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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK _________________________________________ : IN RE PAYMENT CARD : No. 05-MD-1720 (MKB)(JO) INTERCHANGE FEE AND MERCHANT : DISCOUNT ANTITRUST LITIGATION : : FILED UNDER SEAL This Document Applies to: All Cases. : _________________________________________ :

CLASS PLAINTIFFS’ OPPOSITION TO RULE 60 MOTIONS TO VACATE JUDGMENT

Case 1:05-md-01720-MKB-JO Document 6555 Filed 09/01/15 of 48 PageID #: 83904

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TABLE OF CONTENTS

I. Introduction ..........................................................................................................................1

II. The Rule 60 Motions Should Be Denied Because Friedman’s Communications with Ravelo Had No Effect on the Class Settlement Negotiations And Settlement Terms .........7

A. The Court Appointed Co-Lead Counsel Were Responsible For Litigating and Settling MDL 1720 ...................................................................7

B. Following Years of Settlement Negotiations That Did Not Include Friedman .......................................................14

1. ...........15

2. Co-Lead Counsel Understood the Power of Differential Surcharging ......17

3. The Mediators’ Proposal Contained The Principal Settlement Terms, ......................................................................................23 4. The Co-Lead Counsel Was Solely Responsible for Negotiating and Accepting the Language in the Final Settlement Agreement ..............26

III. The 7-11 Objectors Rule 60 Motion is Untimely ..............................................................30

IV. Because Co-Lead Counsel Adequately Represented the Rule 23(b)(2) Class, the Rule 60(b)(6) Requirements Cannot be Established ....................................................32

V. There Was No Fraud Upon the Court ...............................................................................35

VI. Under Rule 62.1 Movants’ Motion Cannot Be Granted ...................................................40

VII. Additional Discovery Should Not Be Allowed ................................................................40

VIII. Conclusion .........................................................................................................................42


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TABLE OF AUTHORITIES

Cases Page(s)

Ames True Temper, Inc. v. Myers Inds, Inc., 2007 WL 4268697 (W.D. Pa. Nov. 30, 2007) ........................................................................ 41

Church & Dwight Co. v. Kaloti Enters. Of Mich., L.L.C., 2011 WL 4529605 (E.D.N.Y. Sept. 28, 2011) ....................................................................... 34

Comput. Assocs. Class Action Sec. Litig. v. Artzt, 2007 WL 2713336 (E.D.N.Y. Sept. 12, 2007) ....................................................................... 42

Creative Montessori Learning Ctrs. v. Ashford Gear L.L.C., 662 F.3d 913 (7th Cir. 2011) .................................................................................................. 33

Cyber Fin. Network v. Lendingtree Inc., 2007 WL 623642 (S.D.N.Y. Feb. 22, 2007) .......................................................................... 31

Empressa Cubana del Tabaco v. Gen. Cigar Co., 385 F. Appx. 29 (2d Cir. 2010) .............................................................................................. 30

Eubank v. Pella Corp., 753 F.3d 718 (7th Cir. 2014) .................................................................................................. 33

Freedom N.Y., Inc. v. United States, 438 F. Supp. 2d 457 (S.D.N.Y. 2006) .................................................................................... 31

Goldy v. Beal, 91 F.R.D. 451 (M.D. Pa. 1981) .............................................................................................. 41

Gray v. Dummitt, 2007 WL 6925690 (E.D.N.Y. Dec. 21, 2007) ........................................................................ 34

H.K. Porter Co. v. Goodyear Tire & Rubber Co., 536 F.2d 1115 (6th Cir. 1976) ................................................................................................ 41

Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238 (1944) ............................................................................................................... 40

Hege v. Aegon USA, L.L.C., 780 F. Supp. 2d 416 (D.S.C. 2011) ........................................................................................ 32

Huston v. Imperial Credit Commer. Mortg. Inv. Corp., 179 F. Supp. 2d 1157 (C.D. Cal. 2001) .................................................................................. 33

ISC Holding AG v. Nobel Biocare Fin. AG, 688 F.3d 98 (2d Cir. 2012) ............................................................................................... 31, 32

In re E. Sugar Antitrust Litig., 697 F.2d 524 (3d Cir. 1982) ................................................................................................... 34


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In re Lawrence, 363 B.R. 668 (Bankr. N.D.N.Y. 2007) ................................................................................... 41

In re Old Carco L.L.C., 423 B.R. 40 (Bankr. S.D.N.Y. 2010), aff’d. 2010 WL 3431158 (S.D.N.Y. Aug. 30, 2010) ........................................................ 36, 38

In re Payment Card Interchange Fee & Merch. Disc. Antitrust Litig., 986 F. Supp. 2d 207 (E.D.N.Y. 2013) .................................................................... 1, 20, 35, 39

King v. First Am. Investigations, Inc., 287 F.3d 91 (2d Cir. 2002) ............................................................................................... 36, 38

Kulig v. Midland Funding, L.L.C., 2014 WL 5017817 (S.D.N.Y. Sept. 26, 2014) ....................................................................... 33

Lee v. Marvel Enters., 765 F. Supp. 2d 440 (S.D.N.Y. 2011), aff’d. 471 Appx. 14 (2d Cir. 2015) ............................ 32

Lewis v. Nat’l Football League, 146 F.R.D. 5 (D.D.C. 1992) ................................................................................................... 33

Marderosian v. Shamshak, 170 F.R.D. 335 (D. Mass. 1997) ............................................................................................ 34

Martha Graham Sch. & Dance Found. v. Martha Graham Ctr. of Contemporary Dance, Inc., 466 F.3d 97 (2d Cir. 2006) ..................................................................................................... 31

Mendell on behalf of Viacom, Inc. ex rel. Viacom, Inc. v. Gollust, 909 F.2d 724 (2d Cir. 1990) ................................................................................................... 31

Nemaizer v. Baker, 793 F.2d 58 (2d Cir. 1986) ............................................................................................... 31, 32

Ortiz v. Fibreboard Corp., 527 U.S. 815 (1999) ............................................................................................................... 32

Pearson v. First NH Mortg. Corp., 200 F.3d 30 (1st Cir. 1999) ..................................................................................................... 41

Pichardo v. Ashcroft, 374 F.3d 46, 55 (2d Cir.2004) 200 F.3d 30 (1st Cir. 1999) ......................................................................................................30

Prince of Peace Enterprices, Inc. v. Top Quality Food Mkt., L.L.C., 2012 WL 4471267 (S.D.N.Y. Sept. 21, 2012) ....................................................................... 32


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Robinson v. Audi AG., 56 F.3d 1259 (10th Cir. 1995) ................................................................................................ 36

Sathianathan v. Smith Barney, Inc., WL 2417370 (N.D. Cal. Aug. 24, 2007) ................................................................................ 41

Shukla v. Sharma, 2014 WL 4437278 (E.D.N.Y. Sept. 9, 2014) ......................................................................... 40

Wagner v. Lehman Bros. Kuhn Loeb, Inc., 646 F. Supp. 643 (N.D. Ill. 1986) ........................................................................................... 33

Warren v. Garvin, 219 F.3d 111 (2d Cir. 2000) ................................................................................................... 31

Wyly v. Weiss, 697 F.3d 131 (2d Cir. 2012) ............................................................................................. 41, 42

Rules

Fed. R. Civ. P. 23(b)(2).......................................................................................................... passim

Fed. R. Civ. P. 30(b)(6)............................................................................................................18, 19

Fed. R. Civ. P. 60 ................................................................................................................... passim

Fed. R. Civ. P. 60(b) .............................................................................................................. passim

Fed. R. Civ. P. 60(b)(1)-(5)............................................................................................................31

Fed. R. Civ. P. 60(b)(2)..............................................................................................................6, 30

Fed. R. Civ. P. 60(b)(3)......................................................................................................31, 36, 38

Fed. R. Civ. P. 60(b)(6).......................................................................................................... passim

Fed. R. Civ. P. 60(c)(1) ....................................................................................................................6

Fed. R. Civ. P. 60(d)(3).......................................................................................................... passim

Fed. R. Civ. P 62(a)(3) .....................................................................................................................7

Fed. R. Civ. P. 62.1 ........................................................................................................................40

Fed. R. Civ. P. 62.1(a) ...............................................................................................................7, 40

Fed. R. Civ. P. 62.1(a)(1) and (2) ..................................................................................................40


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I. Introduction

Class Plaintiffs oppose the Rule 60 Motions to Vacate Judgment served by the 7-11,

Target and The Home Depot Objectors (referred to as the “7-11 Objectors”) and Discover

(collectively the “Movants”). At all times, both merchant classes (but as pertains to these

motions the Rule 23(b)(2) class) were more than adequately represented by Co-Lead Counsel,

not Gary Friedman. Mr. Friedman was not a Court-appointed Co-Lead Counsel in MDL 1720.1

He was subordinate to Co-Lead Counsel, along with many other firms, playing only a supporting

role in this litigation. Mr. Friedman’s unjustifiable conduct therefore could not, and did not,

have any impact on: 1) the adequacy of representation the class received; 2) the years of hard-

fought arm’s length settlement negotiations with Defendants, which involved two highly

respected and experienced mediators, and at times with the parties’ consent this Court; and 3) the

settlement terms that this Court has concluded were fair, reasonable and adequate.2

Co-Lead Counsel had no knowledge of Mr. Friedman’s conduct that is the basis of these

motions prior to notification by the Willkie Farr firm in February 2015.3 Declaration of K. Craig

Wildfang (Aug. 18, 2015) In Support of Class Plaintiffs’ Opposition to Rule 60 Motions To

1 The Court appointed Co-Lead Counsel are Robins Kaplan L.LP., Berger & Montague, P.C., and Robbins Geller Rudman & Dowd, L.L.P. (the Order appointed the Firms, not individual attorneys). (Dkt. No. 279). 2 The court-approved settlement included monetary compensation of approximately $7.25 billion and substantial injunctive relief in the form of changes to the governing rules of Visa and MasterCard, including, in particular, the right for merchants to differentially surcharge Visa and MasterCard credit cards, which the court concluded was “an indisputably procompetitive development that has the potential to alter the very core of the problem this lawsuit was brought to challenge.” In re Payment Card Interchange Fee & Merchant Discount Antitrust Litig, 986 F. Supp. 2d 207, 230 (E.D.N.Y. 2013). 3 For example, Co-Lead Counsel had no knowledge that Mr. Friedman forwarded to Ms. Ravelo any of the MDL 1720 information cited in footnote 26 of the 7-11 Objectors’ brief. While Co-Lead Counsel are disappointed that Mr. Friedman did so and ignorant as to his reasoning, those communication are irrelevant to Movants’ motion having no relationship to the settlement terms and final written settlement agreement.


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Vacate Judgment at ¶4 (Ex. 1) (“Wildfang Aug. 18, 2015 Decl.”). Co-Lead Counsel were

surprised and appalled to learn of such conduct and instructed Mr. Friedman “that neither you

nor your firm until further notice, is to participate in the representation of the Certified

Settlement Class in MDL 1720.” Id. (Ex. 1) quoting March 5, 2015 Letter from Patrick

Coughlin to Gary Friedman (Ex. 2).

Movants ask this Court to vacate the judgment based on a chimerical collusive scheme in

MDL 1720 between Mr. Friedman (one of plaintiffs’ counsel who played a supporting role, but

not a Court-appointed Co-Lead Counsel for the class in MDL 1720) and Keila Ravelo (one of

MasterCard’s counsel) to negotiate and leverage the “Level Playing Field” (“LPF”) provision in

the MDL 1720 class action settlement to benefit MasterCard at the expense of the merchant

class. Such a scheme could only have been effectuated through a future hypothetical settlement

in a separate and distinct case In re American Express Anti-Steering Rules Antitrust Litigation,

11MD-2221 (NGG)(RER) (the “Amex” litigation), in which Mr. Friedman was a co-lead

counsel, unlike here. This scheme contrived by Movants is nothing short of fantasy.

First, Mr. Friedman was not a member of the Court-appointed Co-Lead Counsel in MDL

1720. Co-Lead Counsel were the sole decision-makers on the conduct of the litigation, including

the terms of any settlement, and adequately represented the class at all times. Co-Lead Counsel

were the ones responsible for determining whether to agree to the final settlement terms,

including the LPF provision, and recommend them for approval. Mr. Friedman had none of

these responsibilities and had no decision-making authority; he had simply a supporting role in

this litigation. This in itself distinguishes this case from the role Mr. Friedman played in the


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Amex Litigation.4 While the Movants’ motions are predicated on Mr. Friedman’s unethical

conduct, they do not, and cannot, assert that Co-Lead Counsel acted unethically; the 7-11

Objectors’ expert ethicist does not, and could not, impute Mr. Friedman’s unethical conduct to

Co-Lead Counsel. The conduct of Mr. Friedman and Ms. Ravelo had no impact on the

procedural fairness of the MDL 1720 class settlement as demonstrated by the “negotiating

process,” the “arm’s length negotiations,” the “necessary experience and ability” of Co-Lead

Counsel, and the conduct of sufficient discovery. See Amex Litigation, No. 1:11-md-2221-NGG-

RER, Dkt. No. 657 at 18 (discussing factors relevant to determining procedural fairness).

Second, although central to Movants’ arguments, Mr. Friedman and Ms. Ravelo did not

suggest, and were not responsible for, including the LPF as a settlement term.

the LPF provision, was agreed to

by all of the parties in MDL 1720 before Mr. Friedman had any participation in assisting Co-

Lead Counsel in portions of the drafting of the Definitive Class Settlement Agreement.

Wildfang Aug. 18, 2015 Decl. at ¶¶6, 10 (Ex. 1).

4 Amex Litigation, No. 1:11-md-2221-NGG-RER (Dkt. No. 657, Aug. 4, 2015) at 38-39 and 43 n. 49.


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Third, contrary to Movants’ claim that Co-Lead Counsel and the Defendants were

ignorant as to the historical evidence of credit card transaction surcharging, Co-Lead Counsel

well-understood the effects of differential surcharging in the Australian payment card market as

a result of fact and expert discovery in MDL 1720. While not privy to all of the record evidence

developed in the Amex litigation, Co-Lead Counsel in MDL 1720 had developed a hefty

evidentiary record of their own and had gained more than sufficient knowledge to understand the

importance of differential surcharging as a competitive tool in the market and to insist on

differential surcharging as structural relief in their settlement agreement.

Fourth, the scheme constructed by Movants to explain the Friedman/Ravelo

communications hinges entirely, and could only come to fruition, upon Mr. Friedman negotiating

a parity surcharge provision with Amex and the Amex Court approving that settlement provision.

In other words, each of the following events had to occur, each of which neither Mr. Friedman,

nor Ms. Ravelo, could control, much less guarantee would happen: 1) Amex had to agree to

settle the case, 2) Amex had to agree to modify its non-discrimination rule to permit parity

surcharging of all credit cards regardless of network brand; and 3) the Court had to grant final

approval of that settlement. Of course, by the time Movants filed their motions describing their

elaborate theory, they already knew that a proposed settlement providing for parity surcharging

was reached with Amex—entered more than two years after the time Movants allege the

collusive scheme was hatched. However, after they filed the present motions, the proposed

settlement was rejected by the Amex court (No. 1:11-md-2221-NGG-RER, Dkt. No. 657). The

necessary predicate to effectuate the alleged scheme therefore never materialized. Thus,

Merchants’ right to differentially surcharge obtained in the MDL 1720 settlement remains

undisturbed and Movants’ concern about market-wide parity surcharging—the alleged goal of


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the scheme—has vanished. Movants’ unsupported theory is also belied by the simple logic that

if Mr. Friedman and Ms. Ravelo had decision-making authority and control over the settlement

terms, they would have included a clear parity surcharging provision in the MDL 1720 class

settlement. But that did not happen, and could not have happened, because Mr. Friedman had no

decision-making authority in MDL 1720 and Ms. Ravelo also did not have the power to make it

happen. And any argument that Mr. Friedman and Ms. Ravelo conspired through an illegitimate

agreement to undo a legitimate agreement (the MDL 1720 settlement) is not only more remote

and fanciful, but at bottom has no bearing on the hard-fought, fair and reasonable settlement

achieved in MDL 1720. See Green Aug. 17, 2015 Decl. at ¶¶3, 12 (Ex. 3). Movants, having

successfully used Mr. Friedman’s indiscretions to help reject the Amex settlement, are now

overreaching in an attempt to undo the MDL 1720 settlement, which contains the very

competition-enhancing tool they promote as critical.

Co-Lead Counsel take seriously the allegations concerning Mr. Friedman’s improper

communications with Ms. Ravelo. However, while those improper communications may have

tainted and infected the settlement negotiations in the Amex litigation, where Mr. Friedman was

the primary Co-Lead Counsel responsible for litigating and settling that case, they had no effect

on the settlement negotiations and settlement terms in MDL 1720 because it was litigated,

negotiated and settled by Co-Lead Counsel, not Mr. Friedman. And of course no settlement

could have been achieved in MDL 1720 without the active participation and agreement of all

Defendants which include not only MasterCard but also Visa and some of the largest banks in

the world, including Bank of America, Chase, Citi and Wells Fargo. Finally, and telling, are the

litigation positions and settlement commentary proffered by the Individual Merchant Plaintiffs

(“IMPs”), who filed individual actions in both cases challenging the anti-steering rules of the


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three big networks. Armed with the entire Amex Australian record in both cases, the IMPs

forcefully argued in support of final approval of the MDL 1720 class settlement, including the

LPF provision, while strenuously objecting to the subsequent proposed class settlement in the

Amex litigation because it would undermine the right to differentially surcharge achieved in the

MDL 1720 settlement.5 At bottom, Movants have provided no basis to disturb this Court’s

determination that the settlement was negotiated at arms-length by the Co-Lead Counsel and

Defendants and was a fair, reasonable and adequate settlement. Movants’ motions should be

denied.

In addition to denying the motions on the merits, Class Plaintiffs urge the Court to deny

the 7-11 Objectors’ motion on the additional ground that it is untimely. Although the 7-11

Objectors move under Fed. R. Civ. P. 60(b)(6), their motion is plainly predicated on new

evidence concerning the alleged misconduct of Mr. Friedman and consequently the motion

clearly falls under Fed. R. Civ. P. 60(b)(2). Accordingly, the 7-11 Objectors cannot avoid the

one year time bar under Fed. R. Civ. P. 60(c)(1) by attempting to move under the wrong

subdivision of Rule 60.

Discover attempts to circumvent Fed. R. Civ. P. 60(b)(2) by moving under Rule 60(d)(3).

That rule is inapplicable here because there has been no fraud on this Court.

5 The IMPs were well-positioned to understand the benefits of the relief for merchants obtained in the MDL 1720 settlement compared to the shortcomings of the relief in the proposed Amex settlement because they “have had a front row seat in both cases and have been close enough to be heard by both the Department of Justice as it fashioned Consent Decrees with Visa and MasterCard and by Class Counsel in MDL 1720 as they fashioned relief to open the door to reform in the industry.” See Amex litigation, No. 1:11-md-2221-NGG-RER, Dkt. No. 581 at 2. The IMPs observed that “[i]t has been clear from the day that Judge Gleeson approved the Class Settlement in MDL 1720 that the Amex non-discrimination provision (NDP) and its application to prevent differentiated treatment of payment cards at the point of sale has remained the final roadblock to the reforms that merchants and the law of competition require.” Id.


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Finally, under Fed. R. Civ. P. 62.1(a), this Court may deny the motions (which Class

Plaintiffs urge) or defer it, but it cannot grant it. At most, the Court may “state either that it

would grant the motion if the court of appeals remands for that purpose or that the motion raises

a substantial issue.” Fed. R. Civ. P 62(a)(3). Class Plaintiffs urge that both of the reasons should

be rejected as the motions are baseless.

II. The Rule 60 Motions Should Be Denied Because Friedman’s Communications with Ravelo Had No Effect on the Class Settlement Negotiations And Settlement Terms A. The Court-Appointed Co-Lead Counsel Were Responsible For Litigating and Settling MDL 1720 In 2005 over 38 class actions and seven individual actions were filed in federal courts

around the United States and eventually consolidated and coordinated in the Eastern District of

New York before Judge Gleeson by an order from the Judicial Panel on Multidistrict Litigation.

See Declaration of K. Craig Wildfang (April 11, 2013) at ¶25 (Dkt. No. 2113-6) (“Wildfang

April 11, 2013 Decl.”). Two motions for appointment of lead counsel were filed. One sought

that Robins Kaplan LLP, Berger & Montague, P.C. and Robins Geller Rudman and Dowd be

appointed Co-Lead Counsel and the other sought that Milberg Weiss be appointed sole lead

counsel. Id. at ¶26. Pursuant to the Court’s February 24, 2006 order, Robins Kaplan L.L.P.,

Berger & Montague, P.C. and Robins Geller Rudman and Dowd were appointed Co-Lead

Counsel. Dkt. No. 279. The Court’s Order further provided for Co-Lead Counsel to be

responsible for litigating this matter, including, inter alia to conduct settlement negotiations on

behalf of the class. Id.

As directed by the Court, Co-Lead Counsel took responsibility for every aspect of this

litigation on behalf of the merchant class. Co-Lead Counsel designated two other highly

experienced law firms to serve as Co-Chairs of the Class Plaintiffs’ Steering Committee,


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Freedman, Boyd, Hollander, Goldberg, Urias & Ward P.A., and Hulett Harper Stewart LLP.

Wildfang April 11, 2013 Decl. at ¶29 (Dkt. No. 2113-6); Wildfang Aug. 18, 2015 Decl. at ¶2

(Ex. 1). These firms constituted the entirety of the Class Leadership Group in this case. Id. Co-

Lead Counsel were the sole decision-makers and represented the class at all times. Wildfang

Aug. 18, 2015 Decl. at ¶5 (Ex. 1). The Steering Committee Co-Chairs assisted Co-Lead Counsel

in managing the efforts of other lawyers for the class, and were consulted in key decisions

regarding the development and implementation of litigation and settlement negotiation strategy.

Id at ¶2 (Ex. 1); Wildfang April 11, 2013 Decl. at ¶29 (Dkt. No. 2113-6). Co-Lead Counsel were

the only ones responsible for determining whether to agree to the final settlement terms,

including the LPF provision, and recommend them for approval. Wildfang Aug. 18, 2015 Decl.

at ¶5 (Ex. 1). Mr. Friedman had none of the responsibilities and had no decision-making

authority. Id. at ¶¶5-7, 10 (Ex. 1). For example, Co-Lead Counsel:

● Oversaw and had primary responsibility for the drafting and submission of the operative consolidated class complaints in MDL 1720, which were signed by one of the Co-Lead Counsel. See, e.g., Wildfang April 11, 2013 Decl. at ¶36 (Dkt. No. 2113-6), 128-33; Dkt. No. 1153 (SCACAC);6 ● Drafted, signed, submitted and argued the oppositions to all of Defendants’ motions to dismiss the operative complaints. See, e.g., Wildfang April 11, 2013 Decl. at ¶¶47-51, 134-41 (Dkt. No. 2113-6); ● Oversaw and had primary responsibility for drafting, signing, submitting and arguing, the class certification motion and supporting papers, including retaining and working with the economist who submitted reports in support of class certification, and then helped the expert prepare for his deposition and defended the deposition. Co-Lead Counsel also deposed Defendants’ economic expert in opposition to class certification and had responsibility for drafting and submitting their opposition to exclude class plaintiffs’ expert, which was argued by a member of the steering committee. See, e.g., Wildfang April 11, 2013 Decl. at ¶¶96-100, 138-41 (Dkt. No. 2113-6);

6 In these bullet points, Class Plaintiffs provide just a few examples of the vast filings that are too numerous to list but are available to review in the docket entries for in MDL 1720.


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● Oversaw and had primary responsibility for identifying, retaining and working with Class Plaintiffs’ merits experts and then helping those experts prepare for their depositions and defending those depositions as well as deposing Defendants’ merits experts. Co-Lead Counsel were assisted by the Co-Chairs of the Steering Committee and a select few other attorneys for the class. See, e.g., Wildfang April 11, 2013 Decl. at ¶¶142-50 (Dkt. No. 2113-6); ● Oversaw and had primary responsibility for drafting, signing, submitting and arguing Class Plaintiffs’ affirmative summary judgment motion, Class Plaintiffs’ opposition to Defendants’ summary judgment motions; Class Plaintiffs’ opposition to Defendants’ Daubert motions; and Class Plaintiffs’ Daubert Motions. Co-Lead Counsel was assisted by the Co-Chairs of the Steering Committee and a select few other attorneys for the class. See, e.g., Wildfang April 11, 2013 Decl. at ¶¶152-62, 165-68 (Dkt. No. 2113-6); ● In collaboration with the IMPs, and with the assistance of Mr. Friedman on anti-steering restraint issues, were responsible for the issuance and drafting of hundreds of interrogatories and document requests and primarily responsible for the meet and confer process relating to disputes over the scope of the written discovery requests. See, e.g., Wildfang April 11, 2013 Decl. at ¶¶66-67 (Dkt. No. 2113-6); ● Organized and oversaw the review of nearly 4 million documents consisting of over 56 million pages and were the primary reviewers of the productions by the key defendants (Visa, MasterCard, Chase, Citi and Bank of America), along with several other bank defendants, and assigned and oversaw the review by other counsel for class plaintiffs of the remaining defendants. Co-Lead Counsel with the assistance of the Co-Chairs of the Steering Committee also negotiated and obtained production of the transaction data necessary for class plaintiffs’ experts to analyze injury and damages issues. See, e.g., Wildfang April 11, 2013 Decl. at ¶¶63-65, 69-72, 74, 76-79 (Dkt. No. 2113-6); ● Had primary responsibility for taking the depositions of the defendants’ top-level executives, took other fact witness depositions, and assigned and oversaw the deposition of other witnesses taken by various counsel for class plaintiffs. Co-Lead Counsel also had primary responsibility for preparing and defending the depositions of Class Plaintiffs’ employees. (See, e.g., Wildfang April 11, 2013 Decl. at ¶¶63-65, 69-72, 74, 76-79, 85 (Dkt. No. 2113-6); ● Along with IMPs, drafted all status reports that were submitted to the Court, and appeared at and spoke on behalf of the class plaintiffs at all status conferences, including arguing all disputed issues raised in the status conferences, such as discovery disputes. See, e.g., Wildfang April 11, 2013 Decl. at ¶¶30, 64, 72, 73 (Dkt. No. 2113-6); and ● Had primary responsibility for drafting, signing and submitting all memoranda in support of the settlement (both for preliminary and final approval) and presented oral argument in support of approval at both hearings. See, e.g., Dkt. Nos. 1656, 2111 & 5939; Sept. 12, 2013 Hr’g Tr.


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Co-Lead Counsel managed and controlled every aspect of this litigation.7 The

circumstances in the Amex case were the opposite. There, the Amex Court’s opinion describes

Mr. Friedman as the primary lawyer running the Amex litigation giving him decision-making

authority that he did not have in his subordinate role in MDL 1720.8 The Amex court highlighted

that:

7 The 7-11 Objectors erroneously claim

demonstrate that Friedman had anything more than a

subordinate role in MDL 1720.

The 7-11 Objectors imply too much from these statements. The

original complaint filed by Robins Kaplan, as did many others, “challenged, [] as unlawful monopolization under Section 2, many of the rules of Visa and MasterCard which disabled merchants from providing discounts, or employing surcharges, or to take other steps designed to make the transaction at the point-of-sale more transparent and to steer customers to a lower cost form of payment at the point-of-sale.” Wildfang April 11, 2013 Decl. at ¶22 (Dkt. No. 2113-6). And the drafting process for the FCACAC was led by Ryan Marth of Robins Kaplan, with Co-Lead Counsel “provide[ing]input, comments and edits such that the final product was truly a joint effort. Industry, economic, and legal experts were also consulted with regard to the factual and legal allegations in the complaint. All Class Plaintiffs—including their in-house and outside counsel—also received drafts of the FCACAC and were asked to provide substantive input into the facts that were alleged and the theories that were pursued.” Id. at ¶36. While Mr. Friedman provided input into the “ASR” claims in the FCACAC, he did so as a subordinate to Co-Lead Counsel.

does not address

litigation or settlement strategy in MDL 1720, or any attorney’s role in the case.

evidences that Mr. Friedman was in a subordinate role and was not leading anything as he was reporting to Mr. Wildfang

Class Plaintiffs anticipate that Movants will rely heavily on the Amex Court’s ruling to assert the same conclusions about Mr. Friedman’s conduct and its impact on the settlements of the


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● Friedman was appointed co-lead counsel (No. 1:11-md-2221-NGG-RER, Dkt. No. 657 at 4); ● “Friedman was the primary lawyer … driving these case generally” (Id. at 38); ● “Friedman signed and filed most of the Class Plaintiffs’ letters, briefs, and other submissions” (Id.); ● “It was Friedman who made appearances and spoke on behalf of Class Plaintiffs at court conferences” (Id.); ● “Friedman was the primary lawyer working on the settlement” (Id. at 38); and ● “It was Friedman who stood up and spoke in support of final approval of the Settlement of the Class Fairness Hearing” (Id. at 38). As discussed throughout, Mr. Friedman performed none of these leading functions in

MDL 1720, and in addition, he neither signed nor submitted the memorandum of understanding,

the Definitive Class Settlement Agreement or any of the briefing or declarations filed in support

the class settlement.9 See Wildfang Aug. 18, 2015 Decl. at ¶11 (Ex. 1). Mr. Friedman, himself,

clearly understood that he had no decision-making authority in MDL 1720.

Amex litigation should be applied in MDL 1720. However, as discussed throughout this brief, the factual circumstances of the two cases are far different requiring a different result here than in the Amex litigation. Moreover, as Judge Garaufis emphasized throughout his opinion: “[a]ny discussion of the 1720 MDL in this Memorandum and Order is included only for the purpose of assessing the proposed Class Settlement Agreement in the Amex Class Actions. Nothing said herein is intend to express any opinion whatsoever regarding the 1720 MDL class settlement or the Rule 60 motion currently being briefed in that action.” See American Express Merchants Anti-Steering Antitrust Litigation, No. 1:11-md-2221-NGG-RER, Dkt. No. 657 at n 7. See also id. at n. 38 (“this court expresses no opinion regarding the 1720 MDL settlement or the negotiating process that resulted in that settlement”); id. at n. 49 (“To reiterate, nothing stated herein is intended to express any opinion regarding the fairness, procedural or otherwise, of the 1720 MDL settlement agreement. Irrespective of Friedman’s or Ravelo’s degrees of participation or lack thereof in the negotiations of that agreement” (emphasis in original)). 9 See Dkt. No. 1588 (Memorandum of Understanding); No. 1656 (motion for preliminary approval and support documents), No. 2111 (motion for final approval and supporting documents); No. 5939 (reply brief in support of final approval and supporting documents).


12

10 This is entirely consistent with and buttressed by Magistrate

Judge Orenstein’s observation that Mr. Friedman did not have a leading role in MDL 1720:

Mr. Friedman, no disrespect intended. I just don’t recall Mr. Friedman’s role. I’ve had some familiarity with these proceedings over the past going on ten years, including settlement negotiations that occurred in court. Obviously, I don’t know what happened elsewhere. His name does not stand out as the one who was primarily involved, and I know you weren't there….I did review the docket. I believe his name appears twice, once on a notice of appearance and once on a letter filed in 2006 reporting an agreement with Discover…. and there's nothing else on the docket that shows his involvement.

Feb. 26, 2015 Hr’g. Tr. at 26:8-15; 28:18-21, 29:25-30:-3 (Ex. 9).

Movants provide submissions from former class representatives who,

ultimately objected to

the MDL 1720 settlement claiming that surcharging in any form is unhelpful to merchants.

10 reflect Mr. Friedman’s subordinate role.


13

11 From this, they surmise that the

LPF provision emanated from Mr. Friedman, which is false as discussed below. But more

importantly, what impact does any of this have? Mr. Friedman was very knowledgeable about

the effect of anti-steering rules on competition based on his many years of advocating on the

subject in a variety of fora. Wildfang Aug. 18, 2015 Decl. at ¶6 (Ex. 1). He, among others,

started and led the class case against Amex’s anti-steering restraints. Id. at ¶5 (Ex. 1). He,

among others (including Movants), was an advocate for the Durbin Amendment reforms that

promoted card steering to newly regulated, lower-cost debit cards. Id. at ¶6 (Ex. 1). He

encouraged the Department of Justice to investigate the networks’ anti-steering restrains, as one

would expect from the leader of the Amex class case.12 Id. (Ex. 1). And he started a litigation

effort to strike down states’ anti-surcharge laws as unconstitutional.13 Id. (Ex. 1). Because of his

knowledge of these subjects, Mr. Friedman participated in discovery, including analyzing the

discovery concerning the anti-steering restraints in MDL 1720. Id. at ¶5 (Ex. 1). As one of the

class counsel having a supporting role in MDL 1720, Mr. Friedman was also a good resource for

information on structural reform in addition to the class’ experts and the Australian experience.

11 Mr. Wildfang has submitted a declaration explaining Mr. Friedman’s actual role as a supporting player in MDL 1720. See Wildfang Aug. 18, 2015 Decl. at ¶¶5-7, 10 (Ex. 1).

Indeed, it was in the context of Mr. Friedman’s advocacy with the DOJ, as leader of the Amex case, that Mr. Wildfang was referring in ¶125 of his Declaration in Support of Class Plaintiffs’ Motion for Final Approval that Mr. Friedman was referred to as having had a role to play in the discussions with DOJ. See 7-11 Objectors’ Br. at 9-10. Although the sentence was perhaps less than clear, the intent was to refer to “Co-Lead Counsel” and, in addition, Mr. Friedman, as having participated in those discussions. The fact that he was never a member of any of the three Co-Lead Counsel firms in MDL 1720 should be patently obvious. 13 See Italian Colors Restaurant v. Harris, 2:14-at-00273 (E.D. Ca.); Lynn Rowell d/b/a Beaumont Greenery v. Abbott, 1:14-cv-00190 (W.D. Tex.); Dana’s Railroad Supply v. Bondi, 1:14-cv-00025-RS-GRJ (N.D. Fla); Expressions Hair Design v. Schneiderman, 13 cv 3775 (JSR) (S.D.N.Y.).


14

Wildfang Aug. 18, 2015 Decl. at ¶¶5-8 (Ex. 1). All of these sources, and others, helped Co-Lead

Counsel to analyze the impact and efficacy of structural reforms and helped Co-Lead Counsel to

decide how best to achieve a meaningful settlement in MDL 1720. Id. (Ex. 1). After all parties

accepted the Mediators’ Proposal, Co-Lead Counsel asked Mr. Friedman to assist in drafting

portions of the final written settlement agreement to memorialize the principal terms of the

Mediators’ Proposal. Id. at ¶6 (Ex. 1). At all times, the final decisions resided with Co-Lead

Counsel. Id. at ¶¶5-7 (Ex. 1). If Mr. Friedman later sold out for inadequate relief in his own

Amex case, that issue was put to rest by Judge Garaufis in his August 4, 2015 decision.

B. Following Years of Settlement Negotiations That Did Not Include Friedman Movants contend that Mr. Friedman conceived of the LPF term and inserted it into the

MDL 1720 settlement as a Trojan horse, which would enable him to more easily settle the Amex

case two years later with parity surcharging that would also inure to the benefit of MasterCard,

who his friend Ms. Ravelo represented.14 Movants claim that the LPF became an integral

settlement term only after a November 29, 2011 email from Mr. Friedman to Ms. Ravelo

suggesting that Amex would be happy with a LPF provision in the MDL 1720 settlement

because Amex could avoid differential surcharging by settling the Amex litigation through an

agreement to change its rule to effectively permit only parity surcharging in the marketplace.15

14


15

In particular, they assert, after the LPF provision became a proposed settlement term in MDL

1720, Mr. Friedman was responsible for negotiating, over the course of months, whether Class

Plaintiffs would agree to this term, and the scope of other rules relief.16 See 7-11 Objectors’ Br.

at 23-24; Discover Br. at 21-22. Movants further assert that solely Mr. Friedman and

MasterCard’s lawyers understood the implications of the LPF provision because of information

about Amex’s experience in Australia obtained in the Amex litigation that Mr. Friedman

provided to Ms. Ravelo during the course of negotiations in 2012.17 But all of these conjectures,

essential to the scheme Movants attempt to weave, are patently false.

1.

The idea of an LPF did not arise for the first time as a result of Mr. Friedman’s

. Nor was the LPF the brain child of either Mr. Friedman or Ms.

Ravelo . The LPF was introduced by

16 Movants assert that Mr. Friedman was acting to benefit MasterCard. But that assertion cannot be squared with Mr. Friedman filing four lawsuits, after the MDL 1720 settlement, challenging the constitutionality of state laws that ban surcharging. If restricting merchants’ ability to surcharge benefits MasterCard, how does MasterCard benefit if state laws banning surcharging are found to be unenforceable as unconstitutional? That conduct is evidence that Friedman appeared not to be acting to benefit MasterCard or any other defendant. 17 The 7-11 Objectors state the “massive breach of the American Express protective order occurred between approximately January 2012 and July 2012.” 7-11 Objectors Br. at 25. Discover makes a similar assertion (Discover Br. at 22) but also claims that Mr. Friedman provided Ms. Ravelo


16

The LPF provision

would prevent a network from being competitively disadvantaged if a network allowed its cards

to be surcharged, and were surcharged, while competitor networks restricted surcharging. Under

those circumstances, the network would risk losing transaction volume as cardholders faced with

a surcharge switched their transactions to another card brand not subject to a surcharge even if

the fees charged to merchants by that competitor were higher than the fees charged by the

network permitting surcharging. It might also cause large bank issuers to switch their card

portfolios to a brand that restricted surcharging and offered even higher discount rates (revenue)

to issuing banks. This would result in merchants’ card acceptance costs increasing which is

obviously contrary to the interests of the merchant class.

Co-Lead Counsel long understood why the network defendants might seek a means to

protect themselves against competitive disadvantage with Amex, and in fact shared a goal of not

driving issuing banks and their cardholders to any more expensive payment card system.

Wildfang Aug. 18, 2015 Decl. at ¶10 (Ex. 1). Co-Lead Counsel first learned of the LPF concept


17

2. Co-Lead Counsel Understood the Power of Differential Surcharging Movants suggest that Co-Lead Counsel did not understand the LPF provision could

negate merchants’ ability to differentially surcharge because they lacked sufficient information

about the effects of differential surcharging in Australia

(Discover Br. at 19-22 and 7-11 Objectors at 21-22).

. Id.

However, even without being privy to the complete record developed in the Amex litigation,19

Co-Lead Counsel had independently developed a significant understanding of the Australian

18

The 7-11 Objectors criticize Co-Lead Counsel for not seeking the Amex Australian record to inform their decision regarding the LPF. 7-11 Objectors Br. at 21-22. However, as explained herein, Co-Lead Counsel did not need those materials to make an informed decision. While Co-Lead Counsel did file a motion to compel production of some of those materials after preliminary approval was granted (Dkt. No. 1760 and No. 1531) those materials were requested merely to assist the Court if it felt it needed additional materials when deciding the motion for final approval of the settlement. As Co-Lead Counsel told the Court, “By this request, Class Plaintiffs are not in any way implying that there will not be enough information before the district court to adequately inform it ‘intelligently to approve’ the settlement…. Class Plaintiffs believe that the requested information will facilitate the work of any court-appointed expert.” (Dkt. No. 1788 at 2-3.) The Court denied the motion on February 1, 2013 and the Court-appointed expert never requested these materials.


18

experience, including the impact of differential surcharging on higher priced cards

, through consultation with their economic experts and the factual and expert record

developed in MDL 1720.20 And they recognized that the power of differential surcharging

outstripped any concern posed by the LPF.

Co-Lead Counsel had the benefit of insights and analyses from their primary economic

expert—Dr. Alan S. Frankel—one of the leading economic authorities on payment card systems

throughout the world, including Australia. Dr. Frankel well-understood the competitive effects

of differential surcharging on payment cards. Dr. Frankel submitted two exhaustive economic

reports in MDL 1720 in which he comprehensively explained the Australian experience

including the effects of the mandated reduction in Visa’s and MasterCard’s interchange fees and

differential surcharging on higher priced cards in Australia. See July 2, 2009 Report of Alan S.

Frankel, Ph.D. at ¶¶447-460 (“The Australian Experience”) (excerpts at attached as Ex. 13); June

22, 2010 Rebuttal Report of Alan S. Frankel, Ph.D. at ¶¶170-181 (excerpts attached as Ex. 14).

According to Dr. Frankel, differential surcharging has led to

. Id. (Exs. 13 and

14). One of the IMPs’ economic experts reached similar conclusions about the effects of

20 Co-Lead Counsel developed significant discovery relating to the Australia experience in MDL 1720, including the request and production of over 200,000 documents comprised of over 3 million pages via third-party discovery from Amex. Co-Lead Counsel also retained a consulting expert from Australia who was particularly knowledgeable about the Australian experience. Wildfang Aug. 18, 2015 Decl. at ¶8 (Ex. 1). This was in addition to documents produced by Visa and MasterCard on the subject and Rule 30(b)(6) depositions of MasterCard, Visa and Amex designees relating to the Australian reforms and the impact of surcharging, in addition to public disclosures by the Reserve Bank of Australia reporting on the impact of reforms, including differential surcharging and contractual undertakings that lowered merchant fees in consideration for merchants’ foregoing surcharging. Id. (Ex. 1). Similar discovery was taken relating to outcomes of reforms in the United Kingdom and the European Community. Id. (Ex. 1).


19

differential surcharging in Australia:

July 2, 2009 Expert Report of Dr. Christopher A.

Vellturo at ¶¶203-206 (excerpts attached as Ex. 15); June 22, 2010 Reply Report of Dr.

Christopher A. Vellturo at ¶¶37-51 (excerpts attached as Ex. 16). The experts’ opinions were

supported by the evidentiary record in MDL 1720 regarding Australia. For example,

21

23


20

.25

, Co-Lead Counsel knew that differential

surcharging was a very powerful tool that would permit merchants to exert pressure on the

highest rate cards in the market to lower their rates and that the threat of surcharging could be

leveraged by merchants to obtain lower rates on cards in exchange for not surcharging.26 In

other words, differential surcharging was a key tool for merchants to obtain lower card

acceptance costs. , Co-Lead Counsel,

got Visa and MasterCard to change their respective rules to permit differential

surcharging at the brand and product level. Wildfang Aug. 18, 2015 Decl. at ¶10 (Ex. 1). They

did so believing the

relief would be effective. Id. (Ex. 1). They also recognized that through this litigation they

could not change or control non-party Amex’s conduct. Id. (Ex. 1). Rather, as this Court

recognized, the problem posed by Amex’s rule would have to be addressed elsewhere “but that

isolating American Express as the only remaining major network insulated from price

competition will assist in the effort to ‘fix’ it.” In re Payment Card Interchange Fee & Merchant

Discount Antitrust Litig, 986 F. Supp. 2d at 234. Accordingly, the importance of achieving

differential surcharging for merchants outweighed any limitation caused by the LPF.

24 25 26

In fact, in his reports, Dr. Frankel addressed

the very type of general information


21

The IMPs recognized this as well.

.

Recognizing that obtaining the right to differentially surcharge at the brand and product level

through the MDL 1720 class settlement was a monumental victory that would be effective even

with the LPF, the IMPs were forceful proponents for final approval of the MDL 1720 class

settlement stating at the final approval hearing:

The case against American Express is powerful. The American Express executives, they studied this issue. I would put them up as the foremost experts in this whole world on what is the fear from surcharging. And I am convinced in a multiple of where we were a year ago that [surcharging] is the problem solver…. So, quickly, the relief against American Express we consider is critical. However, with the level playing field set up the way that it’s set up, we think this relief will be effective even in the face of American Express but we intend to win the American Express case”

Sept. 12, 2013 Hr’g Tr. at 46-47, 49 (Ex. 5). The IMPs also touted the MDL 1720 class

settlement as “the single greatest advancement of a merchant’s ability to resist high credit card

fees in industry history.” Individual Plaintiffs’ Memorandum in Support of the Settlement

Reforms (Dkt. No. 5934) at 5.27

In stark contrast, the same IMPs vehemently objected to the subsequently proposed

settlement in the Amex litigation. See American Express Merchants Anti-Steering Antitrust

Litigation, No. 1:11-md-2221-NGG-RER, Dkt. No. 657 at 10. Putting their objection in context,

27 The IMPs further explained the significance of the surcharging rights obtained in the MDL 1720 class settlement: “The Class Settlement gives merchants tools which they can use at the point of sale to stimulate Network price competition for merchants’ payment card volume if they choose to use them. And perhaps that is among the points here. The Class Settlement gives merchants the ability to give their customers choices about payment means and price which they never had before. Offering their customers those choices enable merchants to control/lower their card acceptance costs.” Id. (emphasis in original).


22

the IMPs explained to the Amex court that they “have had a front row seat in both cases and have

been close enough to be heard by both the Department of Justice as it fashioned Consent Decrees

with Visa and MasterCard and by Class Counsel in MDL 1720 as they fashioned relief to open

the door to reform in the industry. It has been clear from the day that Judge Gleeson approved

the Class Settlement in MDL 1720 that the Amex non-discrimination provision (NDP) and its

application to prevent differentiated treatment of payment cards at the point of sale has remained

the final roadblock to the reforms that merchants and the law of competition require.” See Amex

litigation, No. 1:11-md-2221-NGG-RER, Dkt. No. 581 at 2. The IMPs told the Amex court that

the settlement in that case should be disapproved because “the proposed class settlement is a sell-

out designed to accomplish nothing but to rob the merchant class in MDL 1720 of the benefit of

their bargain and give Amex, MasterCard and Visa immunity from differential surcharging—a

vital component in unbundled pricing.”28 Id. at 6.

Discover’s claim that Mr. Friedman provided to Ms.

Ravelo somehow informed Ms. Ravelo and MasterCard about

is undermined by some of the very

materials it cites to support its argument. That is particularly true of Discover’s contention that

The documents that Discover cites to support its contention

28 The IMPs further explained that the Amex settlement “allows MasterCard and Visa to roll back reforms on differential surcharging that those networks reluctantly agreed to after the merchant class fought for them in MDL 1720” (id. at 3) and that “[a]pproval of the [Amex] settlement would protect the credit card networks from competition, provide no benefit to the class, and deprive the Individual Plaintiffs of their opportunity to complete the reform…. This Court has already found that steering is generally procompetitive (Decision at 3) and the ‘differential surcharging is the most powerful form of steering.’” (Id. at 5).


23

demonstrate on their face that they were provided to Ms. Ravelo too late to impact anything in

MDL 1720.

July 13, 2012 is a significant date in MDL 1720; it is the day the Memorandum

of Understanding29 (“MOU”) was filed with this Court. The cited documents therefore have no

evidentiary value here as they unquestionably had no impact on the settlement terms and

negotiations in MDL 1720.

3. The Mediators’ Proposal Contained The Principal Settlement Terms, Movants’ motions also misapprehend the significance of the Mediators’ Proposal. They

appear to suggest that the Mediators’ Proposal was merely a jumping off point for contentious

negotiations over whether or not to include some or all of those terms in the final settlement

agreement.30 Discover Br. at 22-26; 7-11 Objectors Br. at 23-29. Movants assert that the “MDL

29 The terms of the “Class Settlement Agreement” attached to the MOU were identical to the terms of the Definitive Class Settlement Agreement but that document did not include the required exhibits such as the notices to the classes, the plan of distribution, the escrow agreements and the final judgments, which still needed to be drafted. See Dkt. Nos. 1588, 1588-1 and 1656-1. 30 This is exemplified by Discover’s assertion that

after this Court granted preliminary approval of the MDL 1720 class


24

1720 settlement was being negotiated” between “January 2012 and July 2012.” 7-11 Objectors

Br. at 25; Discover Br. at 22. This is not so. The Mediators’ Proposal, once accepted by the

parties (including certain former class representatives who later became objectors), became the

settlement in principle, setting forth the principal terms of settlement. Indeed, Professor Green

explained exactly these points in his declaration:

The Mediators’ Proposal contained proposed settlement terms for the core issues that the Parties were negotiating over, but anticipated that further negotiations would be necessary to finalize the details of the settlement. By the terms of the Mediators’ Proposal, each party was to respond by January 13, 2012 with either a “YES” or “NO” on a confidential, double-blind basis as to whether it was prepared to enter into a written agreement on the essential terms of the Mediators’ Proposal. If the mediators received a positive response from both the Class and Defendants, they would inform the Parties and the Court that there was a conditional Agreement in Principle subject to the execution of a final Settlement Agreement.

Declaration of Eric D. Green April 11, 2013 (Dkt. No. 2111-3) at ¶25 (emphasis added) (“Green

April 11, 2013 Decl.”). See also Green Aug. 17, 2015 Decl. at ¶9 (Ex. 3) (“The Mediators’

Proposal contained the conceptual essence of the parties’ final negotiated settlement and by its

terms did not admit of any further substantive negotiation over its essential conceptual

elements”); Declaration of the Hon. Edward A. Infante (Ret.) in Support of Class Plaintiffs’

Motion for Final Approval of Settlement April 11, 2013 (Dkt. No. 2111-2) at ¶10 (“The terms of

the final settlement agreement are consistent with the terms of the mediators’ proposal”); Infante

Aug. 14, 2015 Decl. at ¶6 (Ex. 4) (“Once accepted by the parties, the principle terms in the

Mediators’ Proposals were not expected to be further negotiated. What remained to be

completed was to fill in the details of the agreement.”).


25

When the parties accepted the Mediators’ Proposal it was expected and understood that

the parties had an agreement in principle, . It is important to

understand that these principal settlement terms did not arise solely from a two-day mediation

session with the parties, the mediators, and the Court in December 2011 and a few subsequent

meetings and calls. The principal settlement terms were the culmination of years of hard-fought

negotiations. The first mediation session with Judge Infante was April 14-15, 2008 (See, e.g.,

Wildfang April 11, 2013 Decl. at ¶178 (Dkt. No. 2113-6)) and the first mediation with Professor

Green was October 15, 2009 (Green April 11, 2013 Decl. (Dkt. No. 2111-3) at ¶12). From April

2008 through mid-December 2011 there were more than a dozen mediation session days and

hundreds of phone calls, emails and dozens of face to face meetings between counsel for the

parties as well as with the mediators to negotiate towards a settlement. See, e.g., Wildfang April

11, 2013 Decl. at ¶¶181 (Dkt. No. 2113-6); Wildfang Aug. 18, 2015 Decl. at ¶9 (Ex. 1). During

those settlement negotiations the merchant classes were represented solely by the Co-Lead

Counsel and they were the only ones with authority to negotiate and agree to settlement terms on

behalf of the merchant classes.31 Green Aug. 17, 2015 Decl. at ¶¶9-10 (Ex. 3); Green April 11,

2011 Decl. (Dkt. No. 2111-3) at ¶8; Infante Aug. 14, 2015 Decl. at ¶3, 6 (Ex 4); Wildfang Aug.

18, 2015 Decl. at ¶¶5, 7 (Ex. 1). Mr. Friedman did not participate in those mediation sessions

and meetings.32 Green Aug. 17, 2015 Decl. at ¶¶9-10 (Ex. 3); Infante Aug. 14, 2015 Decl. at ¶3,

31 The 7-11 Objectors also complain that they did not have the right to opt out of the Rule 23(b)(2) settlement and choose their own counsel. 7-11 Objectors Br. at 1. But they did choose their own separate counsel, objected to the Rule 23(b)(2) settlement and appealed the order granting final approval of that settlement. 32 Movants apparently concede that Mr. Friedman had absolutely no role in the negotiations and mediation sessions until no earlier than sometime in November 2011 undercutting their contention that Friedman had primary responsibility for negotiating the LPF provision and other rules changes. 7-11 Objectors’ Br. at 11; Discover Br. at 22 (pointing to settlement negotiations between January 2012 and July 2012). For this reason, Mr. Friedman could not, and did not,


26

6 (Ex. 4); Wildfang Aug. 18, 2015 Decl. at ¶¶5, 10 (Ex. 1). Simply put, Mr. Friedman had

nothing to do with the introduction and acceptance of the LPF provision as a settlement term,

much less any other settlement term.

4. The Co-Lead Counsel Was Solely Responsible for Negotiating and Accepting the Language in the Final Settlement Agreement After the parties accepted the principal settlement terms in the Mediators’ Proposal, they

still needed to “finalize the details of the settlement agreement” meaning they needed to draft the

language of the Definitive Class Settlement Agreement that embodied the agreed upon terms.

Doing so took several months and, at times, required the assistance of the mediators to resolve

disputes about wording and descriptions of the settlement terms. But, as discussed above, it was

not a negotiation over the accepted principal settlement terms set forth in the Mediators’

Proposal. Mr. Friedman assisted Co-Lead Counsel in finalizing portions of the Definitive Class

Settlement Agreement by providing input when asked to do so or drafting proposed language,

such as the language that expressly permits differential surcharging at both the brand and product

levels, after consultation with and instructions from Co-Lead Counsel. Wildfang Aug. 18, 2015

Decl. at ¶¶5-6 (Ex. 1). But none of this elevates him from a subordinate position to a decision-

maker. Professor Green confirms that he never had a phone call or private meeting with Mr.

Friedman, that he did not consider Mr. Friedman to be a decision-maker, and that Mr. Friedman

provide Ms. Ravelo with “MDL 1720 Class’ position on the surcharging-rules relief and the LPF.” 7-11 Objectors Br. at 20.


27

had a subordinate role at the sessions regarding the final written agreement. Green Aug. 17,

2015 Decl. at ¶10 (Ex. 3). Judge Infante likewise confirmed that the sole decision-makers during

this time period on behalf of Class Plaintiffs were Co-Lead Counsel and that he did not interact

with Mr. Friedman on these issues relating to the final settlement agreement. Infante Aug. 14,

2015 Decl. at ¶6 (Ex. 4). Consistent with the declarations from Professor Green and Judge

Infante, Mr. Friedman himself understood he had no authority

Both Professor Green and Judge Infante also confirmed that from their perspectives Ms.

Ravelo was not the decision-maker for MasterCard.33 Green Aug. 17, 2015 Decl. at ¶¶7, 10 (Ex.

3); Infante Aug. 14, 2015 Decl. at ¶7 (Ex. 4). The apparent decision-maker for MasterCard was

Mr. Gallo, the lead lawyer during the negotiations. Id.

The above narrative describing the facts surrounding the negotiations, including the

timing and acceptance of the Mediators’ Proposal, followed by the implementation of the

principal terms via the drafting process, expose as vast overstatements the import of Mr.

Friedman’s involvement and the non-impact of his information sharing with Ms. Ravelo on the

settlement of MDL 1720. Some of the assertions are flatly and demonstrably false, such as

33 Co-Lead Counsel shared the same view based on interactions during the settlement negotiations. Wildfang Aug. 18, 2015 Decl. at ¶9 (Ex. 1).


28

(among numerous others) Discover’s assertion that “Plaintiffs’ entire strategy with respect to

settlement and the Level Playing Field rules was shared by Mr. Friedman with MasterCard’s

counsel at each step of the negotiations” (Discover Br. at 18) and the 7-11 Objectors assertions

that Friedman gave “Ravelo the complete roadmap of the class’s negotiation positions on key

surcharging issues.”34 (7-11 Objectors Br. at 28).

Movants also take great liberties with the evidence to falsely suggest that Mr. Friedman

effectively had the role of a Co-Lead Counsel. For example, the 7-11 Objectors claim

While Mr. Friedman may have helped draft

34

Movants ask this Court to blindly accept—contrary to

the evidence—that Mr. Friedman was effectively a Co-Lead Counsel and was the decision-maker with respect to the rules relief. The Court should not do so as the documents they rely on do not support their claim.

Mr. Friedman had no decision-making authority.


29

he did so at the direction of Co-Lead Counsel and circulated

only after review by, input from, approval of, and authorization from “Class Plaintiffs Lead

Counsel Group.” See Wildfang Aug. 18, 2015 Decl. at ¶6 and footnote 1 (Ex. 1).

In another example, Discover relies

after preliminary approval of the class settlement had already

been granted. Discover relies

would remain

subject to the anti-competitive Level Playing Field rules.” Discover Br. at 16 and Exs. 34, 39.

This is pure fantasy. It is not evidence of collusive behavior but merely recognition of the

obvious: Visa and MasterCard would be unwilling to agree to remove one of their primary

competitors in the credit card market from the definition of a competitive card brand—which

proved to be correct. See Discover Br. at 15-16.

In sum, the information provided by Mr. Friedman to Ms. Ravelo that is the

focus of Movants’ arguments could not have had, and did not have, any impact on the

negotiation and acceptance of the principal settlement terms, including the LPF provision, or the

negotiations relating to the language of the Definitive Class Settlement Agreement that was

submitted to the Court for approval. See 7-11 Objectors Br. at 26-29 and Discover Br. at 23-25.

Finally, contrary to the 7-11 Objectors’ contention (7-11 Objectors Br. at 26-27), Co-

Lead Counsel negotiated for and the parties agreed to a provision in the Definitive Class

Settlement Agreement that ensures that the LPF effectively sunsets. Wildfang Aug. 18, 2015


30

Decl. at ¶10 (Ex. 1). The LPF applies only to (i) higher priced products, or (ii) networks that

restrict or completely bar surcharging. Dkt. No. 1656-1 Definitive Class Settlement Agreement

at ¶¶42, 55. The LPF therefore sunsets by operation (that is it no longer applies) when a

competitive card brand does not have rules that prevent surcharging. Wildfang Aug. 18, 2015

Decl. at ¶10 (Ex. 1).

Discover also completely mischaracterizes the purpose and effect of another one of the

details filled in prior to the parties accepting and submitting the Definitive Class Settlement

Agreement—the clause permitting merchants to contract away their right to surcharge. (Dkt. No.

1656-1 at ¶¶42, 55). Discover implies that the clause is sinister giving card brands the ability to

eliminate surcharging from the market and arises out of

, the contracting

provision and is pro-competitive because it allows merchants to leverage

differential surcharging to get lower rates and ensures that merchants cannot be required to give

away the right to surcharge for illusory or no compensation. See Green Aug. 17, 2015 Decl. at

¶11 (Ex. 3).

III. The 7-11 Objectors’ Rule 60 Motion is Untimely

As a general matter, “Rule 60(b) motions are disfavored.” Empresa Cubana del Tabaco

v. Gen. Cigar Co., 385 F. Appx. 29, 31 (2d Cir. 2010) (citing Pichardo v. Ashcroft, 374 F.3d 46,

55 (2d Cir.2004). Under Rule 60 and binding authority, the 7-11 Objectors’ motion is untimely

and their efforts at a procedural sleight of hand are unavailing.

Although the 7-11 Objectors assert their motion is based on Mr. Friedman’s “failure to

disclose conflicts of interest,” the motion is predicated on newly discovered evidence relating to

Mr. Freidman’s conduct. Newly discovered evidence falls plainly under Rule 60(b)(2). The 7-


31

11 Objectors do not move under that provision in a clear effort to avoid the one year limitation,

but instead wrongly move under Rule 60(b)(6). Such gamesmanship is not countenanced. A

movant cannot move under Rule 60(b)(6) “if the reasons offered for relief from judgment are []

covered under the more specific provisions of Rule 60(b)(1)-(5).” Warren v. Garvin, 219 F.3d

111, 114 (2d Cir. 2000) (citing Liljeberg v. Health Serv. Acquisition Corp., 486 U.S. 847, 863 &

n. 11 (1988)). See also, ISC Holding AG v. Nobel Biocare Finance AG, 688 F.3d 98, 109 (2d

Cir. 2012) (“Rule 60(b)(6) relief is only available if Rules 60(b)(1) through (5) do not apply);

Nemaizer v. Baker, 793 F.2d 58, 63 (2d Cir. 1986) (same). This is especially true where the

movant moves under Rule 60(b)(6) in an attempt “to circumvent the 1–year limitations period

that governs Rule 60(b)[(2)].” Warren, 219 F.3d at 114.

That is exactly what the 7-11 Objectors are attempting to do here. They seek relief from

a final order entered on January 14, 2014 but their motion was not filed until eighteen months

later—July 28, 2015. Because “[t]his limitations period is ‘absolute,’” Movants’ untimely

motion should be denied. Id. (internal citations omitted). See also, Martha Graham Sch. &

Dance Found., Inc. v. Martha Graham Ctr. of Contemporary Dance, Inc., 466 F.3d 97, 100 (2d

Cir.2006) (same). This is so even if it would have been impossible to uncover the new evidence

within a year from the final judgment. See Cyber Fin. Network v. Lendingtree Inc., 2007 WL

623642, at *4 (S.D.N.Y. Feb. 22, 2007) (rejecting attempt to recast a 60(b)(3) motion under

60(b)(6) despite the contention that the alleged evidence of fraud could not have possibly been

discovered within the one-year time period because “[Rule 60(b)] creates no exception for

evidence or fraud discovered more than a year after judgment”); Freedom N.Y., Inc. v. United

States, 438 F. Supp. 2d 457, 465 (S.D.N.Y. 2006) (same). At bottom, “Rule 60(b) strikes a


32

balance between serving the ends of justice and preserving the finality of judgments.” Nemaizer,

793 F.2d at 61.

IV. Because Co-Lead Counsel Adequately Represented the Rule 23(b)(2) Class, the Rule 60(b)(6) Requirements Cannot be Established Even if the 7-11 Objectors could establish that subdivisions 1-5 are inapplicable—and

they cannot—Rule 60(b)(6) is inapplicable unless they show that “extraordinary circumstances

are present or the failure to grant relief would work an extreme hardship on the movant.”35 ISC

Holding, 688 F.3d at 109; Nemaizer, 793 F.2d at 63 (same). And even assuming arguendo Rule

60(b)(6) was applicable, “in order to prevail the movant must still demonstrate a strong case that

the movant has a meritorious claim.” Prince of Peace Enterprices, Inc. v. Top Quality Food

Mkt., LLC, 2012 WL 4471267, at *3 (S.D.N.Y. Sept. 21, 2012) (C.J. Preska). “Rule 60(b)(6) has

been used sparingly as an equitable remedy to prevent manifest injustice. The rule is to be

utilized only where extraordinary circumstances prevented a party from taking timely action to

prevent or correct an erroneous judgment. [] In order to qualify for such relief, a party must set

forth ‘highly convincing material’ in support of its motion.” Lee v. Marvel Enterprises, Inc., 765

F. Supp. 2d 440, 452 (S.D.N.Y. 2011) aff’d. 471 Fed. Appx. 14 (2d Cir 2012). The 7-11

Objectors cannot satisfy these stringent standards.

The 7-11 Objectors declare that a “class is entitled to loyal, ‘conflict free counsel.’” 7-11

Objectors Br. at 34 (quoting Ortiz v. Fibreboard Corp., 527 U.S. 815, 863 (1999)). We agree.

That is exactly what the Rule 23(b)(2) class received from the Court appointed Co-Lead

Counsel. Co-Lead Counsel alone were responsible for adequately representing the interests of

35 Indeed, as a general matter, “[m]otions under Rule 60(b) are addressed to the sound discretion of the district court and are generally granted only upon a showing of exceptional circumstances.” Mendell ex rel. Viacom, Inc. v. Gollust, 909 F.2d 724, 731 (2d Cir.1990).


33

the Rule 23(b)(2) class and did so.36 Correctly, the 7-11 Objectors and their expert ethicist—

Professor Simon—do not impute Friedman’s conduct to Co-Lead Counsel.37 Mr. Friedman

acted alone without Co-Lead Counsel’s knowledge and authorization.

Mr. Friedman’s conduct did not taint the settlement negotiation process. Mr. Friedman,

as the 7-11Objectors appear to concede, had no role in the process that led to the principal

settlement terms in the Mediators’ Proposal, , and the acceptance of

those terms. His assistance, as a subordinate to Co-Lead Counsel, in helping to develop verbiage

for the Definitive Class Settlement Agreement to memorialize the agreement in principle set

forth in the Mediators’ Proposal did not transform him into a lead counsel responsible for

determining what rules relief was fair and adequate in the MDL 1720 class settlement. The 7-11

Objectors’ unsubstantiated claim that “Friedman was the supposed independent, adequate

36 For this reason alone, the 7-11 Objectors characterization of Co-Lead Counsel as “other class counsel” to assert the Rule 23(b)(2) class did not have independent representation is factually wrong and disingenuous. 7-11 Objectors Br. at 37. And because Mr. Friedman was not a co-lead counsel, objectors’ reliance on cases finding co-lead counsel to be inadequate due to a conflict of interest is thus misplaced. See Creative Montessori Learning Ctrs. v. Ashford Gear LLC, 662 F.3d 913 (7th Cir. 2011) (vacating class certification where the court appointed co-lead counsel lacked integrity demonstrating a lack of trustworthiness); Kulig v. Midland Funding, LLC, 2014 WL 5017817, at *6 (S.D.N.Y. Sept. 26, 2014) (denying class certification because the plaintiff’s lawyer was inadequate to be appointed class counsel); Eubank v. Pella Corp., 753 F.3d 718 (7th Cir. 2014) (co-lead counsel was inadequate because he had a disabling conflict of interest); Hege v. Aegon USA, L.L.C., 780 F. Supp. 2d 416 (D.S.C. 2011) (refusing to give preclusive effect to a class action settlement because the court found that the court appointed class counsel was inadequate due to a conflict of interest); Huston v. Imperial Credit Commercial Mortg. Inv. Corp., 179 F. Supp. 2d 1157 (C.D. Cal. 2001) (C.D. Cal. 2001) (proposed class counsel inadequate due to a conflict of interest); Lewis v. NFL, 146 F.R.D. 5 (D.D.C. 1992) (denying class certification and finding proposed lead counsel inadequate to be appointed class counsel because of its dual representation of parties was an ethical violation); Wagner v. Lehman Bros. Kuhn Loeb, Inc., 646 F. Supp. 643 (N.D. Ill. 1986) (ethical violation barred attorney from being appointed lead counsel for the class). 37 It should also be noted that Professor Simon’s opinions are based, in part, on the false assumptions that “Mr. Friedman was a senior member of the team in MDL 1720 and had primary responsibility for handling the negotiations for the surcharging relief that included the LPF term.” (7-11 Objectors Ex. 1 at ¶12).


34

representation” for the Rule 23b(2) class is false. See 7-11 Objectors Br. at 37. Co-Lead

Counsel were the only ones responsible for litigating and settling MDL 1720 and the ones

responsible for representing the interests of the Rule 23(b)(2) class. See, e.g., Wildfang Aug. 18,

2015 Decl. at ¶¶5, 7, 10, 11 (Ex. 1).

The 7-11 Objectors do not cite a single case invoking Rule 60(b)(6) to vacate a judgment

where the attorney at issue was neither Co-Lead Counsel nor the direct counsel representing the

client. The factual circumstances in cases they rely on are inapposite from those in MDL 1720.

In each of those cases, unlike here, the improper conduct was committed by the co-lead counsel

or the counsel directly representing an individual client rendering the representation inadequate.

See Church & Dwight Co. v. Kaloti Enters. Of Mich., L.L.C., 2011 WL 4529605, at *7

(E.D.N.Y. Sept. 28, 2011) (vacating default judgment under Rule 60(b)(6), in part, because the

attorney was simultaneously representing two defendants who had differing interests); In re E.

Sugar Antitrust Litig., 697 F.2d 524, 532-34 (3d Cir. 1982) (affirming the denial of Rule 60(b)

motion, although on grounds different from those of the district court, but finding an appearance

of impropriety because the Co-Lead Counsel firm merged with a firm that had previously

represented certain defendants in the same litigation); Marderosian v. Shamshak, 170 F.R.D.

335, 342 (D. Mass. 1997) (vacating judgment because counsel was simultaneously representing

two defendants with divergent interests resulting in a conflict of interest).

Mr. Friedman’s reprehensible conduct did not affect the integrity of the settlement

negotiations or the judicial process.38 The 7-11 Objectors’ request to have this Court vacate, at

38 The 7-11 Objectors cite Gray v. Dummitt, 2007 WL 6925690 (E.D.N.Y. Dec. 21, 2007) (M.J. Orenstein) overruled by 2009 WL 210865 (E.D.N.Y. Jan. 9, 2009) for the court’s obligation to protect the process. But, Class Plaintiffs note that the Gray case concerned an alleged conflict between a client and her direct attorney which had the potential to affect the integrity of the adversarial process.


35

this late stage, a class settlement that it found to be fair, reasonable and adequate, is unwarranted

and baseless on the record here. Movants seem to ignore that the Court found, among other

supporting factors, that the differential surcharging relief obtained here is “an indisputably

procompetitive development that has the potential to alter the very core of the problem this

lawsuit was brought to challenge” (In re Payment Card Interchange Fee & Merchant Discount

Antitrust Litig, 986 F. Supp. 2d at 230). It is confounding that Movants weave a supposed

scheme to suppress differential surcharging that they agree is necessary to promote inter-network

competition, yet insistently strive to unravel the very settlement that promoted the very merchant

freedom they now promote so fervently.

The 7-11 Objectors have failed to show that Rule 60(b)(6) is applicable or even that relief

would be warranted under that rule. Accordingly, their motion should be denied

V. There Was No Fraud Upon the Court

Discover cannot meet the stringent standards to prove that the communications between

Mr. Friedman and Ms. Ravelo constitute a fraud upon the court under Fed. R. Civ. P. 60(d)(3).

As we have shown, the conduct had no impact on the terms of the MDL 1720 settlement because

Co-Lead Counsel, IMP’s counsel, defense counsel (certainly Visa’s and the banks’ counsel) and

the mediators all conducted negotiations and made decisions without knowledge of the conduct.

It had no impact on the Court’s determination, as an independent arbiter of its terms, that the

settlement was fair, reasonable and adequate and that the settlement was the result of arm’s-

length negotiations by those with authority to make agreements. No false statements were made

to the Court and, therefore, Rule 60(d)(3) does not apply.


36

Even if Rule 60(d)(3) was applicable, Discover must, but cannot, prove fraud upon the

court by “clear and convincing evidence.”39 King v. First American Investigations, 287 F.3d 91,

95 (2d Cir. 2002); In re Old Carco, 423 B.R. 40, 51 (Bankr. S.D.N.Y. 2010) aff’d. 2010 WL

3431158 (S.D.N.Y. Aug. 30, 2010). Additionally, “[t]he boundaries of the concept of ‘fraud

upon the court’ are strict.” Old Carco, 423 B.R. at 52 (citations omitted). “Fraud upon the court

should embrace ‘only that species of fraud which does or attempts to, defile the court itself, or is

a fraud perpetrated by officers of the court so that the judicial machinery cannot perform in the

usual manner its impartial task of adjudging cases.’” King, 287 F.3d at 95 (internal citations

omitted); Old Carco, 423 B.R. at 51 (same). “[T]he fraud, misrepresentation or conduct must

have actually deceived the court. If a court’s judgment was not influenced by the conduct at

issue, the judgment should not be set aside.”40 Old Carco, 423 B.R. at 52. “Any doubts” as to

the existence of the fraud must be “resolved in favor of upholding the finality of the judgment.”41

Id. at 51.

Discover cannot meet this high standard. Co-Lead Counsel did not mislead the Court,

even unknowingly, and Discover does not contend otherwise. Rather, Discover asserts that the

fraud on the court consisted solely of Mr. Friedman and Ms. Ravelo failing to reveal their 2012

39 In its discussion and analysis of the alleged fraud on the Court, Discover never mentions that it must meet this extremely high standard and never explains how it will. (Discover Br. at 30-37). It only mentions the clear and convincing evidence standard in its request for additional discovery. (Id. at 37). 40 Some courts also require proof that the parties intended to defraud the court. See Robinson v. Audi Aktiengesellschaft, 56 F.3d 1259, 1267 (10th Cir. 1995). There is no evidence that Mr. Friedman and Ms. Ravelo, and indisputably none that Co-Lead Counsel and the other sponsors of the settlement, acted with the intent to defraud the Court. 41 Because of the “time limitation that applies to motions brought under Rule 60(b)(3) but not Rule 60(d)(3), it is recognized that motions under 60(d)(3) for fraud on the court must encompass conduct other than that proscribed by Rule 60(b)(3)…. Accordingly, the standard for establishing fraud on the court under Rule 60(d)(3) ‘is higher and distinct from the more general standard for fraud under [Rule] 60(b)(3).”” Old Carco, 423 B.R. at 52 (citations omitted).


37

communications to the Court prior to the Court granting final approval of the MDL 1720 class

settlement. Discover Br. at 31-34. Discover has no evidence, much less clear and convincing

evidence, that the communications between Mr. Friedman and Ms. Ravelo affected the

settlement negotiations and/or the settlement terms, and resulted in the negotiations being

collusive instead of at arm’s length. To the contrary, the settlement gives merchants the ability

to differentially surcharge credit cards at both the brand and product levels, and the LPF has an

operative sunset provision. Discover’s alleged fraud on the court is pure speculation and

factually baseless.

Mr. Friedman’s conduct had nothing to do with the adequacy of class representation or

adequacy and fairness of the settlement in MDL 1720; rather, it tainted the representation and

settlement negotiated by Mr. Friedman in the Amex case. Now that the Amex settlement has been

rejected and Mr. Friedman has been removed from the Amex case, his conduct did not and cannot

have any impact at all on relief obtained in MDL 1720.

Discover has not cited a single affirmative misrepresentation made by Mr. Friedman or

Ms. Ravelo to the Court about the settlement negotiations or the terms of the settlement. In fact,

Mr. Friedman never addressed the Court in MDL 1720. Discover has not submitted evidence to

substantiate its assertions that Mr. Friedman provided materials to Ms. Ravelo “that aided Ms.

Ravelo in securing a favorable settlement” (Discover Br. at 33) and that Mr. Friedman

“propos[ed] provisions of the Settlement that were helpful to MasterCard” (Discover Br. at 36).

Discover has not submitted a single document which explicitly states why Mr. Friedman

provided any of this information to Ravelo; not submitted a single document showing an explicit

agreement between Mr. Friedman and Ms. Ravelo to secure a favorable settlement for

MasterCard to the detriment of the class; not submitted a single document showing that Mr.


38

Friedman proposed the LPF as a settlement provision; not submitted a single document showing

agreement between Mr. Friedman and Ms. Ravelo to the purported scheme to eliminate

merchant’s ability to differentially surcharge by including a parity surcharge provision in the

Amex litigation.

Discover has submitted no evidence, much less clear and convincing evidence, that there

was a fraud upon the Court. Consequently, there is no basis to vacate the judgment under Rule

60(d)(3). See King, 287 F.3d at 95 (affirming denial of Rule 60(d)(3) motion where allegations

of fraud were unsupported by facts).42

“Moreover, because a party cannot fully and fairly present its case if the court has been

improperly influenced, the standard applied to allegations of Rule 60(b)(3) fraud—that a party

must be shown to have been precluded from fully and fairly representing its case—also applies

in the context of a Rule 60(d)(3) motion for fraud on the court.” Old Carco, 423 at 53. Discover

cannot meet this threshold either. Nothing about the alleged fraud on the court prevented

42 Discover’s standing to raise fraud on the Court to challenge the settlement negotiations as tainted is questionable because Discover has brought this motion solely in its capacity as an unaffected competitor of Visa and MasterCard. Discover is solely in control over whether the LPF provision impacts its business. It can charge merchants lower fees than the fees charged by Visa and MasterCard to merchants and it can abolish its so-called “equal treatment rule” if that causes any merchant(s) to not differentially surcharge. And Discover’s complaint that the cost comparison in the LPF is rigged against it is misleading. (Discover Br. at 14). The cost comparison includes the fees that Visa and MasterCard actually control and charge. (Dkt. No. 1656-1 Definitive Class Settlement Agreement at ¶¶42, 55). Visa and MasterCard do not own or control merchant acquirers who contract with merchants and independently set and charge their own fees to merchants on Visa and MasterCard transactions. Those costs cannot fairly be included in the cost comparison. In contrast, Discover contracts directly with merchants so it controls the fees charged to them. Ironically, Discover complains that the LPF provision prevents Discover from “offer[ing] merchants lower pricing in exchange for their agreement to surcharge more expensive networks.” Such an arrangement could be construed as anticompetitive and is far different than an agreement to provide lower rates in exchange for a merchant agreeing not to surcharge Discover cards. Moreover, while asserting that the LPF is anticompetitive, Discover complains that it “had no opportunity to participate in the settlement negotiations” in MDL 1720. Of course, as a non-party, it would have been odd to include Discover in settlement negotiations.


39

Discover, or any class member, from arguing that the LPF provision itself is an anticompetitive

restraint on trade.43 Indeed, Discover made this argument in opposing final approval, and this

Court rejected that the LPF is an anticompetitive restraint: “to the extent that Discover cards are

lower-priced than Visa and MasterCard products, Discover will not be affected by the level-

playing-field provision. Its claim that in ‘some situations’ its Equal Treatment Rule may

preclude surcharges against Visa and MasterCard is not a reason to reject the Settlement

Agreement.” In re Payment Card Interchange Fee & Merchant Discount Antitrust Litig, 986 F.

Supp. 2d at 238. Discover was therefore not affected by the MDL 1720 settlement as a

competitor of Visa and MasterCard.

Finally, in an act of desperation, Discover argues that Mr. Friedman committed fraud on

the Court because he (apparently as a member of the class counsel roster) “submitted the false

declaration of Mr. Renfrew in support of the Class Plaintiffs’ motion for approval of the final

settlement” opining that the settlement appeared to be derived through arms-length-negotiations

devoid of collusion. (Discover Br. at 32). This assertion is patently false. Co-Lead Counsel

alone retained and worked with Judge Renfrew and submitted his declaration in support of final

approval of the MDL 1720 class settlement. Wildfang Aug. 18, 2015 Decl. at ¶11 (Ex. 1). Mr.

Friedman was neither a drafter nor a signatory to Class Plaintiffs’ motion for final approval of

the settlement and the supporting materials (e.g. Dkt. No. 2111), nor did he speak on behalf of

the class, or speak at all, in support of final approval of the settlement at the fairness hearing

(Sept. 12, 2013 Court Transcript). Above all, there is no evidence whatsoever that whatever Mr.

Friedman did had any effect on the conduct of Co-Lead Class Counsel in negotiating and

43 See Discover Br. at 3 (“The Level Playing Field rules, and their clear and substantial harm to competition and to Discover…); and 4 (“Discover argued during the final approval process, its business is directly harmed by the terms of the Settlement”).


40

agreeing to the terms of the MDL 1720 Settlement. For this reason, Discover’s assertion that the

submission of Judge Renfrew’s declaration here is like the submission of a false expert report by

the party’s direct counsel in Hazel-Atlas Glass Co. v. Hartford-Empire Col., 322 U.S. 238, 241,

250 (1944) is misleading at best and should be rejected.

VI. Under Rule 62.1 Movants’ Motions Cannot Be Granted

Because of the pending appeals of this Court’s final approval of the class settlement, this

Court lacks jurisdiction under Rule 62.1(a) to grant Movants’ motions. However, Rule 62.1 does

permit the Court to deny the motions, and, as Chief Judge Amon recognized, “Courts in this

Circuit routinely exercise their authority pursuant to Rule 62.1 to deny Rule 60(b) motions as

meritless.” Shukla v. Sharma, 2014 WL 4437278, at *3 (E.D.N.Y Sept. 9, 2014) (citing

numerous cases). Class Plaintiffs urge the Court to deny both motions as meritless for the

reasons stated above.

The Court’s only other choices under Rule 62.1(a)(1) and (2) are either to defer the

motions or “state either that it would grant the motion if the court of appeals remands for that

purpose or that the motion raises a substantial issue.” Class Plaintiffs urge the Court not to do

either one since the motions are meritless.

VII. Additional Discovery Should Not Be Allowed

The Court should deny both Movants’ requests for additional discovery. Additional

discovery is unnecessary. Movants have had months to scour the over ten thousand pages

produced by three different entities relating to Mr. Friedman’s and Ms. Ravelo’s conduct. That

they have not found evidence in those documents to support their contrived “scheme” is

revealing. Moreover, discovery cannot change the following indisputable facts:

1) Mr. Friedman was not appointed Co-Lead Counsel in MDL 1720;


41

2) Mr. Friedman had a subordinate role with no-decision making authority in MDL 1720; 3) Mr. Friedman did not draft and sign pleadings and briefs, represent the Class at status conferences or argue on behalf of the class before the Court in MDL 1720; 4)

5) Friedman had no role in the mediation sessions and settlement negotiations that the led to the principal settlement terms agreed to by all parties; and 6) Mr. Friedman was not a signatory to the memorandum of understanding , the Definitive Class Settlement Agreement or any of the briefing or declarations filed or oral arguments made in support of the class settlement. Where, as here, additional discovery will not change the result it should not be permitted.

The Court “is well within [its] discretion to require the moving party to make a showing in

support of its allegations before requiring the prevailing party to submit a second time to

extensive discovery to protect his judgment.” H.K. Porter Co., Inc. v. The Goodyear Tire &

Rubber Co., 536 F.2d 1115, 119 (6th Cir. 1976). The movant must show some proof of fraud

before requiring additional discovery. Id. Movants should not be permitted to go on a fishing

expedition when the extensive documents they received are insufficient to make a colorable

showing of their claims. See Ames True Temper, Inc. v. Myers Inds, Inc., No. 05-1694, 2007 WL

4268697, at *5-8 (W.D. Pa. Nov. 30, 2007); Goldy v. Beal, 91 F.R.D. 451, 454-55 (M.D. Pa.

1981).44 Because the objectors’ theory, when viewed in the light of mostly undisputed facts, is

44 The cases relied upon Movants for seeking additional discovery actually support denying additional discovery here. See Pearson v. First NH Mortgage Corp., 200 F.3d 30, 35-42 (1st Cir. 1999) (discovery not permitted unless there is a colorable claim of fraud on the court and finding a colorable claim of fraud because the debtor’s direct attorney may have concealed a conflict of interest from the court); Sathianathan v. Smith Barney, Inc., 2007 WL 2417370, at *6 (N.D. Cal. Aug. 24, 2007) (denying request for additional discovery as a fishing expedition where requesting party was provided with discovery to support Rule 60 motion); In re Lawrence, 363 B.R. 668, 670-71 (Bankr. N.D.N.Y. 2007) (allowing limited discovery in support of motion where they had not been provided with discovery before); Wyly v. Weiss, 697 F.3d 131, 135-36 (2d Cir. 2012) (noting solely that in support of Rule 60(b) motion the district court required the


42

so implausible, the burden and additional delay that such discovery will cause is unwarranted.

Movants’ requests should be denied.

Accordingly, Movants should not be permitted additional discovery to support their

interminable quest to defeat the MDL 1720 settlement.

VIII. Conclusion

For all the reasons above, Movants’ motions should be denied.

Dated: August 18, 2015 Respectfully submitted,

BERGER & MONTAGUE, P.C. /s/ H. Laddie Montague, Jr. H. Laddie Montague, Jr. Merrill G. Davidoff Michael J. Kane 1622 Locust Street Philadelphia, PA 19103 Telephone: 215/875-3000 Fax: 215/875-4604 ROBINS KAPLAN L.L.P. K. Craig Wildfang Thomas J. Undlin Ryan W. Marth 2800 LaSalle Plaza 800 LaSalle Avenue South Minneapolis, MN 55402-2015 Telephone: 612/349-8500 Fax: 612/339-4181

production of the 23 boxes of documents that had been improperly withheld by defendants); In re Computer Assocs. Class Action Sec. Litig. v. Artzt, 2007 WL 2713336, at *3 (E.D.N.Y. Sept. 12, 2007) (the district court in the Wyly case refused to permit additional discovery: “[a]s was set forth in this Court’s Order dated August 2, 2007, both Wyly Movants and Ranger Governance, Ltd. failed to set forth cause to permit further discovery to be conducted in conjunction with their 60(b) motions. This Court has repeatedly made clear that additional discovery was to be confined to the “fraud” alleged to be within the ‘23 boxes.’ To date, neither the Wyly Movants nor Ranger Governance, Ltd. has produced any ‘new’ evidence of fraud upon this Court and consequently, have failed to establish that the contents of the ‘23 boxes’ allegedly withheld during discovery and prior to settlement warranted granting further discovery and the reopening of the 2003 Settlement scheduling depositions for same.”).


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ROBBINS GELLER RUDMAN & DOWD LLP Patrick J. Coughlin Alexandra S. Bernay 655 West Broadway, Suite 1900 San Diego, CA 92101 Telephone: 619/231-1058 Fax: 619/231-7423 Co-Lead Counsel for Plaintiffs


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