20-339-cv(L)
`In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation
`
`
`UNITED STATES COURT OF APPEALS
`FOR THE SECOND CIRCUIT
`____________________
`
`
`
`
`(Argued: March 16, 2022
`
`
`August Term, 2021
`
`
`
`
`
`
`
`Decided: March 15, 2023)
`
`
`
`Docket Nos. 20-339(L), 20-340(CON),
`20-341(CON), 20-342(CON), 20-343(CON), 20-344(CON)
`
`____________________
`
`
`
`Fikes Wholesale, Inc.,
`
` Plaintiff - Appellant,
`
`
`Plaintiffs in civil action Photos Etc. Corp. v. Visa U.S.A., Inc. 05-cv-5071JG-JO,
`CHS Inc., Leons Transmission Service, Inc., Traditions, Ltd., Plaintiffs in civil
`action Parkway Corp. v. Visa U.S.A., Inc. 05-cv-5077 JG-JO, Plaintiffs in civil
`action Discount Optics, Inc., et al. v. Visa U.S.A., Inc., et al. 05-cv-5870 JG-JO,
`Payless Shoe Source, Inc., Capital Audio Electronics, Inc.,
`
` Plaintiffs - Appellees,
`
`Plaintiffs in civil action Jetro Holding, Inc. et al v. Visa U.S.A., Inc. et al 05-cv-
`4520 JG-JO, Plaintiffs in civil action National Association of Convenience Stores
`et al v. Visa U.S.A., Inc. et al 05-cv-4521 JG-JO, Plaintiffs in civil action Supervalu
`Inc. v. Visa U.S.A. Inc. et al 05-cv-4650 JG-JO, Plaintiffs in civil action Seaway Gas
`& Petroleum, Inc. v. Visa U.S.A., Inc. et al 05-cv-4728-JG-JO, Plaintiffs in civil
`action Raley's v. Visa U.S.A. Inc. et al 05-cv- 4799 JG-JO, Plaintiffs in civil action
`East Goshen Pharmacy, Inc. v. Visa U.S.A., Inc. 05-cv-5073 JG-JO, Plaintiffs in
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`civil action National Grocers Association et al v. Visa U.S.A., Inc. et al 05-cv- 5207
`JG-JO, Plaintiffs in civil action American Booksellers Association v. Visa U.S.A.,
`Inc. et al 05-cv-5319 JG-JO, Plaintiffs in civil action Rookies, Inc. v. Visa U.S.A.,
`Inc. 05-CV-5069 JG-JO, Plaintiffs in civil action Jasperson v. Visa U.S.A., Inc. 05-
`cv-5070 JG-JO, Plaintiffs in Civil action Animal Land, Inc. v. Visa U.S.A., Inc 05-
`cv-5074 JG-JO, Plaintiffs in civil action Bonte Wafflerie, LLC v. Visa U.S.A., Inc.
`05-cv-5083 JG-JO, Plaintiffs in civil action Broken Ground, Inc. v. Visa U.S.A., Inc.
`05-cv-5082 JG-JO, Plaintiffs in civil action Baltimore Avenue Foods, LLC v. Visa
`U.S.A., Inc. 05-cv-5080 JG-JO, Plaintiffs in civil action Fairmont Orthopedics &
`Sports Medicine, PA v. Visa U.S.A., Inc. 05-cv-5076 JG JO, Plaintiffs in civil action
`Tabu Salon & Spa, Inc. v. Visa U.S.A., Inc. 05-cv-5072 JG-JO, Plaintiffs in civil
`action Lakeshore Interiors v. Visa U.S.A., Inc. 05-cv-5081JG JO, Plaintiffs in civil
`action NuCity Publications, Inc. v. Visa U.S.A., Inc. 05-cv-5075 JG-JO, Plaintiffs in
`civil action Hyman v. VISA International Service Association, Inc. 05-cv-5866 JG-
`JO, Plaintiffs in civil action Lee et al v. Visa U.S.A. Inc. et al 05-cv-3800 JG-JO,
`Plaintiffs in civil action Resnick Amsterdam & Leshner P.C. v. Visa U.S.A., Inc. et
`al 05-cv-3924 JG-JO, Plaintiffs in civil action Hy-Vee, Inc. v. Visa U.S.A., Inc. et al
`05-cv-3925-JG-JO, Plaintiffs in civil action Meijer, Inc. et al v. Visa U.S.A. Inc. et al
`05-cv-4131-JG-JO, Plaintiffs in civil action Lepkowski v. Mastercard International
`Incorporated et al 05-cv-4974 JG-JO, Plaintiffs in civil action Kroger Co. v. Visa
`U.S.A., Inc. 05-cv-5078 JG-JO, Plaintiffs in civil action Fitlife Health Systems of
`Arcadia, Inc. v. Mastercard International Incorporated et al 05-cv-5153 JG-JO,
`Plaintiffs in civil action Harris Stationers, Inc., et al. v. Visa International Service
`Association, et al. 05-cv-5868 JG-JO, Plaintiffs in civil action Dr. Roy Hyman, et al
`v. Visa International Service Association, Inc., et al . 05-cv-5866 JG-JO, Plaintiffs
`in civil action Performance Labs, Inc. v. American Express Travel Related
`Services Co., Inc., et al. 05-cv-5869 JG-JO, Plaintiffs in civil action Leeber Cohen,
`M.D. v. Visa U.S.A., Inc., et al. 05-cv-5878 JG-JO, Plaintiffs in civil action G.E.S.
`Bakery, Inc. v. Visa U.S.A., Inc., et al. 05-cv-5879 JG-JO, Plaintiffs in civil action
`Connecticut Food Association, Inc., et al. v. Visa U.S.A., Inc., et al. 05-cv-5880 JG-
`JO, Plaintiffs in Twisted Spoke v. Visa U.S.A., Inc., et al. 05-cv-5881 JG-JO,
`Plaintiffs in civil action Lombardo Bros., Inc. v. Visa U.S.A., Inc. 05-5882 JG-JO,
`Plaintiffs in civil action Abdallah Bishara, etc. v. Visa U.S.A., Inc. 05-cv-5883 JG-
`JO, Plaintiffs in civil action 518 Restaurant Corp. v. American Express Travel
`Related Services Co., Inc., et al. 05-cv-5884 JG-JO, Plaintiffs in civil action JGSA,
`2
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`Inc. v. Visa U.S.A., Inc., et al. 05-cv-5885 JG-JO, Plaintiffs in civil action The
`Kroger Co., et al. v. MasterCard Inc., et al., 06-cv-0039 JG-JO, Plaintiffs in civil
`action Rite Aid Corporation et al. v. Visa U.S.A., Inc. et al. 05-cv-5352 JG-JO,
`Plaintiffs in civil action Fringe, Inc. v. Visa, U.S.A., Inc et al 05-cv-4194 JG-JO,
`Plaintiffs in civil action Bi-Lo, LLC. et al v. Visa U.S.A., Inc. et al 06-cv-2532 JG-
`JO, Plaintiffs in civil action Bi-Lo, LLC. et al v. Mastercard Incorporated et al 06-
`cv-2534 JG-JO, Plaintiffs in civil action 06-cv-5583, Esdacy, INC. v. Visa USA,
`INC. et al, QVC, Inc., GMRI, Inc., NATSO, Incorporated, Plaintiffs in civil action
`BKS. v. Visa U.S.A., Inc. et al 09-cv-2264-JG-JO, Plaintiffs in civil action Gulfside
`Casino Partnership. v. Visa U.S.A., Inc. et al 09-cv-03225 JG-JO, Keith
`Superstores, BKS, INC., BKS of LA, Inc. d/b/a KEITH SUPERSTORES, and
`KEITHCO PETROLEUM, INC., Keithco Petroleum, Inc., BKS, INC., BKS of LA,
`Inc. d/b/a KEITH SUPERSTORES, and KEITHCO PETROLEUM, INC., National
`Community Pharmacists Association, National Cooperative Grocers Association,
`Coborn's Incorporated, D'Agostino Supermarkets, Inc., National Restaurant
`Association, Affiliated Foods Midwest, Gielen Enterprises, Inc., Rice Palace, Inc.,
`Tobacco Plus, Inc., CVS Pharmacy, Inc., Plaintiffs in Delta Airlines Inc et all v.
`Visa Inc et al, 1:13-cv-04766-JG-JO, Cox Communications, Inc., Cox Enterprises,
`Inc., Cox Media Group, Inc., G6 Hospitality LLC, Live Nation Entertainment,
`Inc., Manheim Inc., Motel 6 Operating LP, E-Z Mart Stores, Inc., Jacksons Food
`Stores, Inc./PacWest Energy LLC, Kum & Go, L.C., Sheetz, Inc., Susser Holdings
`Corporation, The Pantry, Inc., Plaintiffs in Target Corporation, et al. v. Visa Inc.,
`et al., 13-cv-03477, DSW Inc., Jetblue Airways Corporation, Plaintiffs in Civil
`Action 7-Eleven Inc., et al. v. Visa Inc. et al, 1:13-cv-05746-JG-JO, Minnesota
`Twins LLC, Crystal Rock LLC, Plaintiffs in Civil Action Target Corporation, et al.
`v. Visa Inc. et al., 13-cv-4442, Plaintiffs in civil action Publix Supermarkets, Inc. v.
`Visa U.S.A. Inc. et al 05-cv-4677 - JG-JO, Plaintiffs in civil action LDC, Inc. v. Visa
`U.S.A., Inc., et al 05-cv-5871 JG-JO, Robersons Fine Jewlery, Inc., Sunoco, Inc.
`(RM), Einstein Noah Restaurant Group, Inc., Furniture Row BC, Inc., Google,
`Inc., Google Payment Corporation, Bass Pro Group, LLC, American Sportsman
`Holdings Co., Bass Pro Outdoor World, LLC, BPIP, LLC, BPS Direct, LLC, Big
`Cedar, LLC, Fryingpan River Ranch, LLC,
`
` Plaintiffs,
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`3
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`v.
`
`HSBC Bank USA, N.A., Capital One Bank, Capital One, F.S.B., Capital One
`Financial Corporation, Wells Fargo & Company, Juniper Financial Corporation,
`National City Bank of Kentucky, National City Corporation, Mastercard
`Incorporated, HSBC Finance Corporation, HSBC North America Holdings Inc.,
`Citibank, N.A., Citigroup Inc., Chase Bank USA, N.A., JPMorgan Chase & Co.,
`Fifth Third Bancorp, Bank of America, N.A., First National Bank of Omaha,
`Barclays Financial Corp., Chase Paymentech Solutions, LLC, Visa International
`Service Association, Visa U.S.A. Inc., Bank of America Corporation, Texas
`Independent Bancshares, Inc., Wells Fargo Merchant Services, LLC, Visa Inc.,
`Capital One Bank, (USA), N.A., JP Morgan Chase Bank, N.A., Barclays Bank
`PLC, Barclays Bank Delaware, MBNA America Bank, N.A., HSBC Finance
`Corporation, HSBC Holdings PLC, HSBC North America Holdings, Inc, PNC
`Financial Services Group, Inc., SunTrust Bank, Suntrust Banks Inc, Wells Fargo
`Bank, N.A., Wachovia Corporation, Wachovia Bank, National Association, BA
`Merchant Services LLC, FKA National Processing, Inc., FIA Card Services, N.A.,
`Mastercard International Incorporated,
`
` Defendants - Appellees,
`
`Defendants in civil action Jetro Holding, Inc. et al v. Visa U.S.A., Inc. et al 05-cv-
`4520 JG-JO, Defendants in civil action National Association of Convenience
`Stores et al v. Visa U.S.A., Inc. et al 05-cv-4521 JG-JO, Defendants in civil action
`Supervalu Inc. v. Visa U.S.A. Inc. et al 05-cv-4650 JG-JO, Defendants in civil
`action Publix Supermarkets, Inc. v. Visa U.S.A. Inc. et al 05-cv-4677-JG-JO,
`Defendants in civil action Seaway Gas & Petroleum, Inc. v. Visa U.S.A., Inc. et al
`05--cv-4728 JG-JO, Defendants in civil action Raley's v. Visa U.S.A. Inc. et al 05-
`cv-4799- JG-JO, Defendants in civil action East Goshen Pharmacy, Inc. v. Visa
`U.S.A., Inc 05-cv-5073-JG-JO, Defendants iin civil action National Grocers
`Association et al v. Visa U.S.A., Inc. et al 05-cv- 5207 JG -JO, Defendants in civil
`action American Booksellers Association v. Visa U.S.A., Inc. et al 05-cv-5319 JG -
`JO, Defendants in civil action Rookies, Inc. v. Visa U.S.A., Inc. 05-cv-5069-JG-JO,
`Defendants in civil action Jasperson v. Visa U.S.A., Inc. 05-cv-5070-JG-JO,
`Defendants in civil action Animal Land, Inc. v. Visa U.S.A., Inc. 05-cv-5074-JG-
`4
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`JO, Defendants in civil action Bonte Wafflerie, LLC v. Visa U.S.A., Inc. 05-cv-5083
`JG-JO, Defendants in civil action Broken Ground, Inc. v. Visa U.S.A., Inc. 05-cv-
`5082 JG-JO, Defendants in civil action Baltimore Avenue Foods, LLC v. Visa
`U.S.A., Inc. 05-cv-5080 JG-JO, Defendants in civil action Fairmont Orthopedics &
`Sports Medicine, PA v. Visa U.S.A., Inc. 05-cv-5076-JG-JO, Defendants in civil
`action Tabu Salon & Spa, Inc. v. Visa U.S.A., Inc. 05-cv-5072 -JG-JO, Defendants
`in civil action Lakeshore Interiors v. Visa U.S.A., Inc. 05-cv-5081 JG-JO,
`Defendants in civil action Parkway Corp. v. Visa U.S.A., Inc. 05-cv-5077-JG-JO,
`Defendants in civil action Hyman v. VISA International Service Association, Inc.
`05-cv-5866 JG -JO, Defendants in civil action Lee et al v. Visa U.S.A. Inc. et al 05-
`cv-03800, Defendants in civil action Resnick Amsterdam & Leshner P.C. v. Visa
`U.S. A, Inc. et al, 05-cv-3924 JG-JO, Defendants in civil action Hy-Vee, Inc. v. Visa
`U.S.A., Inc. et al 05-cv-03925 JG-JO, Defendants in civil action Meijer, Inc. et al v.
`Visa U.S.A. Inc. et al 05-cv-4131 JG-JO, Defendants in civil action Lepkowski v.
`Mastercard International Incorporated et al 05-cv-4974-JG-JO, Defendants in civil
`action Photos Etc. Corp. v. Visa U.S.A., Inc. 05-cv-5071-JG-JO, Defendants in civil
`action Kroger Co. v. Visa U.S.A., Inc. 05-cv-5078 JG-JO, Defendants in civil case
`Fitlife Health Systems of Arcadia, Inc. v. Mastercard International Incorporated
`et a 05-cv-5153 JG -JO, Defendants in civil action Rite Aid Corporation et al. v.
`Visa U.S.A., Inc. et al. 05-cv-5352 JG-JO, Defendants in civil action The Kroger
`Co., et al. v. MasterCard Inc., et al., 06-cv-0039 JG-JO, Defendants in civil action
`Harris Stationers, Inc., et al. v. Visa International Service Association, et al. 05-cv-
`5868 JG-JO, Defendants in civil action Dr. Roy Hyman, et al. v. Visa International
`Service Association, Inc., et al. 05-cv-5866, Defendants in civil action Performace
`Labs, Inc. v. American Express Travel Related Services Co., Inc., et al 05-cv-5869
`JG-JO, Defendants in civil action Discount Optics, Inc., et al. v. Visa U.S.A., Inc.,
`et al. 05-cv-5870 JG-JO, Defendants in civil action LDC, Inc. v. Visa U.S.A., Inc. et
`al. 05-cv-5871 JG-JO, Defendants in civil action G.E.S. Bakery, Inc. v. Visa U.S.A.,
`Inc,. et al. 05-cv-5879 JG-JO, Defendants in civil action Leeber Cohen, M.D. v.
`Visa U.S.A., Inc., et al. 05-cv-5878 JG-JO, Defendants in civil action Connecticut
`Food Association, Inc., et al. v. Visa U.S.A., Inc., et al 05-cv-5880 JG-JO,
`Defendants in civil action Twisted Spoke v. Visa U.S.A., Inc., et al. 05-cv-5881 JG-
`JO, Defendants in civil action Lombardo Bros., Inc. v. Visa U.S.A., Inc. 05-cv-5882
`JG-JO, Defendants in civil action Abdallah Bishara, etc. v. Visa U.S.A., Inc. 05-cv-
`5883 JG-JO, Defendants in civil action 518 Restaurant Corp. v. American Express
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`Travel Related Services Co., et al. 05-cv-5884 JG-JO, Defendants in civil action
`JGSA, Inc. v. Visa U.S.A., Inc., et al 05-cv-5885, Defendants in civil action Fringe,
`Inc. v. Visa, U.S.A., Inc. et al 05-cv-4194 JG-JO, Defendants in civil action Bi-Lo,
`LLC. et al v. Visa U.S.A., Inc. et al 06-cv-2532 JG-JO, Defendants in civil action Bi-
`Lo, LLC. et al v. Visa U.S.A., Inc. et al 06-cv-2534 JG-JO, Defendants in civil action
`06-cv-5583, Esdacy, INC. v. Visa USA, INC. et al, Washington Mutual, Inc.,
`Defendants in civil action BKS. v. Visa U.S.A., Inc. et al 09-cv-2264-JG-JO,
`Wachovia Corporation, Wachovia Bank, National Association, Defendants in
`civil action Gulfside Casino Partnership. v. Visa U.S.A., Inc. et al 09-cv-03225 JG-
`JO, Landers Harley-Davidson Little Rock, Sears Holdings Management
`Corporation, Discover Financial Services, Newport European Motorcars, Ltd.
`Newport Beach, California, Newport European Motorcars, Ltd. Newport Beach,
`California, Dennis D Gibson, Unlimited Vacations and Cruises Inc., Top Gun
`Wrecker, Orange County Bldg Materials, Bishop, DBA Hat & Gown, Enterprise
`Holdings, Inc., Ragland Bros. Retail Cos., Inc., ABP Corporation, NJ Applebee's
`(Paramus), River Valley Market, LLC, Durango Natural Foods, The Real Good
`Fashion Store, Inc., Paymentech, LLC, LAJ, Inc., DBA Grapevine Wines an
`Spirits, Lane Courkamp, Premier Enterprises Group, Class Action Recovery
`Service, Discover, Refund Recovery Services, LLC, Electronic Payment Systems,
`LLC, Daviss Donuts and Deli, Jonbro, Visa Europe Limited, Visa Europe Services
`Inc., Chase Manhattan Bank USA, N.A., Citibank (South Dakota), N.A., BA
`Merchant Services LLC, FKA National Processing, Inc., FIA Card Services, N.A.,
`Bass Pro Shops White River Conference and Education Center, LLC, SunTrust
`Bank Holding Company,
`
` Defendants,
`
`v.
`
`Jack Rabbit LLC, Cahaba Heights Service Center, Inc., DBA Cahaba Heights
`Chevron, R & M Objectors, Falls Auto Gallery, DBA Falls Car Collection,
`Gnarlywood LLC, Quincy Woodrights, LLC, Kevan McLaughlin, Unlimited
`Vacations and Cruises Inc., Pets USA LLC, Slidell Oil Company, LLC, National
`Association of Shell Marketers, Inc., Petroleum Marketers Association of
`America, Midwest Petroleum Company, Society of Independent Gasoline
`6
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`Marketers of America,
`
` Objectors - Appellants.
`____________________
`
`
`
`Before: JACOBS, LEVAL, and PARK, Circuit Judges.
`
`
`A putative class of over 12 million merchants brought this antitrust action
`
`under the Sherman Act against Visa U.S.A. Inc., MasterCard International Inc.,
`
`and numerous banks that serve as payment-card issuers for those networks.
`
`Plaintiffs alleged that Visa and MasterCard adopted and enforced rules and
`
`practices relating to payment cards that had the combined effect of injuring
`
`merchants by allowing Visa and MasterCard to charge supracompetitive fees
`
`(known as “interchange fees”) on each payment card transaction. After nearly
`
`fifteen years of litigation, the parties agreed to a settlement of roughly $5.6
`
`billion, which was approved by the United States District Court for the Eastern
`
`District of New York (Brodie, C.J.) over numerous objections. In so doing,
`
`$900,000 in service awards was granted to lead plaintiffs, and roughly $523
`
`million was granted in attorneys’ fees.
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`7
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`The appellants are various objectors who argue that the district court erred
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`when it certified the class, approved the settlement, granted service awards and
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`computed attorneys’ fees.
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`We conclude that these arguments are without merit and therefore
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`AFFIRM the district court’s orders in all respects, except as noted below.
`
`
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`The opinion of the Court is unanimous. Judge Jacobs and Judge Leval
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`each concur in separate opinions.
`
`____________________
`
`NATHANIEL A. TARNOR, Hagens
`Berman Sobol Shapiro LLP, New York, NY
`(Steve W. Berman, Hagens Berman Sobol
`Shapiro LLP, Seattle, WA, on the brief), for
`Objectors-Appellants Fikes Wholesale, Inc.,
`et al.
`
`N. ALBERT BACHARACH, JR. (Paul S.
`Rothstein, on the brief), Gainesville, FL, for
`Objectors-Appellants Jack Rabbit, LLC, et
`al.
`
`KENDRICK JAN, San Diego, CA, for
`Objectors-Appellants Gnarlywood LLC, et
`al.
`
`JOHN J. PENTZ, Sudbury, MA, for
`Objectors-Appellants Pets USA LLC, et al.
`
`
`8
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`C. Benjamin Nutley, Pasadena, CA, and
`John W. Davis, Tampa, FL, for Objector-
`Appellant Kevan McLaughlin.
`
`PATRICK J. COUGHLIN, (Joseph D. Daley,
`Alexandra S. Bernay, and Carmen A.
`Medici, on the brief) Robbins Geller
`Rudman & Dowd LLP, San Diego, CA; K.
`Craig Wildfang, Thomas J. Undlin, Ryan
`W. Marth, Robins Kaplan LLP,
`Minneapolis, MN; H. Laddie Montague, Jr.,
`Merrill G. Davidoff, Michael J. Kane, Berger
`Montague PC, Philadelphia, PA, for
`Plaintiffs-Appellees.
`
`KANNON K. SHANMUGAM (Kenneth A.
`Gallo, Jessica Anne Morton, Stacie M.
`Fahsel, on the brief) Paul, Weiss, Rifkind,
`Wharton & Garrison LLP, Washington, DC;
`Gary R. Carney, Elyssa E. Abuhoff, Paul,
`Weiss, Rifkind, Wharton & Garrison LLP,
`New York, NY, for Defendants-Appellees.
`
`
`
`DENNIS JACOBS, Circuit Judge:
`
`
`A putative class of over 12 million merchants brought this antitrust action
`
`under the Sherman Act against Visa U.S.A. Inc. (“Visa”), MasterCard
`
`International Inc. (“MasterCard”), and numerous banks that serve as payment-
`
`card issuers for those networks. Plaintiffs alleged that Visa and MasterCard
`
`adopted and enforced rules and practices relating to payment cards that had the
`9
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`combined effect of injuring merchants by allowing Visa and MasterCard to
`
`charge supracompetitive fees (known as “interchange fees”) on each payment
`
`card transaction. After nearly fifteen years of litigation, the parties agreed to a
`
`settlement of roughly $5.6 billion, which was approved by the United States
`
`District Court for the Eastern District of New York (Brodie, C.J.) over numerous
`
`objections. In so doing, $900,000 in service awards was granted to lead plaintiffs,
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`and roughly $523 million was granted in attorneys’ fees.
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`The appellants are various objectors who argue that the district court erred
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`when it certified the class, approved the settlement, granted service awards and
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`computed attorneys’ fees.1
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`We conclude that these arguments are without merit and therefore
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`AFFIRM the district court’s orders in all respects, except as noted below.
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`1 We refer to “Appellants” plural, regardless of whether a point was advanced by
`one objector-appellant or more.
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`BACKGROUND
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`I
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`It is well known that Visa and MasterCard operate two of the world’s
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`largest payment-card networks. An understanding of this case requires some
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`knowledge of how those networks operate. In brief: the customer presents a
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`payment card to the merchant; the merchant relays the card information to its
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`bank (the acquiring bank); the acquiring bank forwards that information to the
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`appropriate network (Visa or MasterCard); the network relays the information to
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`the bank that issued the customer’s card (the issuing bank); and the issuing bank
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`confirms that the customer has sufficient credit or funds to cover the purchase. .
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`When these steps are completed, the issuing bank transmits its approval back
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`through the chain to the acquiring bank, which relays it to the merchant at the
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`point of sale.
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`Next, the issuing bank provides the funds via the appropriate network to
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`the acquiring bank, less the “interchange fee” (the focus of this litigation) which
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`the issuing bank – a member of the Visa or MasterCard network - keeps. While
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`the issuing and acquiring banks are contractually free to agree on an applicable
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`interchange fee, Visa and MasterCard each set a default fee in the absence of such
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`an agreement. The acquiring bank, in turn, pays the merchant while charging
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`what is known as a “merchant discount fee.” That fee covers the interchange
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`fee as well as an additional amount that compensates the acquiring bank for
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`processing the transaction. The applicable default fee varies depending on
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`factors that include the type of payment card.
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`Merchants who accept Visa- and MasterCard-branded cards are bound by
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`the issuers’ network rules, which in effect are identical to one another. For
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`example, the “honor-all-cards” rules require any merchant that accepts a Visa- or
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`MasterCard-branded credit card to accept all credit cards of that brand,
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`regardless of the differences in interchange fees. Further, multiple rules
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`prohibit merchants from influencing customers to use one type of payment over
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`another--such as a credit card with a lower interchange fee, or cash rather than
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`credit. These “anti-steering” rules include the “no-surcharge” and “no-discount”
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`rules, which prohibit merchants from charging different prices at the point of
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`sale depending on the means of payment.
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`II
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`Numerous antitrust lawsuits were filed against Visa and MasterCard
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`beginning in 2005. The first consolidated complaint in this action (which was
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`followed by several amended complaints) was filed the following year. The
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`then-operative complaints alleged that the Visa and MasterCard interchange
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`fees, and associated rules, were anticompetitive and violated the Sherman Act, 15
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`U.S.C. §§ 1 and 2, and California’s Cartwright Act, Bus. & Prof. Code § 16700 et
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`seq.
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`Prolonged negotiation resulted in a “2012 Settlement Agreement.”
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`Consistent with the then-operative complaint, the proposed settlement divided
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`the plaintiffs into two classes. The first--the Rule 23(b)(3) damages class--covered
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`merchants that accepted Visa and/or MasterCard from January 1, 2004 to
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`November 27, 2012. The second--the Rule 23(b)(2) injunction class--covered
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`merchants that accepted (or would accept) Visa and/or MasterCard on or after
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`November 27, 2012. The 23(b)(3) class was set to receive roughly $5.3 billion,
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`after opt-out payments. The 23(b)(2) class would receive injunctive relief in the
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`form of changes to Visa’s and MasterCard’s network rules. While members of
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`the (b)(3) damages class could opt out, members of the (b)(2) injunction class
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`could not. The same counsel represented both classes.
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`The settlement agreement was given preliminary approval in late 2012.
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`Final approval by the district court came roughly a year later.
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`III
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`On June 30, 2016, we held that the members of the (b)(2) injunction class
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`received inadequate representation, in violation of the Due Process Clause and
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`Rule 23(a)(4) of the Federal Rules of Civil Procedure, because, despite their
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`divergent interests, they were represented by the same counsel and lead
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`plaintiffs as the (b)(3) damages class. See In re Payment Card Interchange Fee &
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`Merch. Disc. Antitrust Litig., 827 F.3d 223, 233-34 (2d Cir. 2016). Specifically, we
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`explained that the interest of the (b)(3) class members was in “maximiz[ing] cash
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`compensation for past harm,” while the interest of the (b)(2) class members was
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`in “maximiz[ing] restraints on network rules to prevent harm in the future.” Id.
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`at 233. This conflict disadvantaged the (b)(2) injunction class, we concluded,
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`because “[t]he class counsel and class representatives who negotiated and
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`entered into the [2012] Settlement Agreement were in the position to trade
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`diminution of (b)(2) relief for increase of (b)(3) relief.” Id. at 234. Accordingly,
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`we vacated the district court’s certification of the settlement class, reversed
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`approval of the 2012 Settlement Agreement, and remanded for further
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`proceedings. Id. at 240.
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`IV
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`On remand, the district court appointed the three law firms that had
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`previously served as class counsel (together, “Class Counsel”) to serve as interim
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`counsel only for the Rule 23(b)(3) damages class.2 About two years later, after
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`additional discovery and renegotiation, the parties executed this new settlement
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`agreement (the “Settlement Agreement”), which provides for a collective award
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`of $5.6 billion (as reduced in the amount of $700 million to reflect opt-outs). The
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`district court granted preliminary approval on January 24, 2019, and final
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`approval on December 13, 2019.
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`2 The district court also appointed separate counsel to represent a proposed
`injunctive-relief class seeking certification under Rule 23(b)(2). The (b)(2) action
`is now proceeding as DDMB, Inc. v. Visa, Inc., No. 05-md-1720.
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`The Settlement Agreement defines the class as “all persons, businesses,
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`and other entities that have accepted any Visa-Branded Cards and/or
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`Mastercard-Branded Cards in the United States at any time from January 1, 2004
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`to the Settlement Preliminary Approval Date [January 24, 2019].” App’x at 3324
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`¶ 4. The definition expressly excludes, among others, the “Dismissed Plaintiffs,”
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`a defined term referring to roughly 200 merchants (and their related entities) that
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`had opted out of the initial settlement and separately settled their claims. Id. at
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`3316 ¶ 3(t), 3324-25 ¶ 4. The Settlement Agreement provides that each claimant
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`will receive a pro rata share of the monetary fund “in accordance with the
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`relative economic interests of the Claimants as measured by the Interchange Fee
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`amounts attributable to their Visa- and Mastercard-Branded Card transactions
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`during the Class Period.” Id. at 3567.
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`In exchange for this cash, each class member released claims “arising out
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`of or relating to” any conduct or acts that were or could have been alleged in the
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`litigation. Id. at 3337 ¶ 31(a). That release covers all claims that have accrued
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`during the class period, or that will “accrue no later than five years after the
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`Settlement Final Date,” id., which is defined as the date on which appeals from
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`the Settlement Agreement become final, id. at 3321-22 ¶ 3(ss).
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`The release “extend[s] to, but only to, the fullest extent permitted by
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`federal law.” Id. at 3337 ¶ 31(a). The parties have stated, in the district court and
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`on appeal, that this language is intended to comport with the “identical factual
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`predicate” test, i.e., that a settlement may validly release claims “that would have
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`to be based on the identical factual predicate as that underlying the claims in the
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`settled class action.” TBK Partners, Ltd. v. Western Union Corp., 675 F.2d 456,
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`460 (2d Cir. 1982). See Defendants-Appellees Br. at 52; Plaintiffs-Appellees Final
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`Approval Br. at 63; App’x at 4424. The district court so construed the Settlement
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`Agreement in granting approval. In re Payment Card Interchange Fee & Merch.
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`Disc. Antitrust Litig., No. 05-md-1720, 2019 WL 6875472, at *23-25 (E.D.N.Y. Dec.
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`16, 2019) (“Final Approval”).
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`Because of the dispute described below between integrated oil companies
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`and their franchised service stations operating under the trademark of the
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`franchisor, contesting which should receive the settlement funds allocated to
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`customers using payment cards to purchase primarily gasoline, the district court
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`determined to appoint a special master to study and determine the question,
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`subject to de novo review by the district court.
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`After granting final approval of the Settlement Agreement, the district
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`court awarded Class Counsel 9.31% of the settlement fund in attorneys’ fees,
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`approximately $523 million. See In re Payment Card Interchange Fee & Merch.
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`Disc. Antitrust Litig., No. 05-md-1720, 2019 WL 6888488, at *25 (E.D.N.Y. Dec. 16,
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`2019). This award was meant to reflect, among other things, the “enormous
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`number of hours and many years” devoted to the case, id. at *10, and the
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`“substantively risky” nature of the litigation, id. at *14. The award for expenses
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`was $39 million. See id. at *25.
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`Separately, the district court granted the class representatives $900,000 in
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`service awards, in addition to out-of-pocket expenses. The district court
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`recognized that “[t]here is no indication that any Class Representative assumed
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`the position or undertook the time and labor they did in anticipation of being
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`compensated,” but still granted the award because of the “enormous amount of
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`time and resources” they spent on the case. App’x at 7456-57.
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`Appellants argue that the district court abused its discretion when it
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`certified the class, approved the settlement, granted service awards and
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`computed attorneys’ fees.
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`DISCUSSION
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`I
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`The settlement-only class is defined to include (with limited exceptions)
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`“all persons, businesses, and other entities that have accepted any Visa-Branded
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`Cards and/or Mastercard-Branded Cards in the United States at any time from
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`January 1, 2004 to [January 24, 2019].” App’x at 3324 ¶ 4. A controversy over the
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`class definition exists between integrated oil companies (e.g., Shell, Chevron, and
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`Valero) and their branded service stations--i.e., between franchisors and their
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`franchisees--both of which claim to have been injured by the interchange fees
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`imposed on gas sales and claim to “have accepted” Visa-Branded and
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`MasterCard-Branded cards in payment for sales. Appellants are representatives
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`of the service stations, and raise challenges regarding: (A) ascertainability,
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`(B) adequacy of representation, (C) claims administration, and (D) notice.
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`A
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`The ascertainability challenge hinges on the interpretation of a single
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`word: “accepted.” The word “accepted” creates ambiguity. Both the franchisors
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`and the franchisees claim to have “accepted” the payment card from the
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`customers at the service stations. The franchisees claim to have “accepted” Visa
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`and/or MasterCard from consumers paying for the gasoline dispensed at their
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`stations, while the franchisors claim to have “accepted” the payment cards by,
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`inter alia, providing operating and processing services on the same set of
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`transactions. The question of which ones accepted the payment cards was not
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`resolved by the district court but was instead set aside for determination by a
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`special master, subject to de novo review by the district court. Appellants
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`contend that this failure of the settlement agreement renders the class
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`unascertainable, with dire consequences for the settlement.3 This is