Visa 2009 Annual Report Download - page 18

Table of Contents
The plaintiffs in the interchange litigation seek damages for alleged overcharges in merchant discount fees, as well as injunctive and other relief. The
plaintiffs have not yet quantified the damages they seek, although several of the complaints allege that the plaintiffs expect that 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 will be trebled and we, Visa U.S.A. and/
or Visa International may be subject to joint and several liability among the defendants if liability is established, which could significantly magnify the effect
of any adverse judgment. The interchange litigation is part of the covered litigation, which our retrospective responsibility plan is intended to address;
however, the retrospective responsibility plan may not adequately insulate us from the impact of settlements of, or judgments in, the interchange litigation.
Failure to successfully defend or settle the interchange litigation would result in liability that to the extent not covered by our retrospective responsibility plan
could have a material adverse effect on our results of operations, financial condition and cash flows, or, in certain circumstances, even cause us to become
insolvent. In addition, even if our direct financial exposure were covered by our retrospective responsibility plan, settlements or judgments involving the
multidistrict litigation could include restrictions on our ability to conduct business, which could increase our cost of doing business and limit our prospects for
future growth. See Item 1A Risk Factors—Our retrospective responsibility plan may not adequately insulate us from the impact of settlements and judgments
in the covered litigation and will not insulate us from other pending or future litigation and See Note 21—Legal Matters to our consolidated financial
statements included in Item 8 in this report.
Our retrospective responsibility plan may not adequately insulate us from the impact of settlements and judgments in the covered litigation and will
not insulate us from other pending or future litigation.
Our retrospective responsibility plan is intended to address monetary liabilities from settlements of, or final judgments in, the covered litigation
described in Note 21—Legal Matters to our consolidated financial statements included in Item 8 of this report. The retrospective responsibility plan consists
of several related mechanisms to fund settlements of, or judgments in, the covered litigation, including an escrow account funded with a portion of the net
proceeds of our initial public offering and potential follow-on offerings of our class A common stock (or deposits of cash to the escrow account in lieu of such
follow-on offerings), a loss sharing agreement, a judgment sharing agreement and the indemnification obligation of Visa U.S.A. members pursuant to Visa
U.S.A.'s certificate of incorporation and bylaws and in accordance with their membership agreements. These mechanisms are unique and complex, and if we
are prevented from using one or more of these mechanisms under our retrospective responsibility plan, we could have difficulty funding the payment of a
settlement or final judgment against us in a covered litigation, which could have a material adverse effect on our results of operations, financial condition and
cash flows, or, in certain circumstances, even cause us to become insolvent.
The retrospective responsibility plan does not address litigation other than the covered litigation that we currently face, including state court litigation
relating to interchange, and will not cover litigation that we may face in the future, except for cases that include claims for damages relating to the period prior
to our initial public offering that are transferred for pre-trial proceedings or otherwise included in the interchange litigation. In addition, our retrospective
responsibility plan is designed to cover only the potential monetary liability from settlements of, or judgments in, the covered litigation. Settlements and
judgments in covered litigation may require us to modify the way we do business in the future, which could adversely affect our revenues, increase our
expenses and/or limit our prospects for growth. Therefore, even if our retrospective responsibility plan adequately safeguards us from the monetary impact of
settlements of, or judgments in, the covered litigation, it may not be sufficient to insulate us from all potential adverse consequences of settlements of, and
judgments in, the covered litigation.
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