Visa 2007 Annual Report Download - page 153

Table of Contents
VISA U.S.A. INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Future payments discounted at 4.72% over the payment term of $1.9 billion are reflected in the litigation provision on the Company's consolidated
statements of operations for the fiscal year ended September 30, 2007 and in current and long-term accrued litigation on the Company's consolidated balance
sheets at September 30, 2007. The settlement will be funded by the members of Visa U.S.A. through Visa Inc.'s retrospective responsibility plan, a series of
agreements with U.S. financial institutions to fund the financial obligations of certain litigation, including the American Express litigation covered by this
settlement agreement.
Attridge
On December 8, 2004, a purported consumer class action was filed against Visa U.S.A., Visa International and MasterCard in California state court
(Attridge). The complaint asserted claims under California's Cartwright Act and Unfair Competition Law, based in part on Visa's former bylaw 2.10(e). The
Cartwright Act claim, however, was dismissed in May 2006. On October 4, 2006, the court approved a plan for initial discovery, which is now proceeding.
No trial date has been set. On December 14, 2007, the plaintiff amended this complaint to add Visa Inc. as a defendant. No new claims were added to the
complaint.
Interchange Litigation
Kendall
In October 2004, a class action was filed in United States District Court for the Northern District of California against Visa U.S.A., MasterCard and
several banks (Kendall). The Kendall class purported to represent all merchants that accept Visa- or MasterCard-branded payment cards, and alleged, among
other things, that the setting of interchange is unlawful under Section 1 of the Sherman Act. In addition to money damages, the plaintiffs sought to enjoin Visa
and MasterCard from setting interchange rates and from allegedly negotiating merchant discount rates with certain merchants. The plaintiffs filed an amended
complaint in April 2005 and stipulated that the suit related only to conduct taking place after January 1, 2004.
On July 25, 2005, the court granted defendants' motions to dismiss the amended complaint with prejudice. Plaintiffs filed an appeal to the Ninth Circuit
Court of Appeals on August 10, 2005. The Ninth Circuit heard oral argument on the plaintiffs' appeal on June 11, 2007. No ruling has been issued.
Multidistrict Litigation Proceedings (MDL)
In fiscal 2005 and 2006, approximately fifty lawsuits—most of which were asserted as purported class actions—were filed on behalf of merchants who
accept payment cards against Visa U.S.A., Visa International, MasterCard and other defendants. Plaintiffs allege that defendants violated federal and state
antitrust laws by setting interchange rates (among other claims, as described below). The suits seek treble damages for alleged overcharges in merchant
discount fees, as well as injunctive and other relief.
On October 19, 2005, the Judicial Panel on Multidistrict Litigation issued an order establishing a MDL in the Eastern District of New York. The
Honorable John H. Gleeson was assigned to coordinate pretrial proceedings in the cases transferred to the MDL. On April 24, 2006, a consolidated amended
class action complaint was filed, which supersedes the class action complaints filed previously. One additional class action was filed after the date of the
consolidated class complaint; it has been conditionally transferred to MDL 1720 but has not yet been made part of the consolidated class. Visa U.S.A. is a
defendant in the consolidated class action complaint and nine additional complaints filed on behalf of individual plaintiffs.
152