Objectors to $7.25 billion credit card class action settlement want expert report in writing

Posted on: August 2nd, 2013 by Steve Larson

Antitrust CasesObjectors to a proposed $7.25 billion class action settlement of antitrust allegations over swipe fees charged by Visa Inc. and MasterCard Inc. told a New York federal judge Monday that a court-appointed economic expert should issue written findings that can be cross-examined.

A group of trade associations, retailers and others that oppose a proposed settlement of multidistrict antitrust litigation said the court should require Alan O. Sykes, a New York University law professor tapped to serve as an expert witness, to issue his findings in writing and detail the materials he drew from in reaching his conclusions, according to a filing.

The settlement received preliminary court approval in November 2012.  The settlement would resolve allegations that Visa and MasterCard charged excessive interchange, or swipe, fees to merchants that accept the companies’ cards. But it has also faced objections from trade groups and big-name retailers, which have expressed concerns that the deal would not fully address the alleged anti-competitive conduct and would prevent them from filing future legal actions related to interchange fees.

In April, U.S. District Judge John Gleeson appointed Sykes to advise on economic issues related to the settlement as the judge decides whether the deal deserves final approval. The objectors said Monday that, in addition to requiring Sykes to produce a written report, they and other interested parties should have a chance to respond to the expert’s findings.

“Given the stakes at issue and the starkly opposing views that have been advanced regarding the settlement, objectors believe Professor Sykes’ opinions should be set forth in writing and the opportunity provided to test them through cross-examination at deposition or otherwise provide a response,” the objectors said.

But the parties — including Visa, MasterCard and merchant plaintiffs that still support the settlement — said in the joint filing that Sykes should be given whatever information he needs “to provide effective consultation to the court,” adding that they disagreed with the objectors’ proposal in part because it pertains “to areas that properly rest solely within the discretion of the court.”

“It is the parties’ view that the manner in which Dr. Sykes performs his function as the court-appointed expert is properly left to the court’s discretion,” they said in the joint filing.

Under the proposed settlement, believed to be the largest ever private antitrust settlement, Visa and MasterCard have agreed to pay $6.05 billion to a class of merchants that accept the companies’ cards. The card companies also agreed to reduce interchange fees for eight months, a move expected to be worth about $1.2 billion, according to court filings.

U.S. District Judge John Gleeson granted preliminary approval of the settlement in November 2012, setting a fairness hearing for September 12, 2013, according to the court docket.

The judge in April appointed Sykes to advise the court on “any economic issues” that may come up as the court considers whether to grant final approval to the settlement. That appointment came after the parties, in a March 21 letter, indicated that they had no problem with Sykes advising on the case, according to that filing.

Jeffrey Shinder of Constantine Cannon LLP, who represents some of the largest objectors to the settlement, wrote to the court on March 29 indicating that his clients were also not opposed to Sykes serving as an expert. But the objectors also said at the time that they wanted a chance to provide input on certain issues pertaining to Sykes’ role in the case.