Credit Card Merchant Fee Settlement — Injunctive Relief

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6 Responses

  1. brad says:

    “Prof. Sykes suggests that even if surcharging would be an ineffective remedy, the settlement should not be rejected because no simple injunctive measure could produce meaningful competition on merchant fees.”

    If that’s the case then it looks like the class shouldn’t be certified under 23(b)(2). The rule requires:
    “The party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole;”

    If effective injunctive relief is impossible than it certainly can’t be appropriate.

  2. Steve Semeraro says:

    So how does this cut? The thrust of Prof. Sykes report to the court is that the inability to fashion effective injunctive relief is a reason to approve the settlement because the plaintiffs would be unable to achieve a better result through litigation.

    Is the potential ineffectiveness of any injunctive relief a reason to reject the settlement as well?

  3. brad says:

    It’s been a while since I’ve done any work in this area, but I seem to recall that settlement only class certifications get additional scrutiny. Also, at least as of 5 years or so ago, there was a certificate split on the propriety of certifying “hybrid” class actions — those that sought money damages and injunctive relief — as non-opt out.

    It entirely possible that the court will refuse to certify under (b)(2) which as I read it allows the parties to void the agreement. I imagine the defendants would do so, since global peace is their whole goal.

  4. Steve Semeraro says:

    Just to clarify, this was not a settlement-only class certification.

    And the mandatory nature of the(b)(2)class is the only thing that gives the defendants global peace. Without it, nothing would stop additional merchants from suing them. I’ll deal with this more in the last installment on the release provisions of the settlement.

  5. brad says:

    I guess I’m confused then. From the linked website, in the document labeled “Signed Preliminary Approval Order” paragraphs 5 & 6 it says that the court gave preliminary approval to the classes for settlement purposes only. Has there been a subsequent order?

    Thanks again for this series of posts, very interesting.

  6. Steve Semeraro says:

    No, my apologies, you are right. I was thinking that this case is not like the asbestos class action from the 1990s in which the parties had no intent to litigate the case if the court did not approve the settlement that (in that case) was filed with the complaint. My recollection is that the cases holding that settlement-only class certifications get greater scrutiny were like the asbestos case.

    Here, the parties engaged in serious litigation for years, and the plaintiffs have a motion for class certification on file with the court. The class cert approval for the settlement was limited only because the defendants did not want to concede the issue if the settlement was not approved.