$545M Fee in Credit Card Antitrust Case Sets Record
In the largest attorney fee award in a private antitrust case, a federal judge in Brooklyn has granted a group of plaintiffs attorneys $544.8 million for a class action filed on behalf of 12 million merchants against Visa, Mastercard and a group of banks. U.S. District Judge John Gleeson gave the firms all but $25 million of the amount they requested, noting that a similar earlier case had failed, and they weren't piggybacking on a government action. "If not for the attorneys’ willingness to endure for many years the risk that their extraordinary efforts would go uncompensated, the settlement would not exist," the judge wrote in his 17-page order.
The plaintiffs lawyers, who filed their litigation in 2005, were led by Robins Kaplan Miller & Ciresi, Robbins Geller Rudman & Dowd, and Berger & Montague. These three firms contributed about 55 percent of the hours in the fee request, which suggests they could split about $270 million.
In December, Gleeson approved a $5.7 billion settlement resolving claims brought by merchants accusing the defendants of conspiring to fix the so-called interchange fees retailers are charged when customers pay with a credit card. The plaintiffs team asked for 10 percent of the settlement value. But Gleeson calculated the award on a graduated scale: 33 percent of the fund up to $10 million, 30 percent of the next $40 million, 25 percent of the next $50 million, and so on until granting 6 percent of the value between $2 billion $5.7 billion. The final fee amounted to 9.56 percent of the fund.
The plaintiffs lawyers may face additional hurdles before they see their payday. The case docket is peppered with notices of appeal filed by small retailers challenging the settlement and the fee.
Before the settlement's approval, ten of the 19 named plaintiffs and several large retailers, including Wal-Mart and Target, opted out of the deal. After the settlement was announced in 2012, objectors argued that it unfairly released Visa and MasterCard from future liability and would do little to affect interchange fees.
The settlement deal initially included a $6 billion cash payment, plus a temporary reduction in fees from Visa and MasterCard valued at $1.2 billion, but the cash pool shrank to roughly $4.5 billion after the opt-outs. Even at its current level, the settlement and fee award are the largest ever in a private antitrust case in the U.S., according to the National Association of Legal Fee Analysis. The amount is still nearly $250 million lower than the $688 million fee award that went to the lawyers who represented Enron shareholders in a $7.2 billion settlement.