Nine companies including Federal Express Co., which had opted out of an earlier $7.25 billion settlement with Visa Inc. and Mastercard Inc., have now agreed to a settlement that resolved their claims in multidistrict litigation (MDL) in New York that accused the credit card companies of fixing the price of swipe fees. A diverse array of companies — FedEx, Hawaiian Holdings Inc., JetBlue Airways Co., DSW Inc., Southwest Airlines Co., Alaska Air Group Inc., Progressive Casualty Insurance Co., Carnival Corp. and O’Reilly Automotive Stores Inc. — filed a stipulation and order of dismissal of all claims against Visa and Mastercard in the MDL, in which the card companies are accused of artificially inflating card-swipe fees paid by merchants. The details of the settlement were not disclosed.
This is just the latest turn of events in the MDL, in which Plaintiffs reached a landmark settlement of $7.25 billion over the alleged conspiracy involving interchange fees charged by the credit card giants. Since the court approved the settlement a year ago, the MDL has spawned several litigation branches.
U.S. District Judge John Gleeson signed off on the settlement — believed to be the largest antitrust deal in history — in December 2013 over objections from thousands of retailers and other companies, including 10 of the 19 named Plaintiffs. Among the class members’ concerns was that the deal failed to address the credit card companies’ dominant hold on the industry. K. Craig Wildfang, a lawyer with Robins Kaplan Miller & Ciresi, led the case for the class Plaintiffs as co-lead counsel.
In June, the class members took their concerns about the settlement to the Second Circuit, where their appeal is currently pending. Scores of objectors, including American Express and Blue Cross Blue Shield, as well as hundreds of retailers including Home Depot, Amazon and Whole Foods, claim the deal paled in comparison to the amount the credit card giants would rake in from their allegedly anti-competitive merchant rules and fees.
Following the settlement, several companies struck out on their own in order to achieve their own compacts with Visa and MasterCard. In November, T-Mobile USA Inc., Metro PCS Wireless Inc., VoiceStream Wireless Corp. and Western PCS Corp. all settled for an undisclosed amount. The cellphone companies’ settlements came about two weeks after several companies, including Duke Energy and Orbitz, opted to settle with Visa and MasterCard as well. Other recent settlements in the case include those with companies such as Cox Communications, Live Nation Entertainment Inc., Hewlett Packard Co. and Delta Air Lines Inc.
The MDL kicked off in 2005 with an initial case that accused the credit card giants and the banks that founded them of conspiring to artificially inflate interchange fees. In 2012, by the time the parties reached the landmark settlement, the case’s focus had been narrowed down to the companies’ restrictions on merchants that accept their cards and the practice of setting interchange fees, which merchants pay to be able to accept credit or debit cards.
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