Visa 2007 Annual Report Download - page 155

Table of Contents
VISA U.S.A. INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Ninth Circuit Court of Appeals heard argument on December 7, 2005 and affirmed the district court's dismissal on March 27, 2006.
U.S. Government Litigation
In January 2006, the United States made a monetary claim against the settlement fund that was established in connection with the settlement of the
Retailers' Litigation in December 2003. The United States was not a class member, but asserted equitable arguments as a "merchant" on behalf of its agencies
and instrumentalities accepting Visa or MasterCard cards. After the claims administrator denied the government's claim, the government appealed the
decision to the federal court that has retained jurisdiction to resolve disputes relating to administration of the Retailers' settlement fund. On December 29,
2006, a settlement agreement was reached whereby Visa U.S.A. and MasterCard International Incorporated together will pay the U.S. government $3.5
million and the government's claim against the Retailers' settlement fund will be capped and reduced by 66%. Visa U.S.A.'s portion of the agreement is $2.0
million. The settlement also provides Visa U.S.A. with a full release from the U.S. government for all interchange and "honor all cards"-type claims accruing
prior to January 1, 2004. The District Court entered an order approving the settlement on February 28, 2007.
Retailers' "Opt-Outs"
Several merchants who "opted-out" of the Retailers' class action asserted similar claims against Visa U.S.A. These cases were consolidated for pretrial
proceedings (MDL 1575) before the United States District Court for the Eastern District of New York. Visa U.S.A. has settled all but one of these suits, and
as a result, recorded a pre-tax charge of $19.8 million during the nine months ended June 30, 2005. The sole remaining "opt-out" matter is GMRI. In GMRI,
the plaintiff contends that it can pursue a motion for partial summary judgment previously filed by the settling "opt-out" merchants.
On May 14, 2007, GMRI, Inc. sought to amend its complaint and consolidate the case with Multidistrict Litigation 1720. Visa U.S.A., Visa
International and several of their member banks named as defendants in Multidistrict Litigation 1720 opposed the plaintiff's motion. On June 1, 2007, the
plaintiff withdrew its request.
On June 22, 2007, GMRI, Inc. filed suit against Visa International and various member banks of Visa U.S.A. and/or Visa International in the U.S.
District Court for the District of Minnesota, alleging both the merchant opt-out claims at issue in GMRI, Inc.'s suit against Visa U.S.A. and a number of the
claims set forth in the class complaint filed in Multidistrict Litigation 1720 relating to interchange and Visa rules. In December 2007, GMRI, Inc. and Visa
U.S.A. agreed in principle to resolve the claims brought against Visa U.S.A. and Visa International through binding mediation.
"Indirect Purchaser" Actions
Forty so-called "indirect purchaser" actions stemming from the Retailers' litigation have been filed against Visa and MasterCard in nineteen states and
the District of Columbia. In these actions, the plaintiffs purport to represent classes of residents of one or more states who purchased goods at merchants that
accepted Visa- or MasterCard-branded payment cards. They claim to have paid higher prices as a result of the purported "tying" and other alleged anti-
competitive conduct at issue in the Retailers' litigation. The plaintiffs assert claims under state antitrust statutes, state consumer protection statutes and
common law.
Cases in fifteen jurisdictions were dismissed by the trial court and the plaintiffs declined to pursue an appeal. The parties are awaiting a decision on
Visa U.S.A.'s motion to dismiss in New Mexico.
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