In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation
1:05-md-01720
E.D.N.YJun 3, 2024Background
- This case arises from the Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, consolidated in the Eastern District of New York, involving antitrust claims against Visa, Mastercard, and certain banks, and centering on merchant fees for card acceptance.
- The court previously certified a class (Rule 23(b)(3)) and approved a settlement resolving claims for all persons or entities that "accepted" Visa or Mastercard cards in the U.S. from January 1, 2004 to January 24, 2010.
- Square (now Block, Inc.) and Intuit, as payment facilitators, processed card transactions for merchants but argue that they – not their merchant customers ("Sellers") – "accepted" payment cards for purposes of class membership under the settlement.
- Defendants sought to enforce the settlement agreement to bar opt-out claims by Square and Intuit, arguing the actual "acceptance" of cards occurred at the merchant level; cross-motions were filed by Square, Intuit, and individual merchants (Lanning Plaintiffs).
- The main interpretive dispute centered on the contractual language of "accepted" as used in the settlement, with parties disputing whether payment facilitators or the end merchants are entitled to participate and recover under the class settlement.
- The court concluded on the basis of the agreement text, antitrust standing rules, industry rules, and record evidence that only the sellers (merchants) "accepted" payment cards and thus are settlement class members.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Square/Intuit are members of the settlement class | Square/Intuit claim they “accepted” cards and are covered | Only merchants are covered; facilitators are agents | Not members; merchants are class members |
| Ambiguity of "accepted" in settlement | Square: Term supports inclusion of facilitators | Defendants: Ambiguous, but must follow antitrust standards | Ambiguous; resolved using extrinsic evidence and antitrust law |
| Application of federal antitrust “direct purchaser” doctrine | Square/Intuit claim they are direct purchasers (standing) | Defendants: Only merchants/Sellers are direct purchasers | Sellers are direct purchasers, eligible for recovery |
| Lanning Plaintiffs’ status as class members | Lanning Plaintiffs claim they are not class members | Defendants: They are, as merchants accepting cards | Denied; they are settlement class members |
Key Cases Cited
- Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977) (establishes that only direct purchasers may bring federal antitrust claims)
- Apple Inc. v. Pepper, 139 S. Ct. 1514 (2019) (reaffirms the Illinois Brick direct purchaser rule for standing in federal antitrust cases)
- Fikes Wholesale, Inc. v. HSBC Bank USA, N.A., 62 F.4th 704 (2d Cir. 2023) (confirms ascertainability and interpretation of settlement class in this litigation)