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History of the Action

The Action began in October 1996 with the filing of lawsuits by certain retailers and retail trade associations (collectively, the "Named Plaintiffs") against Visa U.S.A. Inc. ("Visa") and MasterCard International Incorporated ("MasterCard") (collectively, the "Defendants"). In December 1996, those lawsuits were consolidated (the "Consolidated Action"), and the Court appointed the New York, New York based law firm of Constantine & Partners (now Constantine Cannon) to serve as Lead Counsel, and the Seattle, Washington based law firm of Hagens Berman LLP to serve as Co-Lead Counsel, for the putative class of Plaintiffs. The Named Plaintiffs in the Action who represent the Class certified by the Court are: Wal-Mart Stores, Inc.; The Limited, Inc.; Sears Roebuck and Co.; Circuit City Stores, Inc.; Safeway, Inc.; Auto-Lab of Farmington Hills; Bernie's Army Navy Store; Burlington Coat Factory Warehouse Corporation; The Coffee Stop, Inc., d/b/a Torrero Coffee & Tea Company; Computer Supplies Unlimited; Denture Specialists, Inc.; Payless ShoeSource, Inc.; Shoes Etc., Inc., d/b/a Arnold's Shoes; Scrub Shop, Inc.; Sportstop, Inc.; UCC Kwik Doc, Inc., f/k/a UCC Express, Inc.; and Geneva White, D.M.D., P.A. The first (or lead) case was filed by a group of merchants represented by Lead Counsel that included Wal-Mart, The Limited, Sears, Circuit City and Safeway; the lead case and the Consolidated Action have sometimes been referred to as the "Wal-Mart case" or the "Wal-Mart action." Three merchant trade associations, National Retail Federation, International Mass Retail Association, and Food Marketing Institute, are also Named Plaintiffs in the lead case (and the Consolidated Action).

The allegations against Visa and MasterCard are set forth in the Second Amended Consolidated Class Action Complaint filed with the Court on May 26, 1999, a copy of which may be viewed on the Website. In the Action, Plaintiffs claimed, among other things, that Visa and MasterCard, individually, and in conspiracy with each other and with their member banks, have violated the federal antitrust laws by forcing merchants who accept Visa and/or MasterCard-branded credit cards for payment also to accept Visa and/or MasterCard-branded debit cards for payment, and by conspiring and attempting to monopolize a market for general purpose point of sale debit cards. Plaintiffs claimed that Defendants' actions have caused merchants to pay excessive fees on Visa and MasterCard signature debit and credit transactions and on on-line PIN debit transactions, and have injured competition, merchants and consumers. Plaintiffs sought: (1) an injunction prohibiting the Defendants from engaging in the alleged violations of the federal antitrust laws (including the elimination of the alleged forced acceptance of the Visa and/or MasterCard-branded debit card transactions for payment by merchants who accept Visa and/or MasterCard-branded credit cards for payment), and (2) the recovery of damages for the alleged excess portion of fees paid, as well as costs and attorneys' fees.

Defendants denied Plaintiffs' allegations, and have denied that Defendants in any way violated the antitrust laws. Defendants asserted defenses to Plaintiffs' claims, including that Defendants' challenged actions were lawful, justified, the result of independent business competition, and that those actions have benefited competition, merchants and consumers. Defendants also asserted that Plaintiffs have not suffered economic harm from the challenged conduct but, in fact, have benefited. (Copies of Defendants' Answers may be viewed on the Website.) Counsel for MasterCard are located in the New York and Washington, D.C. offices of Clifford Chance US and the New York office of Simpson Thacher and Bartlett. Counsel for Visa are located in the San Francisco and New York offices of Heller Ehrman White & McAuliffe LLP and the New York office of Arnold & Porter.

The Named Plaintiffs and Defendants engaged in pre-trial discovery that lasted for over three and a half years. Pre-trial discovery consisted of the production and review of more than five million pages of documents and approximately 400 depositions of party and non-party representatives that took over 500 days. Fact discovery concluded on March 15, 2000.

The Named Plaintiffs submitted reports from five experts in total, including the reports of their liability and damages expert, Dr. Franklin M. Fisher of MIT, who previously served as the expert for IBM in its multi-decade defense of an antitrust prosecution by the United States government and as the expert for the government in its antitrust prosecution of Microsoft. Defendants submitted reports from fourteen expert witnesses. Expert discovery was completed on May 26, 2000, except for the further depositions of experts that filed supplemental reports in October 2002, which were completed by October 31, 2002.

In the summer of 2000, Defendants and the Named Plaintiffs each filed motions asking the Court to enter summary judgment in their respective favors without a trial, and opposed each other's motions. The Court elected not to rule on the summary judgment motions until after class certification proceedings had been completed. The Court permitted the parties to supplement their expert witness reports and summary judgment filings in the Fall of 2002 (thus completing four rounds of briefings and four rounds of expert reports), and conducted an extensive oral argument hearing on the summary judgment motions on January 10, 2003. On April 1, 2003, 27 days before the scheduled start of the trial, the Court denied Defendants' motions in their entirety, and granted Named Plaintiffs' summary judgment motion as to certain elements of Plaintiffs' claims for relief. The Court denied Plaintiffs' motion for summary judgment as to certain of Defendants' defenses. (A copy of the Court's 4/1/03 Summary Judgment Order may be viewed on the Website.) As described more fully in paragraphs 12-14 of the Notice of Settlement of Class Action, on April 30, 2003 Plaintiffs entered into separate memoranda of understanding with each defendant that set forth the basic terms of the settlement of this lawsuit, and on June 4, 2003 Plaintiffs entered into separate settlement agreements with Visa and MasterCard, which collectively are referred to as the "Settlements" or the "Settlement Agreements." (The Settlement Agreements may be viewed on this Website.)

As described above, and in the page of the Website marked Notice of Pendency, Class Members that were members of the class as of June 20, 2002 received Notice of Pendency of the Class Action and the right to exclude themselves from the Class in 2002. Of the original 5 million members of the Class, only 6,041 filed timely exclusions, opting out of the Class. (Of those, six opt-outs brought their own lawsuits against Visa and MasterCard, alleging the identical claims on their own behalf and sought to utilize the discovery and pleading record that had been established by Lead Counsel for the Class, and two large corporations later sought to re-join the class after the Settlements were announced. Lead Counsel resisted both of those efforts.) Judge Gleeson preliminarily approved the settlements on June 13, 2003 and also issued a Stipulation and Order Concerning Notice of Settlement of Class Action. Pursuant to the Order, the Administrator mailed over 8.1 million copies of the notice and placed copies of the Summary Notice of settlements in national circulation and trade press estimated to reach over 150 million targets. A full description of the Notice of Settlement process and copies of the Notice and Summary Notice can be viewed on the page of the Website entitled Notice of Settlement. As part of the Notice of Settlement, "New Merchants" (i.e., those persons or entities who began to accept Visa and/or Mastercard credit cards and/or debit cards for payment after June 21, 2002) were given notice of the settlements and their right to participate in, or to be excluded from, the Class. An total of 154 New Merchants chose to opt out of the Class and not to participate in the Settlements. As set forth in the Notice of Settlement, all objections were due to filed with the Court by September 5, 2003. An extremely small number of objections -- a mere 18 out of approximately five million class members -- were filed, and a Fairness Hearing was held on September 25, 2003 in the federal district court in Brooklyn.

On December 19, 2003, Judge Gleeson gave his final approval to the Settlements, and did not modify any of the terms of the Settlements. On January 4, 2005, the United States Court of Appeals for the Second Circuit affirmed Judge Gleeson's decision. Final Settlement Approval occurred on June 1, 2005, after all appeals from the Second Circuit were exhausted and the time to make such appeals expired.