Remaining Funds in Visa Check/MasterMoney Class Action Awarded to Non-Profits

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The American Antitrust Institute will receive half of the remaining settlement fund in a tying arrangement class action against the Visa and MasterCard payment card networks under a cy pres distribution, the federal district court in Brooklyn, New York, has decided.

Following distribution of approximately $2.6 billion from the settlement fund in the class action brought on behalf of millions of merchants against the two networks, approximately $1.5 million to $1.6 million was remaining in the fund.

The lead counsel for the plaintiffs had initially asked the court that the entire remainder be donated to the American Antitrust Institute—a non-profit organization dedicated to education, research, and advocacy concerning antitrust law. Ultimately, it was decided that the American Antitrust Institute would share the money with two other charitable organizations.

After determining that a cy pres award was a more appropriate manner for disposing of the remaining settlement funds than an additional distribution to class members, the court took up the issue of who would be granted the remaining funds. The cy pres donation amounted to roughly 0.057 percent to 0.061 percent of the total amount distributed to class members.

Distribution to Three Organizations

The funds were to be distributed as follows: 50 percent to the American Antitrust Institute; 25 percent to Consumers Union, a non-profit advocacy organization; and 25 percent to U.S. PIRG, a network of state public interest groups working on behalf of the American public on issues such as product safety, public health and health care reform, higher education, political corruption and voting rights.

The court denied a request from the Jewelers Vigilance Committee—a not-for-profit trade association for the U.S. precious metal, gem, and jewelry trade—for consideration as a recipient of the cy pres funds. The group was not an appropriate recipient. Its members who were members of the class had already benefited from the settlement.

Moreover, distribution to such narrowly-tailored interests would have had the effect of inequitably concentrating its benefit on a subset of the class as opposed to the class as a whole, in the court’s view.

The October 24, 2011 decision, In re Visa Check/MasterMoney Antitrust Litigation, appears at 2011-2 Trade Cases ¶ 77,654.

Paul Hastings LLP, a leading global law firm, announced today that Thomas Brown will join the Antitrust and Global Competition and the Global Banking and Payments Systems practices in San Francisco as partner in 2012. Mr. Brown, an antitrust lawyer with nationally recognized payment systems expertise, will join from O’Melveny & Myers LLP, where he is a partner.

“Tom has a cutting-edge practice at the convergence of financial services, IT and antitrust, particularly in the area of payment systems, where Tom is among the leading practitioners with concentrated across-the-board expertise for this emerging and constantly evolving industry, helping us expand our capabilities serving the financial services sector and technology clients throughout the firm’s global network,” said Michael Cohen, chair of the Antitrust and Global Competition practice. “His arrival will mark the continued strengthening of our important West Coast antitrust presence, particularly in the Northern California technology corridors,” he added.

“We have strengthened our global antitrust capabilities significantly over the past year,” said William Sullivan, chair of the firm’s Litigation department. “Tom’s addition will enhance and reinforce the strategic connection we have been building between our payments systems, antitrust, IP and regulatory practices,” he added.

Mr. Brown’s practice focuses on competition law and legal issues affecting the financial services industry. In addition to strategically advising payment systems and financial services clients across a broad spectrum of regulatory issues, he has litigated notable antitrust cases, including class actions, in the financial services industry for more than fifteen years. Mr. Brown recently helped eBay defeat a putative class action in which plaintiffs claimed that eBay’s acquisition of PayPal enabled the company to charge supracompetitive fees. He was also a member of the trial team that handled the defense of the then largest civil antitrust class action in U.S. history for Visa U.S.A. Inc., In re Visa Check/MasterMoney Antitrust Litigation.

Immediately prior to joining O’Melveny, Mr. Brown was Vice President, Senior Counsel at Visa U.S.A. Inc. There he was responsible for managing the aftermath of the settlement in In re Visa Check/MasterMoney Antitrust Litigation, including the dozens of consumer class actions that were filed following the settlement. He was also deeply involved in the company’s transformation from a co-op to a shareholder owned company.

Mr. Brown’s hire will follow the arrival of Holly House, former co-chair of the antitrust and trade regulation practice group at Bingham McCutchen LLP, in September 2011, and the hire of Scott Hataway, a former U.S. DOJ Antitrust Division trial lawyer, who joined the firm’s Antitrust and Global Competition practice as partner in Washington, DC in March 2011 from Howrey LLP.

www.paulhastings.com