Visa 2013 Annual Report Download - page 126

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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2013
Certain merchants in the proposed settlement classes thereafter objected to the settlement, opted
out of the damages portion of the class settlement, and/or are seeking to opt out of the rules portion of
the class settlement. Details of merchants who have filed an opt-out claim may be found below (see
“Interchange Opt-out Litigation” below).
Certain competitors and other interested parties have also objected to the class settlement,
including Discover, which filed a motion to intervene on May 28, 2013. Discover sought, among other
things, to object to the Settlement Agreement and to file a proposed complaint challenging certain
aspects of the Settlement Agreement as a restraint of trade in violation of Section 1 of the Sherman
Act. On August 16, 2013, defendants responded to Discover’s objections. On September 12, 2013, the
district court held a hearing on the motion for final approval of the class settlement. Until the Settlement
Agreement is finally approved by the court and any appeals are finally adjudicated, no assurance can
be provided that the Company will be able to resolve the class plaintiffs’ claims as contemplated by the
Settlement Agreement.
Under the Settlement Agreement, if class members opt out of the damages portion of the class
settlement, the defendants are entitled to receive payments of no more than 25% of the original cash
payments made into the settlement fund, based on the percentage of payment card sales volume for a
defined period attributable to merchants who opted out (the “takedown payments”). The class
administrator has filed an amended report stating that the administrator had received 7,953 requests to
opt out of the settlement, some of which may include multiple merchants. Based on the payment card
sales volume of merchants requesting to opt out, in the event of final approval, the defendants will
receive takedown payments equal to an amount calculated as 25% of the original cash payments
made into the settlement fund. Visa’s portion of the takedown payments is calculated to be
approximately $1.1 billion, and would be deposited into the litigation escrow account.
Interchange Opt-out Litigation
Beginning in May 2013, approximately twenty opt-out cases have been filed by hundreds of
merchants in various federal district courts, generally pursuing damages claims on allegations similar
to those raised in MDL 1720. A similar case has been filed by a merchant in Texas state court. A
number of the cases also include allegations that Visa has monopolized, attempted to monopolize,
and/or conspired to monopolize debit card-related market segments, and one of the cases seeks an
injunction against the fixed acquirer network fee. The cases name as defendants Visa Inc., Visa
U.S.A., Visa International, MasterCard Incorporated, and MasterCard International Incorporated,
although some also include certain U.S. financial institutions as defendants. All but one of the cases
originally filed in federal court either were filed in the U.S. District Court for the Eastern District of New
York and have been assigned to the judge presiding over MDL 1720, or have been transferred by the
Judicial Panel on Multidistrict Litigation for inclusion in MDL 1720. Visa is seeking to transfer that one
case to MDL 1720, and the plaintiff in that case has filed a motion opposing such transfer. Visa has
also removed the Texas state court case to federal court and is seeking to transfer it to MDL 1720; the
plaintiff in that case has opposed such transfer. Cases that are transferred to or otherwise included in
MDL 1720 will be covered litigation for purposes of the retrospective responsibility plan. See Note 3—
Retrospective Responsibility Plan.
On May 24, 2013, Visa, MasterCard, and certain U.S. financial institution defendants in MDL 1720
filed a complaint in the Eastern District of New York against certain named class representative
plaintiffs who had opted out or stated their intention to opt out of the damages portion of the MDL class
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