Visa 2015 Annual Report Download - page 31

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shares of class A common stock (or deposits of cash into the escrow account in lieu of such offerings).
They also include a loss sharing agreement, a judgment sharing agreement and an omnibus
agreement, as amended. In addition, our U.S. financial institution clients are obligated to indemnify us
pursuant to Visa U.S.A. Inc.’s certificate of incorporation and bylaws and in accordance with their
membership agreements. These mechanisms are unique, complicated and tiered, and if we cannot
use one or more of them, this could have a material adverse effect on our financial condition and cash
flows, or even cause us to become insolvent.
The principal remaining U.S. covered litigation involves interchange reimbursement rates. See
Note 20—Legal Matters to our consolidated financial statements included in Item 8 of this report.
Beginning in 2005, a series of complaints (the majority of which were styled as class actions) were filed
on behalf of merchants against us, MasterCard and/or other defendants, including certain Visa
member financial institutions. We refer to this as the interchange multidistrict litigation or MDL 1720.
Among other allegations, the plaintiffs alleged that Visa’s setting of default interchange reimbursement
rates violated federal antitrust laws and, in some cases, certain state unfair competition laws. The
lawsuits were transferred to a multidistrict litigation in the U.S. District Court for the Eastern District of
New York.
The plaintiffs in MDL 1720 seek damages for alleged overcharges in merchant discount rates as
well as injunctive and other relief. The consolidated class action complaint alleges that estimated
damages will range in the tens of billions of dollars. Because these lawsuits were brought under the
U.S. federal antitrust laws, any actual damages would be trebled.
The allocation of any monetary judgment or certain settlements among the defendants is governed
by an omnibus agreement dated February 7, 2011, and amended August 26, 2014 and October 22,
2015. See Note 3— U.S. Retrospective Responsibility Plan and Potential Visa Europe Liabilities to our
consolidated financial statements included in Item 8 of this report. Visa’s portion of a settlement or
judgment covered by the omnibus agreement, as amended, would be allocated in accordance with
specified provisions of our U.S. retrospective responsibility plan.
We signed settlement agreements in connection with MDL 1720, which included an agreement to
pay approximately $4.0 billion to the class plaintiffs. On January 14, 2014, the court entered a final
judgment order approving the settlement, from which a number of objectors have appealed. Until the
appeals are finally adjudicated, no assurance can be provided that we will be able to resolve the class
plaintiffs’ claims as contemplated by the settlement agreement.
A number of merchants have filed opt-out cases in various federal district courts. All of the cases
filed in federal court have been either assigned to the judge presiding over MDL 1720, or have been
transferred by the Judicial Panel on Multidistrict Litigation for inclusion in MDL 1720. The court has
entered an order confirming that MDL 1720 includes: (i) all current and future actions transferred to
MDL 1720 by the Judicial Panel on Multidistrict Litigation or other order of any court for inclusion in
coordinated or pretrial proceedings; and (ii) all actions filed in the Eastern District of New York that
arise out of operative facts as alleged in the cases subject to the transfer orders of the Judicial Panel
on Multidistrict Litigation. Cases that are transferred to or otherwise included in MDL 1720 or that are
brought after October 22, 2015, by an opt out of the Rule 23(b)(3) Settlement Class in MDL 1720 and
arise out of facts or circumstances substantially similar to those alleged in MDL 1720 are U.S. covered
litigation for purposes of the U.S. retrospective responsibility plan. See Note 3—U.S. Retrospective
Responsibility Plan and Potential Visa Europe Liabilities.
Failure of our U.S. retrospective responsibility plan to insulate us adequately from the impact of
such settlements or judgments could result in a material adverse effect on our financial condition and
cash flows. Such a failure could even cause us to become insolvent. The U.S. retrospective
18