The federal court handling the long-running class-action litigation between merchants on one hand and big banks and Visa Inc. and Mastercard Inc. on the other announced on Friday it has granted “preliminary approval” to a settlement that could award between $5.54 billion and $6.24 billion to merchant plaintiffs. The parties announced in September they had reached a settlement.
The final money award in the nearly 14-year-old case, which alleges the banks and networks overcharged merchants for card acceptance, will depend on how many plaintiffs ultimately opt out, the U.S. District Court for the Eastern District of New York said, adding that the total will not be allowed to fall by more than $700 million.
Merchants that don’t opt out can file a claim based on “the actual or estimated interchange fees attributable to the merchant’s Mastercard and Visa payment card transactions from January 1, 2004, to January 25, 2019,” the court’s announcement said.
The case, however, is far from over. While the district court, based in Brooklyn, N.Y., granted preliminary approval, it set a hearing for Nov. 7 to decide if it will give a final okay to the agreement. Merchants that want to object to the settlement, or opt out of it, have until July 23 to tell the court. Merchants can’t file claim forms until the court grants final approval and the agreement survives any appeals. Opt outs can’t share in the settlement pot but may file individual cases of their own.
This isn’t the first time the Brooklyn court has had to manage an agreement between the litigants in this sprawling and bitterly contested case, known officially as MDL 1720. The parties first announced a settlement in 2012 that totaled $7.25 billion but opt-outs by mostly big and medium-size merchants ultimately reduced that pot to $5.7 billion. In 2016, a federal appeals court threw the agreement out, and the parties went back to court.
The case traces its origins to 2005, when a number of small, independent merchants filed the first class-action in a series of cases that were ultimately consolidated.