MasterCard 2010 Annual Report Download - page 138

MASTERCARD INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—continued
in its entirety, or alternatively, to narrow the claims in the complaint. The parties have fully briefed the motion
and the court heard oral argument on the motion in November 2009. The parties are awaiting decisions on the
motions.
In July 2006, the group of purported class plaintiffs filed a supplemental complaint alleging that
MasterCard’s initial public offering of its Class A Common Stock in May 2006 (the “IPO”) and certain purported
agreements entered into between MasterCard and its member financial institutions in connection with the IPO:
(1) violate Section 7 of the Clayton Act because their effect allegedly may be to substantially lessen competition,
(2) violate Section 1 of the Sherman Act because they allegedly constitute an unlawful combination in restraint
of trade and (3) constitute a fraudulent conveyance because the member banks are allegedly attempting to release
without adequate consideration from the member banks MasterCard’s right to assess the member banks for
MasterCard’s litigation liabilities in these interchange-related litigations and in other antitrust litigations pending
against it. The plaintiffs seek unspecified damages and an order reversing and unwinding the IPO. In September
2006, MasterCard moved to dismiss all of the claims contained in the supplemental complaint. In November
2008, the district court granted MasterCard’s motion to dismiss the plaintiffs’ supplemental complaint in its
entirety with leave to file an amended complaint. In January 2009, the class plaintiffs repled their complaint
directed at MasterCard’s IPO by filing a First Amended Supplemental Class Action Complaint. The causes of
action in the complaint generally mirror those in the plaintiffs’ original IPO-related complaint although the
plaintiffs have attempted to expand their factual allegations based upon discovery that has been garnered in the
case. The class plaintiffs seek treble damages and injunctive relief including, but not limited to, an order
reversing and unwinding the IPO. In March 2009, MasterCard filed a motion to dismiss the First Amended
Supplemental Class Action Complaint in its entirety. The parties have fully briefed the motion to dismiss and the
court heard oral argument on the motion in November 2009. The parties are awaiting a decision on the motion. In
July 2009, the class plaintiffs and individual plaintiffs served confidential expert reports detailing the plaintiffs’
theories of liability and alleging damages in the tens of billions of dollars. The defendants served their expert
reports in December 2009 countering the plaintiffs’ assertions of liability and damages. In February 2011, both
the defendants and the plaintiffs served a number of dispositive motions seeking summary judgment on all or
portions of the claims in the complaints. Briefing on these motions is scheduled to be completed in June 2011.
No trial date has been scheduled, however, the court has asked the parties to consider a trial date of
September 12, 2012. The parties have also entered into court-recommended mediation and anticipate scheduling
a number of mediation sessions in the coming months. It is not possible to predict whether the mediation will be
successful or not.
On February 7, 2011, MasterCard and MasterCard International Incorporated entered into each of: (1) an
omnibus judgment sharing and settlement sharing agreement with Visa Inc., Visa U.S.A. Inc. and Visa
International Service Association and a number of member banks; and (2) a MasterCard settlement and judgment
sharing agreement with a number of member banks. The agreements provide for the apportionment of certain
costs and liabilities which MasterCard, the Visa parties and the member banks may incur, jointly and/or
severally, in the event of an adverse judgment or settlement of one or all of the cases in the interchange merchant
litigations. Among a number of scenarios addressed by the agreements, in the event of a global settlement
involving the Visa parties, the member banks and MasterCard, MasterCard would pay 12% of the monetary
portion of the settlement. In the event of a settlement involving only MasterCard and the member banks with
respect to their issuance of MasterCard cards, MasterCard would pay 36% of the monetary portion of such
settlement.
In October 2008, the Antitrust Division of the DOJ issued a civil investigative demand to MasterCard and
other payment industry participants seeking information regarding certain rules relating to merchant point of
acceptance rules. Subsequently, MasterCard received requests for similar information from ten State Attorneys
General. On October 1, 2010, MasterCard, the DOJ and seven of the State Attorneys General executed a
stipulation and proposed final judgment, subject to court review and approval, pursuant to which MasterCard
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