NEW YORK (Legal Newsline) —The largest antitrust class action settlement in history was recently put to a halt by the U.S. Court of Appeals for the Second Circuit.
The $7.25 billion proposed settlement includes a group of merchants challenging the fees and regulations of Visa and Mastercard. The plaintiffs claim the defendants have fixed the fees that merchants were charged every time a customer used their cards and that the credit card companies also made it difficult or impossible for customers to use a cheaper form of payment.
The lawsuit had originally acquired approval as-is, but was just reversed by the Second Circuit due to the imbalanced relief two separate groups within the class members would receive.
Those who had accepted the cards before Nov. 28, 2012, would be receiving monetary relief, while those who accepted Mastercard and Visa afterwards would only receive injunctive relief that requires the company to discontinue the infractions.
The Second Circuit determined that representation of the two groups should have been approached in a different way and that the second group — those that only received injunctive relief — received a bad deal.
“The two sides were represented by the same lawyer and should have had two different counsels,” Wystan Ackerman, partner at Robinson+Cole, told Legal Newsline. “[The result of the court ruling] did not seem surprising to me, from the way the opinion was written."
Finding the appropriate relief for both plaintiff groups was difficult because of the different infraction periods and types. During negotiations, the defense has to work to find the best settlement for the defendants while also considering the plaintiffs' side and any specific representation requirements.
Ultimately, after attempting to find a settlement that more or less "met in the middle" for the defendants and the plaintiff, the group that received the monetary relief received the better end of the deal at the expense of the other group, it was determined.
The court’s statement following the reversal indicated as such, as it stated that “[u]nitary representation of separate classes that claim distinct, competing, and conflicting relief create unacceptable incentives for counsel to trade benefits to one class for benefits to the other in order somehow to reach a settlement.”
In order to properly move forward, the class members will have to acquire relief through separation into and representation as two distinct groups.
“[The plaintiff] will need to come to the renegotiated settlement with different counsels. The District Court will then renegotiate and apply for a new approval,” Ackerman said.
What group will keep the current plaintiff lawyers, who will need to acquire new lawyers and when the lawsuit will move forward is yet to be determined.