Visa 2012 Annual Report Download - page 107

Table of Contents VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2012
billion , of which $1.74 billion was paid over four quarters from the escrow account established by the retrospective responsibility
plan. Visa Inc. also paid $80 million toward Visa's share in connection with releases obtained from MasterCard with respect to
certain potential claims. Visa Inc. also paid an additional $65 million , which was refunded by Morgan Stanley, under a separate
agreement related to the settlement. Visa's settlement obligations were fully satisfied with the September 2009 payment to
Discover.
The American Express Litigation. On November 15, 2004, American Express filed a complaint against Visa U.S.A., Visa
International, MasterCard and several Visa U.S.A. and Visa International member financial institutions in the U.S. District Court for
the Southern District of New York. The complaint alleged that the implementation and enforcement of Visa U.S.A.'s bylaw 2.10(e)
and MasterCard's CPP violated Sections 1 and 2 of the Sherman Act, and sought money damages (subject to trebling) and
attorneys' fees and costs.
Visa Inc., Visa U.S.A. and Visa International entered into a settlement agreement with American Express that became
effective on November 9, 2007. Under the settlement agreement, American Express received payments of $2.25 billion , including
$2.07 billion from Visa Inc. and $185 million from five co-defendant banks. An initial payment of $1.13 billion was made on
March 31, 2008, including $945 million funded through the litigation escrow account established under the retrospective
responsibility plan and $185 million from the five co-defendant banks. Beginning April 2008, Visa Inc. paid American Express an
additional amount of $70 million each quarter for 16 quarters, for a total of $1.12 billion . Visa's settlement obligations were fully
satisfied with the January 2012 payment to American Express. The quarterly settlement payments were also covered by the
retrospective responsibility plan. The total settlement was recorded in fiscal 2007 at a discounted value of $1.9 billion
using a rate of
4.72% over the payment term.
The Attridge Litigation. On December 8, 2004, a complaint was filed in California state court on behalf of an alleged class of
consumers asserting claims against Visa U.S.A., Visa International and MasterCard under California's Cartwright Act and Unfair
Competition Law. The claims in this action, Attridge v. Visa U.S.A. Inc., et al
., seek to piggyback on the portion of the DOJ litigation
in which the U.S. District Court for the Southern District of New York found that Visa's bylaw 2.10(e) and MasterCard's CPP
constitute unlawful restraints of trade under the federal antitrust laws. On May 19, 2006, the court entered an order dismissing
plaintiff's Cartwright Act claims with prejudice but allowing the plaintiff to proceed with his Unfair Competition Law claims, which
seek restitution, injunctive relief, and attorneys' fees and costs. On December 14, 2007, the plaintiff amended his complaint to add
Visa Inc. as a defendant. No new claims were added to the complaint.
On July 1, 2009, the court denied in part the Defendants' Motion for Summary Judgment or Summary Adjudication, but
ordered the parties to submit affidavits as to whether further discovery should be conducted prior to the court rendering judgment
on the Motion for Summary Adjudication. On August 3, 2009, the court ruled the Motion submitted without any such further
discovery.
In the separate “Indirect Purchaser” Credit/Debit Card Tying Cases, also pending in California state court, Visa entered into a
settlement agreement on September 14, 2009 which potentially could have had the effect of releasing the claims asserted in the
Attridge
case, subject to the ruling of the Attridge court. On September 24, 2009, the Attridge court deferred its decision on the
Motion for Summary Adjudication pending court approval of the settlement in the Credit/Debit Card Tying Cases . On August 23,
2010, final approval of the Credit/Debit Card Tying Cases settlement was granted. The plaintiff in Attridge and others appealed the
final approval order. On February 15, 2011, the court ordered that the Attridge case be stayed until 30 days following the final
resolution of the appeals in the Credit/Debit Card Tying Cases
. On January 9, 2012, the appeals court reversed the approval of the
Credit/Debit Card Tying Cases settlement, and the case was remanded to the trial court for consideration of the fairness and
adequacy of the settlement in light of the inclusion of the Attridge claims in the release. Attridge filed a motion to disqualify the trial
judge in the
Credit/Debit Card Tying Cases , which was granted. On June 4, 2012, the Credit/Debit Card Tying Cases were
reassigned to the Honorable John E. Munter, the same judge in the Attridge case. On July 17, 2012, the Attridge case was stayed
until January 16, 2013.
The Interchange Litigation
Multidistrict Litigation Proceedings (MDL). Beginning in May 2005, approximately 55 complaints, all but 13 of which were
styled as class actions, have been filed in U.S. federal district courts on behalf of merchants against Visa U.S.A. and/or
MasterCard, and in some cases, certain Visa member financial institutions. Visa International
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