiffs case is on
-2-

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4.
II.

(f)

American Eagle Outfitters, Inc. (American Eagle);7

(g)

rue21, inc.; and

(h)

The Wal-Mart Plaintiffs.8

Objectors-Intervenors Retail & Merchants Objectors.

ISSUES RAISED BY THE SECOND CIRCUITS DECISION


On December 13, 2013, this Court filed a Memorandum and Order finally approving the

Definitive Class Settlement Agreement and certifying two settlement classes. Those two classes
consisted of:
Rule 23(b)(3) Settlement Class, from which exclusions shall be permitted,
consisting of all persons, businesses, and other entities that have accepted VisaBranded Cards and/or MasterCard-Branded Cards in the United States at any time
from January 1, 2004 to the Settlement Preliminary Approval Date [November 28,
2012], except that this Class does not include the named Defendants, their directors,
officers, or members of their families, financial institutions that have issued Visa- or
MasterCard-Branded Cards or acquired Visa- or MasterCard-Branded Card
transactions at any time from January 1, 2004 to the Settlement Preliminary
Approval Date [November 28, 2012], or the United States government.
and:
Rule 23(b)(2) Settlement Class, from which exclusions shall not be permitted,
consisting of all persons, businesses, and other entities that as of the Settlement
Preliminary Approval Date [November 28, 2012] or in the future accept any VisaBranded Cards and/or MasterCard-Branded Cards in the United States, except that
this Class shall not include the named Defendants, their directors, officers, or
hold due to a stipulation and order extending the time for the defendants to answer, and they
therefore take no position with respect to class issues or scheduling issues as covered in this Joint
Status Report.
7

American Eagle is the plaintiff in American Eagle Outfitters, Inc. v. Visa Inc., et al., No. 14-cv00321 (MKB) (JO) (E.D.N.Y.).
8

This group consists of Wal-Mart Stores, Inc., Wal-Mart Stores Texas, LLC, Wal-Mart Stores
East, LP, Wal-Mart Stores East, LLC, Wal-Mart Louisiana, LLC, Wal-Mart Stores Arkansas, LLC,
Sams West, Inc., Sams East, Inc., Wal-Mart.com USA, LLC, Vudu, Inc., Inkiru, Inc., Ozark
Spirits, LLC, Green River Spirits, LLC and Quality Licensing Corp. Wal-Marts action and Visas
declaratory judgment action against Wal-Mart have been stayed by stipulation.
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members of their families, financial institutions that have issued Visa- or


MasterCard-Branded Cards or acquired Visa- or MasterCard-Branded Card
transactions at any time since January 1, 2004, or do so in the future, or the United
States government.
On June 30, 2016, the Second Circuit issued an opinion vacat[ing] the district courts
certification of the class, revers[ing] approval of the settlement, and remand[ing] for further
proceedings not inconsistent with this opinion.
A.

Class Plaintiffs Position

Based on the Second Circuits opinion, it is prudent that the (b)(3)and (b)(2) classes each be
represented by separate class counsel. It is Class Plaintiffs position that the current counsel remain
co-lead counsel9 for the proposed Fed. R. Civ. P. 23(b)(3) class and that the Court set a time by
which counsel seeking to represent a Fed. R. Civ. P. 23(b)(2) class or classes may seek appointment
by the Court. Class Plaintiffs suggest that this process commence immediately and that within 14
days of the August 11, 2016 Status Conference any parties seeking to represent a Fed. R. Civ. P.
23(b)(2) class or classes submit an application to the Court. Responses to any such application(s)
could be filed two weeks after any opening proposals.
As noted below, although class counsel respectfully disagree with the conclusions of both
fact and law in the Second Circuits decision, it was determined that an en banc petition would
deprive this court of jurisdiction and further delay proceedings, and thus it will not be the most
efficient manner in which to present our positions for further potential review.
1.

Second Circuits Opinion

Class Plaintiffs disagree with the Second Circuits finding that class counsel were conflicted
from representing both the Rule 23(b)(3) and (b)(2) classes for settlement purposes resulting in the
9

See attached Exhibit 1 (Pretrial Order No. 5 dated February 24, 2006 designating co-lead counsel
for the Class Plaintiffs).
-4-

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reversal of the settlement.10 While Class Plaintiffs acknowledge the risks of continued litigation and
the benefits of the relief evaluated by Judge Gleeson in granting final approval of the settlement,
those evaluations were ignored by the Second Circuit panel in reaching its conclusions. Class
Plaintiffs disagree with Defendants to the extent that they are suggesting those findings show that
plaintiffs cannot establish liability in this case as explained in detail in their opposition to
Defendants motions for summary judgment.
Defendants description of the procedural history of the litigation, and the District Courts
Orders granting final approval of the settlement, do not mention a number of critical aspects of these
Orders many of which were given little or no attention by the Second Circuit in its decision vacating
the settlement. As a result of the extensive record and the risks this litigation imposed on the
Networks and Banks, tremendous changes were occasioned by class counsels efforts even apart
from the settlement that greatly benefited the proposed Class during the course of the litigation.
As Judge Gleeson noted, since the case had been filed in 2005, there have been significant
developments in the industry, some of which are attributable in whole or in part to the case itself.
See In re Payment Card Interchange Fee & Merchant Discount Antitrust Litig., 986 F. Supp. 2d 207,
215 (E.D.N.Y. 2013). The very structures of Visa and MasterCard themselves changed; in 2008
and 2006, respectively, initial public offerings (IPOs) converted each from a consortium of
competitor banks into single-entity, publicly traded companies with no bank governance. Id. Also,
the Durbin Amendment removed the networks restrictions on discounting credit and debit cards at
the network level. Thus, Visa, MasterCard, American Express and Discover can no longer prohibit
10

The panel opinion effectively says that entities who do not now exist have Due Process rights in
future causes of action that do not now exist, based on future conduct that may never occur, and that
those Due Process rights trump the Due Process rights of plaintiffs and defendants in complex cases
that involve both damage claims and claims for injunctive relief to settle those cases in a manner
which provides future certainty for both plaintiffs and defendants.
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merchants from discounting their cards. Id. Class Counsel worked and contributed toward the
passage of the Durbin Amendment. Additionally, [i]n 2010, after an investigation assisted by the
information developed by the plaintiffs here, the Department of Justice (DOJ) filed lawsuits
against Visa, MasterCard and American Express. In consent decrees filed in 2011, Visa and
MasterCard agreed to remove their rules prohibiting merchants from product-level discounting of
credit and debit cards.11 This, of course, is in addition to the fact that the settlement was the
largest-ever cash settlement in an antitrust class action. Id. at 229.
Judge Gleeson (with the assistance of Magistrate Judge Orenstein) presided over this
litigation for over eight years, and determined, contrary to the Second Circuits findings: This
proposed settlement adds another crucial reform the lifting of restrictions on network- and productlevel surcharging. Even if the objectors are right in contending that additional dominoes must fall
before the alleged anticompetitive behavior of Visa and MasterCard is eradicated, those dominoes
will have to fall in other forums. That does not alter the significance of the relief provided by the
proposed settlement. Id. at 220. Judge Gleeson also found: The proposed settlement is the
product of arms-length negotiations between experienced and able counsel on all sides. The
lawyers for the parties spent a great deal of time in face-to-face, telephonic and written negotiations.
Those negotiations were assisted by two eminent mediators, Judge Infante and Professor Green, who
have informed the Court that the settlement negotiations were fair and conducted at arms length.
My own participation in the efforts to settle the case (along with Magistrate Judge Orenstein)

11

Id. at 215 (emphasis added); see also In re Payment Card Interchange Fee & Merchant Discount
Antitrust Litig., 991 F. Supp. 2d 437, 441 (E.D.N.Y. 2014) (the plaintiffs did not piggyback on
previous government action indeed, the government piggybacked on their efforts). The Rule
23(b)(3) class will benefit from continuing to be represented by class counsel.
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confirmed those descriptions of the negotiations, and nothing in the record suggests otherwise. Id.
at 221.
Judge Gleeson gave careful consideration to the objections even though substantially less
than one-tenth of one percent of the merchants have objected. Id. at 223. Judge Gleeson also
carefully analyzed the ability of merchants to surcharge and concluded, even though there are 10
states that prohibit surcharge, the relief was substantial. The proposed elimination of the nosurcharge rules finally would allow merchants to make transparent and avoidable what has been
opaque and inevitable. Id. at 231. And as to those states that prohibit surcharging Judge Gleeson
noted: More importantly, things change, and there is reason to believe that these state-law
impediments to a full deployment of the proposed relief will eventually be among them. Nosurcharge laws are not only anti-consumer, they are arguably irrational . . . Id. at 232.
Judge Gleeson also carefully considered the release finding: That the release extends to
future challenges to the reformulated rules or substantially similar ones does not create the giant
loophole multiple objectors fear. If the networks make non-substantive changes to the post-release
rules and related conduct, there will be no reason for the release not to operate. Other changes are
not subject to the release. Is there room for litigation over whether future rules are substantially
similar? Of course, but that is no reason to prohibit the networks from making any rules changes,
no matter how unrelated they may be to the claims and conduct at issue here, on pain of losing the
protection of an otherwise lawful release. Id. at 236.
2.

Current Class Counsel Should Remain as Counsel to the (b)(3)


Class

The reasons that class counsel should remain as counsel to the (b)(3) class are many. The
Second Circuit explicitly noted it was not calling into question the actions of class counsel. And
Judge Gleeson noted that building on the reforms the case engendered, along with rule changes
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combined with the massive fund plaintiffs counsel litigated the case with skill and tenacity, as
would be expected to achieve such a result. Payment Card, 991 F. Supp. 2d at 442. Class counsel
has expended an enormous amount of time and energy and resources litigating the MDL 1720
class action on behalf of the proposed Rule 23(b)(3) merchant class. Id. When the District Court
appointed class counsel more than 10 years ago, Magistrate Judge Orenstein recognized the
important factors of efficiency and continuity, in addition to competency and the ability to work
cooperatively with opposing counsel and the Court. Dkt. No. 278. These factors endure today and
militate against replacing class counsel as interim lead counsel for the Rule 23(b)(3) class, thus
avoiding inefficient and duplicative efforts, while freeing the Court to address issues of
representation for the (b)(2) class interests raised by the Second Circuit opinion.
B.

Defendants Position

Defendants respectfully request that the Court set a deadline for submissions from all
interested parties regarding the continued appointment or new appointment of lead interim class
counsel for each of the putative classes. Defendants also request that, pending resolution of those
issues and any other issues relating to class representation, and for 60 days following resolution,
party and non-party depositions and associated deadlines in the individual actions be held in
abeyance so that the class and individual actions can proceed together in a coordinated, orderly, and
efficient fashion.
1.

Procedural History

The actions coordinated and consolidated in MDL 1720 have been ongoing for more than
eleven years. In mid-2005, a host of merchants and trade associations filed putative class and
individual actions in this Court and elsewhere. Those actions alleged that Visa and MasterCard,
each together with thousands of banks, had conspired to violate the antitrust laws by adopting
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default interchange, honor all cards, no surcharge, and other payment network rules that
supposedly restrained trade. Those actions were transferred by the Judicial Panel on Multidistrict
Litigation (JPML) to this Court on October 19, 2005. On February 23, 2006, this Court appointed
Robins, Kaplan, Miller & Ciresi LLP (now Robins Kaplan LLP); Berger & Montague, PC; and
Lerach, Coughlin, Stoia, Geller, Rudman, & Robbins LLP (now Robbins Geller Rudman & Dowd
LLP), as co-lead plaintiffs counsel.
Co-lead plaintiffs counsel subsequently filed a consolidated complaint asserting claims on
behalf of two classesone class consisting of merchants that accepted Visa- and MasterCardbranded payment cards from January 1, 2004 to the present, and one consisting of merchants that
currently and will accept Visa- and MasterCard-branded payment cards in the futureand
coordinated discovery with other counsel pursuing separate claims by individual merchants. In the
discovery period that followed, the parties produced tens of millions of pages of documents, took
hundreds of depositions, and completed expert discovery. As of November 2011, motions for
dismissal, class certification, and summary judgment had been fully briefed and were pending before
the Court.
In 2012, after years of negotiations overseen by two nationally recognized mediators as well
as Judge John Gleeson and Magistrate Judge James Orenstein, defendants reached settlement
agreements with most of the putative class representatives and all of the individual merchants that
were then pursuing actions. After the parties submitted a memorandum of understanding indicating
that settlement was imminent, on July 17, 2012, the Court ordered that all pending motions for relief
were deemed withdrawn without prejudice to reinstatement if the settlement is not consummated.
On November 27, 2012, this Court preliminarily certified and approved two settlement
classes. The Court preliminarily certified under Rule 23(b)(3) a settlement class of merchants who
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accepted Visa- and MasterCard-branded payment cards from January 1, 2004, through November
27, 2012, the settlement for which provided billions of dollars to the class. The Court also
preliminarily certified under Rule 23(b)(2) a settlement class of merchants and future merchants who
currently accept and would accept Visa- and MasterCard-branded payment cards in the future, the
settlement for which awarded various forms of injunctive relief to that class. The same order
appointed co-lead plaintiffs counsel as Class Counsel for both the (b)(2) and (b)(3) settlement
classes.
On December 13, 2013, after additional briefing and objections by additional merchants, as
well as considering the report submitted by Professor Sykes, a Court-appointed economics expert,
the Court finally approved the settlement. In approving the settlement, Judge Gleeson specifically
addressed the objectors challenges to the adequacy of the (b)(2) class representation and the
viability of any equitable relief. See In re Payment Card, 986 F. Supp. 2d 207, 218-221 (E.D.N.Y.
2013). First, Judge Gleeson specifically noted that that the lawsuit [was] an imperfect vehicle for
addressing the wrongs the plaintiffs allege in their complaint and that there [were] forms of relief
many objectors seek, such as the regulation of interchange fees, that this Court could not order even
if the plaintiffs obtained a complete victory on the merits. Second, Judge Gleeson explained that
there are features of the industry landscape, such as other credit card issuers with whom defendants
compete, and laws in some states that prohibit merchants from surcharging the use of credit cards,
that are beyond the reach of this case but will undermine (at least in the near term) the efficacy of the
agreed upon relief. Id. at 218. With regard to this issue, the Court again pointed out that it was not
in a position to grant the sweeping relief the objectors seek, as it could not regulate interchange
fees or enjoin nonparties or preempt state laws or reform network rules that do not violate the
antitrust laws. Id. at 219.
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Following the Courts preliminary approval of the class settlement, hundreds of merchants
opted out of the (b)(3) settlement class and brought individual actions against Visa and MasterCard
and, in one still-pending action, four banks. Visa, and in one case other defendants, also filed
declaratory judgment actions against certain merchants and trade associations. These individual
actions were included in MDL 1720 after being filed here or transferred here by the JPML, and have
proceeded while the class settlement was on appeal.
Defendants have reached settlements with a number of the Individual Plaintiffs, but many
others have pushed forward with discovery. The Court approved a schedule for fact discovery in
these actions on October 29, 2014. Pursuant to that schedule and subsequent modifications thereto,
the parties have exchanged discovery requests, conducted extensive negotiations over the scope and
process of responding to those requests, and produced millions of documents.12 Currently, the
parties are completing their privilege review and preparing for depositions, which are scheduled to
start October 1, 2016 and continue for a year. The parties expect to take hundreds of depositions
during the year-long deposition period.13

12

In preparing for depositions, defendants have identified substantial deficiencies in the document
productions of the 7-Eleven and Target Plaintiffs. 7-Eleven Plaintiffs have produced far fewer
documents than their counterparts among the Target Plaintiffs, both overall and on a custodian-bycustodian basis. Indeed, for a number of their key custodians, certain of the 7-Eleven Plaintiffs have
produced only a handful of documents. Further, there are numerous gaps in time for which these
plaintiffs have not produced documents, and serious questions exist concerning the accuracy of the
metadata for the documents they have produced. The Target Plaintiffs have failed to produce any
documents for several of their custodians. Defendants have raised these concerns with the 7-Eleven
and Target Plaintiffs but have not yet received meaningful responses.
13

Pursuant to an agreement reported to the Court on June 2, 2016, the parties exchanged lists of
deponents for the first two months of the deposition period on August 2, 2016. The parties have
agreed to limits on the number of depositions for the first four months of the period only, with
further negotiations scheduled in the future to determine limits for the remaining eight months.
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In addition, following the Courts approval of the settlement, a number of merchants filed
notices appealing the Courts decision.
2.

The Second Circuits Decision

On June 30, 2016, the Second Circuit reversed this Courts approval of the class settlement,
vacated the certification for settlement purposes of the (b)(2) settlement class, and remanded for
further proceedings in this Court. Despite Judge Gleesons findings, discussed above, the panel held
that reversal was necessary because co-lead plaintiffs counsel were conflicted from representing
both the (b)(3) and (b)(2) classes for settlement purposes. In re Payment Card Interchange Fee and
Merchant Discount Antitrust Litig., 12-4671-cv(L), slip op. at 29-30 (2d Cir. June 30, 2016).
The Second Circuit did not address certain findings by Judge Gleeson that bear upon the core
issues here. Among other things, Judge Gleeson concluded that the merchants face a substantial
probability of securing little or no relief at the conclusion of trial. In re Payment Card, 986 F.
Supp. 2d at 227 (quoting Sykes Report at 3); see also Sykes Report at 30 (the merchants face a
substantial and perhaps rather large probability of eventual failure both as to liability and as to the
prospects of significant monetary and injunctive relief). Judge Gleeson, as well as Professor Sykes,
reached that conclusion after finding, based on the evidence accumulated in discovery, that Visas
and MasterCards respective default interchange and honor all cards rules undeniably have
significant procompetitive effects, and that merchants face considerable difficulty in establishing
. . . [that those rules] cause anticompetitive harm that outweighs their pro-competitive benefits. In
re Payment Card, 986 F. Supp. 2d at 225, 227 (quoting Sykes Report at 3).
As Judge Gleeson recognized, [n]o American court has ever held that Visas or
MasterCards default interchange rules violate antitrust laws. Id. at 227. Judge Gleeson further
found that the Department of Justices decision not to challenge the default interchange rules
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despite entreaties by [c]lass [c]ounsel that it do so further suggests that . . . the antitrust challenge to
the rules could easily fail. Id. He emphasized that [a] number of courts and economists have
found the Honor-All-Cards rule and similar rules to be procompetitive. Id. (emphasis in original).
Again, although Judge Gleesons decision approving the settlement was reversed, his
findings on the potential merits of plaintiffs claimsall made on a substantial factual recordwere
not specifically addressed or criticized by the Second Circuit panel. Accordingly, at a minimum, in
defendants view Judge Gleesons findings serve as important guideposts for the ongoing conduct
and any potential resolution of this litigation.
Following issuance of the panels decision, counsel for defendants and the putative Class
Plaintiffs entered into a stipulation, which the Court ordered on July 19, 2016, to extend the time
within which to determine whether to terminate the settlement agreement.14
3.

Depositions and Associated Deadlines in the Individual and


Declaratory Judgment Actions Should be Held in Abeyance
Until 60 Days after Issues Concerning Representation of the
Putative Classes Are Resolved

Defendants believe that the putative class and individual actions before this Court should be
coordinated, as they were before the class settlement agreement in 2012, and as the JPML originally
ordered. But any such coordination, along with other aspects of class representation, first requires
certainty concerning class representation.
Defendants respectfully request that the Court set a date for submissions regarding any issues
of interim representation of the putative merchant classes, and, after submissions are complete, make
any appropriate determinations regarding continued or new interim class counsel appointments.

14

The Settlement Agreement provides that either side may terminate it within twenty days in the
event that the Courts Order approving the settlement is, among other things, not fully affirmed on
any appeal.
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Defendants further request that the Court set deadlines for the filing of any new or amended
complaints by both the putative class and Individual Plaintiffs and for Defendants responses to
those new or amended complaints. Finally, Defendants request that the Court hold in abeyance the
significant deposition program scheduled to begin in October and associated case management
deadlines until 60 days after interim class counsel have been appointed and any new or amended
pleadings have been filed.
Moving forward with depositions in the individual actions now, while class representation
remains uncertain and Individual Plaintiffs seek to expand their claims, creates a meaningful risk of
duplication, inefficiency, and prejudice. Defendants and Individual Plaintiffs have spent years in
discovery preparing for this deposition period. Defendants have already spent a considerable
amount of time and effort working with Individual Plaintiffs to attempt to minimize the immense
burden on defendants of redoing the collection and review of documents from the same time period
over which the putative class sought discovery. Despite those ongoing efforts, the burden has been
considerable, and in fact Defendants have produced millions of additional documents in the pending
individual actions.15 Now, Defendants face the possibility that they will yet again be asked to redo
discovery during certain time periods, this time by the putative Class Plaintiffs, as well as the
possibility of requests for additional discovery associated with expanded allegations in new and
amended complaints. Were depositions now to proceed in the individual actions, it would needlessly
compound Defendants burden and potentially prejudice the putative class. Deponents would face
the likelihood of being deposed multiple times, putative Class Plaintiffs would fall further behind the
Individual Plaintiffs, and the benefits of coordination would be lost.

15

The Individual Plaintiffs have also received the entirety of Defendants productions in the class
case.
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By contrast, holding depositions and associated deposition deadlines in abeyance for a


reasonable period of time so as to address class representation issues as may exist and any new
allegations by the putative Class and Individual Plaintiffs avoids this risk, and would allow the
parties to proceed in a coordinated and orderly fashion, much as putative Class and Individual
Plaintiffs proceeded previously before settlement was reached in 2012. We note, for example, that
the parties have already reached agreement on sharing the materials requested by putative Class
Plaintiffs (see below), and a limited postponement would also give the parties to the individual
actions sufficient time to work through document production deficiencies and other issues.
It is wrong that, as the Individual Plaintiffs claim, instructing designated class counsel not to
unduly duplicate the discovery undertaken by the 7-Eleven and Target Plaintiffs would avoid the
risks of duplication and inefficiency. That sort of instruction has failed to alleviate the substantial
document production burden Defendants have incurred in the individual actions, and it is no answer
to the threat of deponents sitting for multiple depositions on topics new and old. Further, prioritizing
discovery for the Individual Plaintiffs over that of the putative Class Plaintiffs turns the very purpose
of an MDL like this one on its head.
C.

Individual Plaintiffs Position

Individual Plaintiffs find it extraordinary that class plaintiffs and Defendants have decided to
try to re-litigate their unsuccessful appeal in this status report, citing extensively from Judge
Gleesons reversed decision and implying the Second Circuits stinging and lucid opinion somehow
provides support for matters that the Circuit had absolutely no reason to reach or conclusively
decided the other way. Defendants notion that the Second Circuit did not dispute certain findings
made by Judge Gleeson in the course of approving the settlement ignores the fact that the Second
Circuits decision renders the settlement, and all of the activities surrounding its negotiation and
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prior approval by Judge Gleeson, nullities. In re Payment Card Interchange Fee & Merchant
Discount Antitrust Litig., 12-4671-cv(L), Dkt. 1556 at 30. Simply put, this is not the place to dispute
the meaning of now-reversed opinions. Judge Gleeson, of course, denied motions to dismiss in the
individual cases after the settlement decision, and those cases are proceeding apace. We think they
should continue to do so.
For present purposes, it is sufficient to note that the Second Circuit unanimously held that
class members of the (b)(2) class were inadequately represented in violation of both Rule 23(a)(4)
and the Due Process Clause, and that this inadequacy was in fact confirmed by the substance of
the deal that was struck. In re Payment Card Interchange Fee & Merchant Discount Antitrust
Litig., 12-4671-cv(L), Dkt. 1556 at 16, 30 (2d Cir. June 30, 2016). The Second Circuits decision
also makes clear that the settlement negotiated by class counsel improperly compromised the
Individual Plaintiffs fundamental right to litigate claims arising from the payment of billions of
dollars in interchange fees. Defendants attempt to recast that decision as an implicit critique of the
claims against them is at odds with any fair reading of the decision. Indeed, as Judge Leval
observed, the fact that the Defendants were willing to pay $7.25 billion, apparently the largest
antitrust cash settlement in history, suggests that the claims were not entirely devoid of merit. In re
Payment Card Interchange Fee & Merchant Discount Antitrust Litig., 12-4671-cv(L), Dkt. 1557 at 2
(2d Cir. June 30, 2016) (Leval, J., concurring).
D.

7-Eleven Plaintiffs Additional Statement

The 7-Eleven Plaintiffs include many of the objectors to the class settlement that
concurrently opted-out of the settlement to assert claims for past damages against Visa, MasterCard
and the four largest Visa/MasterCard member banks. As their complaint makes clear, the 7-Eleven
plaintiffs would have asserted ongoing damages and injunctive claims had the settlement permitted
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them to do so, and with the settlement nullified the 7-Eleven Plaintiffs intend to seek consent to do
so now.
To briefly summarize, the 7-Eleven complaint asserts that Visas and MasterCards
respective default interchange, Honor All Issuer, and anti-steering rules violate Section 1 of the
Sherman Act, and that defendants Honor All Issuer rules constitute anticompetitive agreements (1)
among Visa member banks and (2) among MasterCard member banks not to compete for merchant
acceptance or preference for form of payment at the point-of-sale. These agreements not to compete
are inextricably intertwined with Defendants unlawful agreements to collectively fix the prices for
merchants acceptance of defendants payment cards, i.e., interchange rates. The 7-Eleven
Plaintiffs complaint differs materially from the case developed by class counsel in that it deals with
how the Honor All Issuers rules restrain competition among the banks for merchant acceptance and
preference. It also includes allegations as to how, shortly after the now vacated settlement was
preliminarily approved in November 2012, Visa agreed to permit Chase to enter into bilateral
agreements with merchants and differentiate Chase from other Visa-issuing banks through such
deals. The 7-Eleven complaint also includes monopolization claims against Visa concerning its
imposition in 2012 of a new fee on merchants the Fixed Acquirer Network Fee (FANF).16 The
FANF was the linchpin of Visas strategy to maintain its monopoly power in the general-purpose
debit-card market after Congress passed the Durbin Amendment as part of the Wall Street Reform
Act, regulating certain aspects of the market to restrain Visas monopoly power. As this claim
concerns conduct that post-dated the discovery period and summary-judgment briefing in the class
case, it was not presented in that case.

16

Despite the fact that this fee was not introduced until April 2012, the now-vacated settlement
explicitly released all damage claims concerning the FANF.
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1.

Impact of the Second Circuits Decision on the Case Schedule


in 14-md-1720

The Second Circuits opinion speaks for itself. The now-vacated settlement has hindered and
delayed the Individual Plaintiffs prosecution of their claims long enough. Permitting further delay
of discovery concerning the Individual Plaintiffs claims based upon the uncertainty as to the
leadership of the class case would compound the prejudice that the Individual Plaintiffs have already
suffered. The Target and 7-Eleven Plaintiffs have been actively litigating their individual cases
against defendants for more than three years, and are about to begin party and third-party depositions
pursuant to a court-ordered, agreed deposition protocol and case schedule that calls for the
identification of party deponents on August 2 and the commencement of party depositions in
October. The existing case schedule and its deadlines were established with the full understanding
that the Second Circuit decision on the class settlement would be forthcoming.
The individual cases included in 14-md-1720 can and should proceed pursuant to the
existing, agreed-upon case schedule. The 7-Eleven and Target Plaintiffs have invested considerable
resources in negotiating document requests, reviewing documents, and preparing for depositions,
and they would obviously be harmed if discovery were indefinitely stayed while preliminary issues
that relate to the class action are addressed. As the Second Circuit decision acknowledges, the 7Eleven and Target Plaintiffs were prejudiced by the inadequate representation provided by class
counsel, who ignored clear conflicts of interest and negotiated a settlement that improperly limited
the 7-Eleven and Target Plaintiffs ability to pursue their claims without providing a full right to opt
out. Requiring the 7-Eleven and Target Plaintiffs to endure further, indefinite delay while the Court

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addresses class issues would only exacerbate the prejudice the 7-Eleven and Target Plaintiffs have
already suffered.17
For these reasons, the Second Circuit decision should not affect the existing schedule in the
7-Eleven and Target cases. Instead, the most efficient course for all parties to 14-md-1720 is to
proceed with discovery without further delay. After the Court resolves preliminary issues with
respect to the class action, on whatever timetable it deems appropriate, coordination of ongoing 14md-1720 discovery with any additional discovery that may be pursued in the class case can be
addressed. The Target and 7-Eleven Plaintiffs are confident that Visas and MasterCards concerns
about duplicative discovery can be resolved by instructing designated class counsel not to unduly
duplicate the discovery undertaken by the 7-Eleven and Target Plaintiffs, much as the Target and 7Eleven Plaintiffs have been cautioned not to unduly duplicate the discovery taken years ago in the
class action.18 Such instructions are well within the discretion afforded to the Court in administering
this multi-district proceeding. See, e.g., In re GMC Secs. & Derivative Litig., 429 F. Supp. 2d 1368,
1370 (J.P.M.L. 2006) (The transferee judge, of course, may establish separate tracks for discovery
and motion practice in any constituent MDL-1749 action or actions, whenever he determines that
such an approach is appropriate.); In re Worldcom, Inc., Sec. & ERISA Litig., 226 F. Supp. 2d 1352,
1354-55 (J.P.M.L. 2002) (Any concerns of the objecting ERISA plaintiffs that Section 1407

17

The Individual Plaintiffs will not respond in this report to the claim that there are defects in the
document productions they made more than four months ago. The Court has already granted
Defendants one extension to address such purported deficiencies. Such unfounded claims have
become Defendants modus operandi for delay in this case, much like their attempt to turn the
Second Circuits rejection of the settlement into a lengthy delay of the Individual Plaintiffs right to
pursue their multi-billion dollar claims.
18

Defendants claim that they are being forced to redo existing discovery is unfounded, as the
recent documents produced to Individual Plaintiffs date from after August 2006 and were never
produced to the Class Plaintiffs.
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centralization will somehow retard the pace at which their claims are prosecuted should be addressed
to the transferee judge, who remains free to establish separate tracks for discovery and motion
practice in any constituent MDL-1487 action or actions, whenever she concludes that such an
approach is appropriate.).
2.

Impact of the Second Circuit Decision on Class Representation


a.

7-Eleven Plaintiffs Position

In light of the Second Circuits decision concerning the adequacy of representation


merchants received in the now-defunct settlement, the 7-Eleven Plaintiffs agree with Defendants that
the Court should revisit the issue of the appointment of lead class counsel, and should do so in a
comprehensive fashion addressing both the b(3) and b(2) classes. The 7-Eleven Plaintiffs also agree
with class plaintiffs that this process commence promptly with an expedited briefing schedule.
All interested parties, including the Individual Plaintiffs, should be heard on the issue,
including (a) whether some or all of interim class counsel should be changed, and (b) whether, for
obvious reasons, the (b)(2)/(b)(3) construct created by the now-rejected settlement should be
modified in some respects. As for the class plaintiffs recitation in this status report of the merits of
the settlement and their efforts in negotiating it, the 7-Eleven Plaintiffs believe that an examination
of the reasons why class counsel (and class plaintiffs) failed to adequately represent the class should
await briefing and a hearing dedicated to that question. For now, the core holdings of the Second
Circuits recent decision alone refute class counsels claims.
b.

Target Plaintiffs Position

The Target Plaintiffs are pursuing their own claims in a separate case and therefore take no
position on class issues, and reiterate only that the process of resolving these and any other

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preliminary issues related to the class case should not delay the discovery schedule that applies to the
Target Plaintiffs case or delay the ultimate resolution of their case.19
E.

Others

The Tedeschi, Au Energy, Caseys, American Eagle, rue21 and the Tavern Hospitality
Plaintiffs are pursuing their own claims in separate cases and therefore take no position on class
issues.
1.

Position of Objectors-Intervenors

The Retailers and Merchants Objectors (R&M Objectors) are a broad-based and diverse
group of 64 separate business entities. They operate more than 150 retail outlets across 13 states.
Each member of this group pays interchange or swipe fees when they accept payment by credit
card for goods sold to consumers.
R&M Objectors have not been casual, back-bench observers to the attempted settlement of
their rights or these proceedings. Not only did they take an active role before the district court in
opposing the certification of the class and the attempted settlement of the action, but they filed
individual briefs before the Second Circuit securing the decertification of the class and reversal of
approval of the attempted settlement.
R&M Objectors consistently maintained that there had been a fundamental denial of due
process reflected in a proposed settlement that trapped them into an agreement which had no real
value to them; where they gave up valuable rights and received little else in return. That position has
been vindicated in the Second Circuits opinion in In re Interchange Fee and Merchant Discount
Litigation, __ F.3d __, 2016 WL 3563719, *4 (2d Cir. June 30, 2016).
19

As to this section only, the remaining plaintiffs in E-Z Mart Stores, Inc. et al. v. Visa, Inc. et al.,
No. 13-cv-05352 (E.D.N.Y.) (namely, E-Z Mart Stores, Inc., Jacksons Food Stores, Inc./PacWest
Energy, LLC and Susser Holdings Corporation (n/k/a Sunoco, LP)) join the 7-Eleven Plaintiffs.
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In light of the concerns expressed by the Second Circuit regarding representation by present
class counsel (Id. at 2016 WL 356719, *4 and *6), R&M Objectors suggest that the Court set a
separate proceeding to address the question of the appointment of interim lead class counsel, as there
is currently no certified class or class counsel.
III.

DISCOVERY
Since the class settlement, document discovery in the individual cases has continued. Tens

of millions of pages of documents have been produced. Additionally, depositions are set to begin in
October.
A.

Class Plaintiffs Position

Class Plaintiffs have requested that Defendants provide to them the same materials produced
in the opt-out cases and that they be included in the upcoming depositions. Class Plaintiffs have an
interest in not delaying ongoing discovery efforts.
B.

Defendants Position

Putative Class Plaintiffs have requested all materials produced by Defendants in the
individual actions. On the understanding that Individual Plaintiffs do not object, and without taking
any position concerning who the Court should appoint as interim class counsel or whether additional
discovery is appropriate in the putative class or individual actions, Defendants are willing to make
these materials available to putative Class Plaintiffs.
With regard to the current discovery schedule in the individual actions, for the reasons stated
above, Defendants request that the Court hold in abeyance the significant deposition program
scheduled to begin in October, associated case management deadlines, and all non-party depositions
until 60 days after issues are resolved concerning representation of the putative classes and any new

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or amended pleadings have been filed. Doing so will avoid duplication, inefficiency, and prejudice
to the parties.
C.

Individual Plaintiffs Position

The Individual Plaintiffs cases included in 14-md-1720 can and should proceed pursuant to
the existing case schedule. As indicated above, the Target and 7-Eleven Plaintiffs have been actively
litigating their individual cases against defendants for more than three years, and are ready to begin
depositions pursuant to a court-ordered, agreed deposition protocol and case schedule that calls for
the identification of party deponents on August 2 and the commencement of party depositions in
October.
The 7-Eleven and Target Plaintiffs acknowledge the need to coordinate discovery and have
been working collaboratively with all parties to 14-md-1720 to do so. Individual Plaintiffs do not
object to Defendants providing copies of materials produced by Defendants in 14-md-1720 to
interim class counsel, and are amenable to working with all parties to coordinate efforts going
forward. However, the protracted and indefinite delay requested by Defendants would be unduly
prejudicial to the Individual Plaintiffs. Defendants would have this Court delay any depositions until
after (1) submissions from any interested parties regarding any issues of interim representation of the
putative merchant classes, (2) determinations regarding continued or new interim class counsel
appointments, (3) the filing of any new or amended pleadings by the putative class, Individual
Plaintiffs, and Defendants, and (4) the passage of another 60 day period. The Court has already
twice granted Defendants requests for extensions of the discovery schedule. Party depositions were
to have begun already, on August 1, but were delayed at the request of Defendants. The 7-Eleven
and Target Plaintiffs do not believe that the 14-md-1720 schedule should again be delayed for an
indefinite period while the Court addresses issues concerning the class case that have been raised
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by the Second Circuit decision and awaits amended and new pleadings. The Individual Plaintiffs are
confident that coordination of the ongoing 14-md-1720 discovery with any additional discovery that
may be pursued in the class case can be addressed once class representation issues are resolved .
The 7-Eleven and Target Plaintiffs also note that they intend to amend their complaints to
include damages up through the date of judgment, as well as requests for injunctive relief, now that
the mandate has been returned to this Court and the injunction contained in the class settlement
approval orders is no longer in effect. The 7-Eleven Plaintiffs are also considering amending their
complaint to include new allegations based on the new documents defendants have produced to the
Individual Plaintiffs.
D.

Others

The Tedeschi, Au Energy, Caseys and the Tavern Hospitality Plaintiffs have not commenced
discovery and take no position on the timing of discovery related to the 7-Eleven and Target
Plaintiffs.
American Eagle takes no position regarding the timing of discovery related to the 7-Eleven
and Target Plaintiffs.
IV.

PENDING MOTIONS AND MOTIONS SUBJECT TO REINSTATEMENT


Attached as Exhibit 2 is a list of the motions that were deemed withdrawn without prejudice

to reinstatement at the time the parties announced the settlement of the class action in July 2012.
These motions have been fully briefed and argued.
Additionally certain parties filed motions under Fed. R. Civ. P. 60 on July 28, 2015. These
motions have been fully briefed.

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Finally, still pending at the Second Circuit is the service award, fee and expense appeal.20
A.

Class Plaintiffs Position

It is Class Plaintiffs position that the Court should continue to reserve judgment on the
motions which were pending at preliminary approval while the parties address with the Court
matters resulting from the Second Circuits June 30, 2016 decision. It is Class Plaintiffs position
that the Second Circuits decision renders the Rule 60 motions moot. Plaintiffs also believe the
appeal regarding fees, service awards and expenses is mooted by the Second Circuits Order.
B.

Defendants Position

Defendants believe that no action is required by the Court at this time with respect to motions
previously filed in the class litigation. If the parties seek to reinstate any of the motions that were
pending before the Courts preliminary approval of the settlement, the Court can consider those
requests in due course. Defendants agree with Class Plaintiffs and Individual Plaintiffs that the
pending Rule 60 motions are now moot.
C.

Individual Plaintiffs Position

The Individual Plaintiffs agree that no action should be taken at this time with respect to the
motions deemed withdrawn at the time of the settlement. The Individual Plaintiffs agree that the
Rule 60(b) motions are moot now that the mandate has issued, as the relief sought is unnecessary in
light of the Second Circuits decision to vacate the class settlement. However, the Individual
Plaintiffs believe that the Court should consider the facts and circumstances addressed in the Rule
60(b) motions in assessing the adequacy of class counsel and their fitness to continue to serve as
counsel for any merchant class.
20

Argument in 15-217(L) had been scheduled for May 16, 2016. This argument was deferred
pending decision in 12-4671(L) (the main appeal). The Second Circuit has ordered that the parties
submit supplemental letters in light of the decision on the main appeal.
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D.

Others

The Tedeschi, Caseys and Au Energy Plaintiffs, American Eagle and the Tavern Hospitality
Plaintiffs agree with the Individual Plaintiffs position set forth above.
V.

STIPULATION REGARDING DEFINITIVE CLASS SETTLEMENT


AGREEMENT
On July 18, 2016 counsel for Class Plaintiffs and Counsel for Defendants submitted a

Stipulation and Proposed Order (Dkt. No. 6636) regarding the time period during which the
Definitive Class Settlement may be terminated. Under the Stipulation and Proposed Order the
parties agreed the time period under which the Agreement may be terminated should be modified to
extend to and include September 30, 2016. On July 19, 2016 the Court so ordered, the Stipulation
without prejudice to the right of any party to lodge an objection to the stipulated relief at the
conference scheduled for August 11, 2016. To date, no party has lodged an objection to the
stipulated relief.
Pursuant to that Stipulation the parties agreed that pending any termination of the Definitive
Class Settlement Agreement, the Escrow Agent should continue to administer, maintain, and invest
the Class Settlement Cash Escrow Account(s) as provided in the Class Settlement Cash Escrow
Agreement (Appendix B to the Definitive Class Settlement Agreement), and the Escrow Agent
should continue to administer, maintain, and invest the Class Settlement Interchange Escrow
Account(s) as provided in the Class Settlement Interchange Escrow Agreement. There are two Class
Settlement Interchange Escrow Account(s). The Class Settlement Cash Escrow Account fund
consists of $4,520,181,459.42 as of July 31, 2016. The other Class Settlement Interchange Escrow
Account consists of the Default Interchange Payments made pursuant to the Definitive Settlement
Agreement. See attached Exhibit 3 (Definitive Settlement Agreement), 11-13. That account, as of
July 31, 2016, has funds of $772,960,573.01.
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Class Plaintiffs provide the above to the Court for informational purposes.
VI.

THIRD-PARTY CLAIMS FILERS


Following preliminary approval of the settlement in 2012, a number of third party claims

filing companies sought to offer various settlement-related services to class members. A significant
amount of satellite litigation occurred regarding these third parties, including several evidentiary
hearings. To protect class members from being misled by certain companies, the Court ordered on
December 20, 2013 that certain language accompany solicitations for settlement-related services
being offered by third parties. See Dkt. No. 6137; see also Dkt. No. 6141 (December 30, 2013
Order).21 The Court also issued an Order on October 3, 2014 detailing the history of required
disclaimers and enjoining a claims filing entity. See Dkt. No. 6349 at 27-34 (detailing the steps the
Court has taken to protect class members). Class Counsel has worked with the more than 50
companies it is aware of that offer such services and has submitted reports to the Court regarding
these entities every six months, with the last report being submitted in April.
A.

Class Plaintiffs Position

Because of the Second Circuits decision, Class Counsel proposes that the required language
be altered and that the entities offering services be contacted and told to update their required
disclosures. Class Counsel proposes the required disclaimers be altered as follows:
Prior language:
Claim forms are not yet available from the Class Administrator. When claim
forms do become available, class members are not required to sign up with any thirdparty service in order to participate in the monetary relief, but may instead file their
claim directly with the Class Administrator. The claim form will inform most class
members of their actual or estimated interchange fees on which it is proposed their
claims will be paid. You may accept or dispute this estimate with the opportunity to
submit additional information. No-cost assistance will be available from the Class
21

The steps required by the Court were memorialized in the Courts January 13, 2014 Order. Dkt.
No. 6193 at 1-2.
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Administrator and Class Counsel during the claims-filing period. For additional
information, class members may visit www.paymentcardsettlement.com, the Courtapproved website for this case.
New language:
The Second Circuit Court of Appeals reversed approval of the settlement and
returned the case to the District Court on June 30, 2016. Therefore, no claim forms
are available at this time, and no claim-filing deadline has been set. If another
settlement is reached, no-cost assistance will be available from the Class
Administrator and Class Counsel during the claims-filing period. Class members are
not required to sign up with any third-party service in order to participate any
settlement.
For additional information, class members may visit
www.paymentcardsettlement.com, the Court-approved website for this case.
Additionally, Class Plaintiffs suggest that it contact known third parties to ensure those
businesses alert their clients who have previously signed up for claims-filing about the Second
Circuits decision. Class Plaintiffs suggest it develop a notice with the input from third parties and
present the notice to the Court for approval.
B.

Defendants Position

Defendants agree that Court-ordered disclosures by claims-filing companies should be


updated to accurately reflect the status of the settlement.
DATED: August 2, 2016

Submitted on behalf of all Parties

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EXHIBIT 1

Case Case
1:05-md-01720-MKB-JO
1:05-md-01720-JG-JO
Document
Document
6638-1
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of 121PageID
of 3
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UNITED STATES DISTRICT COURT


EASTERN DISTRICT OF NEW YORK
----------------------------------------------------------X
IN RE PAYMENT CARD
INTERCHANGE FEE AND
MERCHANT DISCOUNT
ANTITRUST LITIGATION

ORDER
MDL 05-1720 (JG) (JO)

This document refers to: ALL ACTIONS


----------------------------------------------------------X

PRETRIAL ORDER 5
I.

Designation of Counsel
A.

Co-Lead Plaintiffs' Counsel

For the reasons set forth in a Memorandum and Order dated February 24, 2006, docket
entry 278, I appoint the following three law firms as co-lead counsel for the class plaintiffs:
Robins, Kaplan, Miller & Ciresi L.L.P.; Berger & Montague, P.C.; and Lerach, Coughlin, Stoia,
Geller, Rudman & Robbins, L.L.P. Co-lead counsel shall generally be responsible for
coordinating the activities of class plaintiffs during pretrial proceedings and shall:
Determine (after consultation with co-plaintiffs' counsel) and present (in briefs,
oral argument, or such other fashion as may be appropriate) and present (in briefs,
oral argument, or such other fashion as may be appropriate, personally or by a
designee) to the court and opposing parties the position of the class plaintiffs on
all matters arising during pretrial proceedings;
Coordinate the initiation and conduct of discovery on behalf of class plaintiffs'
consistent with the requirements of Fed. R. Civ. P. 26(b)(1), 26(2), and 26(g),
including the preparation of joint interrogatories and requests for production of
documents and the examination of witnesses in depositions;
Conduct settlement negotiations on behalf of class plaintiffs, but not enter into
binding agreements except to the extent expressly authorized;

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Delegate specific tasks to other counsel or committees of counsel in a manner to


ensure that pretrial preparation for the class plaintiffs is conducted efficiently and
effectively;
Enter into stipulations with opposing counsel as necessary for the conduct of the
litigation;
Prepare and distribute periodic status reports to the parties;
Maintain adequate time and disbursement records covering services as lead
counsel;
Monitor the activities of co-counsel to ensure that schedules are met and
unnecessary expenditures of time and funds are avoided; and
Perform such other duties as may be incidental to proper coordination of class
plaintiffs' pretrial activities or authorized by further order of the court.
This order does not limit the right of other counsel for class plaintiffs to be heard on
matters not susceptible to joint or common action, or when genuine and substantial divergence of
opinion exists among counsel. However, the parties and their counsel are encouraged to avoid
presentations of cumulative views, or submissions that differ from those of co-lead counsel in
only minor ways.
B.

Liaison Counsel
1.

Class Plaintiffs

I appoint the law firm Pomerantz, Haudek, Block, Grossman & Gross L.L.P. as liaison
counsel for the class plaintiffs. The class plaintiffs' liaison counsel shall be responsible for
facilitating and expediting communications with and among co-lead plaintiffs' counsel.
2.

Non-Class Plaintiffs

I appoint the law firm Kenny Nachwalter, P.A., as liaison counsel for the non-class
plaintiffs in MDL 1720. Liaison counsel for the non-class plaintiffs shall generally be
2

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responsible for coordinating and organizing the non-class plaintiffs in the conduct of the
litigation.
II.

Submission Of Time Records


All class plaintiffs' counsel in the class action cases shall submit on a periodic basis a

record of the time expended on these matters, in a manner set forth by co-lead counsel.
III.

Status Conferences And Status Reports


As discussed at the initial conference on January 12, 2006, I will conduct bi-monthly

status conferences with representatives of parties to this action. Absent a court order or
agreement among plaintiffs' counsel to the contrary, all co-lead and liaison counsel for the
plaintiffs shall participate in these status conferences. The first status conference will occur on
March 8, 2006, at 9:30 a.m. This conference will take place in the Brooklyn courthouse in
courtroom 5.
Prior to each scheduled status conference, the parties's counsel are directed to meet and
confer and file a joint report on the progress of the case, any disputes requiring court
intervention, and other issues to be discussed at the conference. The status report shall be
submitted at least one week prior to the scheduled conference. If warranted, I will entertain a
timely application to cancel or adjourn any such conference.
SO ORDERED.
Dated: Central Islip, New York
February 24, 2006
/s/ James Orenstein
JAMES ORENSTEIN
U.S. Magistrate Judge

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EXHIBIT 2

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88995
In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation,
Case No. 1:05-MD-01720(MKB)(JO)
Motions Pending as of Preliminary Approval
No.
1.
2.
3.
4.
5.
6.
7.
8.

9.
10.

11.

12.

13.
14.

15.
16.

PLEADING
Memorandum of Law in Support of Class Plaintiffs Motion for Class
Certification
Memorandum of Law in Support of Motion to Dismiss the
First Amended Supplemental Class Action Complaint
Memorandum of Law is Support of Motion to Dismiss Second
Consolidated Amended Class Action Complaint
Memorandum of Law in Support of Motion to Dismiss the
Second Supplemental Class Action Complaint
Memorandum of Law in Support of Chase Paymentech Solutions. LLCs
Motion to Strike
Memorandum of Law in Support of Defendants Motion to Exclude
Opinions of Dr. Gustavo Bamberger
Letter Motion to Compel the Production of Evidence that has been
Withheld Under a Claim of Privilege
Letter Motion to seek entry of a scheduling order to govern the timing of
disclosures and expert discovery regarding equitable relief sought by
plaintiffs in MDL 1720
Class Plaintiffs Memorandum of Law In Support of Their Motion for
Summary Judgment
Memorandum Of Law In Support Of Defendants
Motion For Summary Judgment On Class Plaintiffs
IPO, Post-IPO Conspiracy, And Fraudulent Conveyance Claims, And
Individual Plaintiffs Post-IPO Conspiracy Claims
Defendants Memorandum of Law in Support Of The Motion
For Summary Judgment As To The Claims In The
Second Consolidated Amended Class Action Complaint
Defendants Memorandum of Law in Support of the Motion to Exclude
Certain Opinions of Class Plaintiffs Economic Expert Dr. Alan S.
Frankel
Memorandum of Law in Support of the MasterCard and Bank
Defendants Motion to Exclude Testimony of Kevin F. Henry
Memorandum of Law in Support of the Network Defendants
Motion to Exclude the Opinions of Individual Plaintiffs Expert Professor
Dan Ariely
Memorandum of Law in Support of the Visa and MasterCard
Defendants Motion to Exclude the Opinion of Dr. Joseph Stiglitz
Memorandum of Law in Support of Defendants Motion to Exclude the

OPENING
2008/05/08

OPP
2008/10/06

REPLY
2009/01/29

SUR-REPLY
2009/06/25

2009/03/31

2009/06/02

2009/07/02

n/a

2009/03/31

2009/06/02

2009/07/02

n/a

2009/03/31

2009/06/02

2009/07/02

n/a

2009/03/31

2009/06/02

2009/07/02

n/a

2009/06/05

2009/07/10

2009/08/03

n/a

2009/07/28

2009/07/31

n/a

n/a

2011/05/12

2011/05/17

n/a

n/a

2011/02/11

2011/05/06

2011/06/30

n/a

2011/02/11

2011/05/13

2011/06/30

n/a

2011/02/11

2011/05/13

2011/06/30

n/a

2011/02/11

2011/05/06

2011/06/30

n/a

2011/02/11

2011/05/06

2011/06/30

n/a

2011/02/11

2011/05/06

2011/06/30

n/a

2011/02/11

2011/05/06

2011/06/30

n/a

2011/02/11

2011/05/06

2011/06/30

n/a

Case 1:05-md-01720-MKB-JO Document 6638-1 Filed 08/02/16 Page 7 of 12 PageID #:


88996

No.

PLEADING
Opinions of Victor Fleischer
17. Memorandum of Law in Support of the Network Defendants
Motion to Exclude the Damages Opinion of Dr. Christopher A. Vellturo
18. Class Plaintiffs Motion to Exclude the Expert Testimony of
J.T. Atkins
19. Memorandum of Law in Support of Joint Motion of Class Plaintiffs and
Individual Plaintiffs to Exclude The Expert Testimony of Professor
Kevin M. Murphy

OPENING

OPP

REPLY

SUR-REPLY

2011/02/11

2011/05/06

2011/06/30

n/a

2011/02/11

2011/05/06

2011/06/29

n/a

2011/02/11

2011/05/06

2011/06/30

n/a

Case 1:05-md-01720-MKB-JO Document 6638-1 Filed 08/02/16 Page 8 of 12 PageID #:


88997

EXHIBIT 3

Case
Case 1:05-md-01720-MKB-JO
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Document1656-1
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PageID #:
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88998

UNITED STATES DISTRICT COURT


EASTERN DISTRICT OF NEW YORK
IN RE PAYMENT CARD
INTERCHANGE FEE AND MERCHANT
DISCOUNT ANTITRUST LITIGATION

No. 05-MD-1720 (JG) (JO)

This Document Applies to: All Cases.

DEFINITIVE CLASS SETTLEMENT AGREEMENT

Case
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10.

Within ten business days after the Settlement Preliminary Approval Date, (a) the

Visa Defendants shall pay by wire transfer into the Class Settlement Cash Escrow Account(s),
from the litigation escrow account established under the Visa Defendants Retrospective
Responsibility Plan, two-thirds of $6,050,000,000 (i.e., $4,033,333,333), and (b) the MasterCard
Defendants and Bank Defendants shall pay by wire transfer into the Class Settlement Cash
Escrow Account(s) a total of one-third of $6,050,000,000 (i.e., $2,016,666,667) in accordance
with the agreement among themselves regarding their respective shares.
11.

If this Class Settlement Agreement is not terminated prior to the commencement

of the eight-month period described in Paragraphs 12 and 13 below, the Visa Defendants and the
MasterCard Defendants each shall make a Default Interchange Payment by wire transfer into the
Class Settlement Interchange Escrow Account(s). Those Default Interchange Payments shall be
made within sixty days after the completion of the eight-month period described in
Paragraphs 12 and 13 below in the event that this Class Settlement Agreement is not terminated
during the eight-month period. If this Class Settlement Agreement terminates during the eightmonth period described in Paragraphs 12 and 13 below, within sixty days of such termination,
the Visa Defendants and the MasterCard Defendants each shall make their respective Default
Interchange Payment based only on the portion of the eight-month period that preceded the date
of termination. In the event of a termination of this Class Settlement Agreement after the
commencement of the eight-month period described in Paragraphs 12 and 13 below, any Default
Interchange Payments made to the Class Settlement Interchange Escrow Account(s) by the Visa
Defendants and the MasterCard Defendants shall be distributed in a manner determined by the
Court, if the parties do not enter into a new Class Settlement Agreement addressing such
distribution, and in no event shall those Default Interchange Payments revert to the Visa
Defendants or MasterCard Defendants or be distributed to Bank Defendants.

21

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12.

The Default Interchange Payment of the Visa Defendants shall be calculated as

follows. Within sixty days after the end of the Class Exclusion Period, the Visa Defendants shall
reduce the default interchange rates in the manner provided in this Paragraph on United States
acquired and issued Visa-Branded Credit Card transactions for a period of eight months (i.e.,
terminating on the same date of the month as the period commenced eight months earlier or, if
no such date exists, the first day of the following month) unless this Class Settlement Agreement
is earlier terminated. That reduction shall be effected by the Visa Defendants withholding or
adjusting 10 basis points from the default interchange amounts that otherwise would be provided
to issuers on transactions to which default interchange rates apply. The default interchange thus
withheld or adjusted that is attributable to transactions of members of the Rule 23(b)(3)
Settlement Class, exclusive of the transactions of the Individual Plaintiffs and Opt Outs, and
prior to the date of any termination of this Class Settlement Agreement during the eight-month
period described in this Paragraph, shall constitute the Default Interchange Payment of the Visa
Defendants. The Visa Defendants shall identify and provide Class Counsel and the Class
Administrator with data used to calculate, and sufficient to analyze and evaluate, that Default
Interchange Payment. During the time period of the interchange reduction provided in this
Paragraph, the Visa Defendants may not use their network fees to circumvent or evade the
reduction in default interchange rates for Visa-Branded Credit Card transactions. For purposes
of clarity, no modification need be made to any Visa-Branded Debit Card default interchange
rates or deposits into issuer accounts, and the Visa Defendants shall not be required to modify
their default interchange rates in any manner not provided in this Paragraph.
13.

The Default Interchange Payment of the MasterCard Defendants shall be

calculated as follows. Within sixty days after the end of the Class Exclusion Period, the
MasterCard Defendants shall reduce the default interchange rates in the manner provided in this

22

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Paragraph on United States acquired and issued MasterCard-Branded Credit Card transactions
for a period of eight months (i.e., terminating on the same day of the month as the period
commenced eight months earlier, or if no such date exists, the first day of the following month)
unless this Class Settlement Agreement is earlier terminated. That reduction shall be effected by
the MasterCard Defendants withholding or adjusting 10 basis points from the default interchange
amounts that otherwise would be provided to issuers on transactions to which default interchange
rates apply. The default interchange thus withheld or adjusted that is attributable to transactions
of members of the Rule 23(b)(3) Settlement Class, exclusive of the transactions of the Individual
Plaintiffs and Opt Outs, and prior to the date of any termination of this Class Settlement
Agreement during the eight-month period described in this Paragraph, shall constitute the
Default Interchange Payment of the MasterCard Defendants. The MasterCard Defendants shall
identify and provide Class Counsel and the Class Administrator with data used to calculate, and
sufficient to analyze and evaluate, that Default Interchange Payment. During the time period of
the interchange reduction provided in this Paragraph, the MasterCard Defendants may not use
their network fees to circumvent or evade the reduction in default interchange rates for
MasterCard-Branded Credit Card transactions. For purposes of clarity, no modification need be
made to any MasterCard-Branded Debit Card default interchange rates or deposits into issuer
accounts, and the MasterCard Defendants shall not be required to modify their default
interchange rates in any manner not provided in this Paragraph.
14.

Class Plaintiffs reserve their rights to seek appropriate relief from the Court in the

event the payments described in Paragraphs 9-13 above are not timely made, including but not
limited to relief consisting of immediate payment, interest, and penalties.
15.

The payments described in Paragraphs 9-13 above shall exhaust and fully satisfy

any and all payment obligations under this Class Settlement Agreement of the Defendants and

23