Visa 2014 Annual Report Download - page 137

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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2014
into the Company’s litigation escrow account. The deposit into the litigation escrow account and a
related increase in accrued litigation to address opt-out claims were recorded in the second quarter of
fiscal 2014. In the fourth quarter of fiscal 2014, an additional accrual of $450 million associated with
these opt-out claims was recorded and payments totaling $57 million were made from the litigation
escrow account reflecting settlements with a number of individual opt-out merchants, resulting in an
accrued balance of $1.4 billion related to covered litigation as of September 30, 2014. See further
discussion below under Interchange Opt-out Litigation and Note 3—Retrospective Responsibility Plan.
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. Visa Inc. was later
added as a defendant. The remaining claims in this action, Attridge v. Visa U.S.A. Inc., et al., allege that
Visa’s bylaw 2.10(e) and MasterCard’s Competitive Programs Policy, which prohibited their respective
members from issuing American Express or Discover cards, constitute unlawful restraints of trade under
California’s Unfair Competition Law, and seek restitution, injunctive relief, and attorneys’ fees and costs.
In the separate “Indirect Purchaser” Credit/Debit Card Tying Cases, also pending in California
state court (see below), an appeals court reversed the trial court’s approval of a settlement agreement,
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. The trial court subsequently
granted final approval of a revised written settlement agreement. Objectors filed notices of appeal in
the Credit/Debit Card Tying Cases and the Attridge case. An appeals court affirmed the judgment
approving the revised written settlement agreement. Certain objectors filed petitions for rehearing. The
Attridge case has been stayed pending final resolution of those appeals.
Interchange Multidistrict Litigation (MDL)
Beginning in May 2005, a series of complaints (the majority of which were styled as class actions)
were filed in U.S. federal district courts by merchants against Visa U.S.A., Visa International and/or
MasterCard, and in some cases, certain Visa member financial institutions. The complaints challenged,
among other things, Visa’s and MasterCard’s purported setting of interchange reimbursement fees,
their “no surcharge” rules, and alleged tying and bundling of transaction fees under the federal antitrust
laws, and, in some cases, certain state unfair competition laws. The Judicial Panel on Multidistrict
Litigation issued an order transferring the cases to the U.S. District Court for the Eastern District of
New York for coordination of pre-trial proceedings in MDL 1720. A group of purported class plaintiffs
subsequently filed a Second Consolidated Amended Class Action Complaint which, together with the
complaints brought by individual merchants, sought money damages alleged to range in the tens of
billions of dollars (subject to trebling), as well as attorneys’ fees and injunctive relief. The class plaintiffs
also filed a Second Supplemental Class Action Complaint against Visa Inc. and certain member
financial institutions challenging Visa’s reorganization and IPO under the antitrust laws and seeking
unspecified money damages and declaratory and injunctive relief, including an order that the IPO be
unwound.
The Company and the individual merchants whose claims were consolidated with the MDL (the
“Individual Plaintiffs”) signed a settlement agreement to resolve the Individual Plaintiffs’ claims against
the Company for approximately $350 million. This payment was made from the litigation escrow
account on October 29, 2012, and the court has dismissed those claims with prejudice.
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