In re Payment Card Interchange Fee and Merchant Discount Antitrust

In re Payment Card Interchange Fee and Merchant Discount Antitrust

Certification and approval of the settlement were vacated and reversed because unitary representation of divergent (b)(3) monetary and (b)(2) injunctive settlement-only classes created fundamental conflicts of interest under Rule 23(a)(4) and the Due Process Clause, counsel had fee incentives favoring monetary recovery, and the settlement imposed a perpetual, overbroad release that bound future and disadvantaged class members who received little or no meaningful relief without opt-out rights.

Citation
In re Payment Card Interchange Fee and Merchant Discount Antitrust
Parties
Class Plaintiffs: Plaintiffs-Appellees; Defendants: Defendants-Appellees; Objectors/appellants: Merchant Appellants (Objectors-Appellants); Objectors/appellants: American Express (Objectors-Appellants); Objectors/appellants: Discover Bank (Objectors-Appellants); Objectors/appellants: First Data Corporation (Objectors-Appellants)
Court
Court of Appeals for the Second Circuit
Jurisdiction
United States
Judgment Date
30 June 2016
Case Number
12-4671-cv(L)
Procedural Posture
Antitrust Class Action / Appeal From District Court Order Certifying Settlement Only Classes and Approving Settlement
Outcome
vacated class certification; reversed approval of settlement; remanded to district court for further proceedings consistent with opinion
Legal Topics
Class Certification, Settlement Approval, Rule 23(a)(4) Adequacy, Due Process Clause, Release of Claims, Opt Out Rights, Injunctive Relief, Monetary Relief
Source Language
English
Antitrust Class Action Civil Procedure Contracts Class Certification Settlement Approval Rule 23(a)(4) Adequacy Due Process Clause +4 more

Case Brief

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Parties

Plaintiffs-Appellees

Class Plaintiffs

Defendants-Appellees

Defendants

Merchant Appellants (Objectors-Appellants)

Objectors/appellants

American Express (Objectors-Appellants)

Objectors/appellants

Discover Bank (Objectors-Appellants)

Objectors/appellants

First Data Corporation (Objectors-Appellants)

Objectors/appellants

Procedural Posture

Antitrust Class Action / Appeal From District Court Order Certifying Settlement Only Classes and Approving Settlement

Legal Issues

  1. 1 whether settlement-only (b)(2) class was adequately represented under Rule 23(a)(4)
  2. 2 whether certification and settlement violated due process by binding absent and future class members without adequate representation or opt-out rights
  3. 3 whether unitary counsel representing both (b)(3) monetary class and (b)(2) injunctive class created structural conflicts

Ratio Decidendi

Certification and approval of the settlement were vacated and reversed because unitary representation of divergent (b)(3) monetary and (b)(2) injunctive settlement-only classes created fundamental conflicts of interest under Rule 23(a)(4) and the Due Process Clause, counsel had fee incentives favoring monetary recovery, and the settlement imposed a perpetual, overbroad release that bound future and disadvantaged class members who received little or no meaningful relief without opt-out rights.

Court Disposition

vacated class certification; reversed approval of settlement; remanded to district court for further proceedings consistent with opinion

Orders

  • District court’s certification of the (b)(2) and (b)(3) settlement-only classes vacated
  • District court’s approval of the settlement reversed