Visa 2015 Annual Report Download - page 135

VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2015
U.S. Covered Litigation
Visa Inc., Visa U.S.A. and Visa International are parties to certain legal proceedings that are
covered by the U.S. retrospective responsibility plan, which the Company refers to as the U.S. covered
litigation. See Note 3—U.S. Retrospective Responsibility Plan and Potential Visa Europe Liabilities. An
accrual for the U.S. covered litigation and a charge to the litigation provision are recorded when loss is
deemed to be probable and reasonably estimable. In making this determination, the Company
evaluates available information, including but not limited to actions taken by the litigation committee.
The total accrual related to the U.S. covered litigation could be either higher or lower than the escrow
account balance. The following table summarizes the activity related to U.S. covered litigation.
Fiscal 2015 Fiscal 2014
(in millions)
Balance at October 1 ............................................ $ 1,449 $—
Reestablishment of obligation related to interchange multidistrict
litigation ...................................................... —1,056
Additional provision for interchange opt-out litigation .................. —450
Payments on covered litigation ................................... (426) (57)
Balance at September 30 ......................................... $ 1,023 $ 1,449
On January 14, 2014, the MDL 1720 court entered the final judgment order approving the
settlement with the class plaintiffs in the interchange multidistrict litigation proceedings, which is subject
to the adjudication of any appeals. Following the payment of approximately $4.0 billion from the
litigation escrow account into settlement funds pursuant to the class settlement agreement, on
January 27, 2014, Visa received and deposited into the Company’s litigation escrow account
“takedown payments” of approximately $1.1 billion, which Visa was entitled to receive under the class
settlement agreement based on payment card sales volume attributable to merchants who opted out.
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. An additional accrual of $450 million
associated with these opt-out claims was recorded in the fourth quarter of fiscal 2014. Payments
totaling $57 million and $426 million were made in fiscal 2014 and 2015, respectively, from the
litigation escrow account reflecting settlements with a number of individual opt-out merchants, resulting
in an accrued balance of $1.0 billion related to U.S.covered litigation as of September 30, 2015. See
further discussion below under Interchange Opt-out Litigation and Note 3—U.S. Retrospective
Responsibility Plan and Potential Visa Europe Liabilities.
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
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