Legal News

AmEx, Boies, Land Another Huge Antitrust Settlement

By Dan Slater

Fresh off his depiction in “Recount” — the HBO movie about the 2000 election fiasco — David Boies, along with partner Don Flexner, have, on behalf of American Express, negotiated one of the largest antitrust settlements ever for an individual company: $1.8 billion. The settlement with MasterCard comes on the heels of a similar $2.25 billion settlement, also handled by Boies, between AmEx and Visa.

The background: The Supreme Court ruled in 2004 that Visa and MasterCard violated antitrust laws by prohibiting their member banks from offering credit cards that could be used on rival payment networks. AmEx and Discover sued. Here are reports from the WSJ and NYT.

Kenneth R. Feinberg, who handled the earlier settlement with Visa and who also oversaw administration of the 9/11 compensation fund, acted as arbitrator in the case during secret negotiations that lasted eight weeks.

Why’d it take so long? Size mattered, Boies told the Law Blog this morning. “If you’d been talking about two less zeros, people would’ve reached agreement on this a lot earlier,” said Boies, who declined to discuss his law firm’s take. “Once we got the $2.25 billion from Visa,” he continued, “there were two things that happened that went in opposite directions. On one hand, we had set the ballpark. And MasterCard has half the marketshare of Visa, so you know it’s going to be somewhere in the billion dollar range. On the other hand, because of set-off arguments, you’ve got to justify to the next defendant that you can really recover that much more [than the $2.25 billion recovered against Visa].”

What’s a set-off? Under antitrust damage rules, if AmEx, for example, had gone to trial and won a judgment of 2.5 billion, the company would only be able to collect $250 million because the earlier recovery against Visa would’ve been deducted. The $250 million in actual damages would’ve then been tripled under the treble damage rule for antitrust suits, amounting to a $750 million verdict.

As for some historical context, Boies said that, in a single-plaintiff antitrust case, the largest recovery, prior to the Visa and Mastercard settlements, was Conwood Tobacco’s $1.05 billion recovery against U.S. Tobacco.

On MasterCard’s side were lawyers from Paul Weiss and Simpson Thacher. The company’s in-house lawyers — Noah Hampf, Louise Parent and Stewart Alderoti — also participated.

Though it has absolutely nothing to do with AmEx, Mastercard or antitrust, we couldn’t help but ask Boies how he felt about his depiction in “Recount,” in which Ed Begley Jr. portrayed Boies during the 2000 election litigation. “I thought the characterization was fair,” he said. “But I don’t spill expensive wine and I don’t drop ice cream. I thought they did an excellent job with the movie. People on both sides thought it was a fair depiction of what happened. That’s not easy to do in an area as controversial as this.”

Full post as published by Law Blog - WSJ.com on June 26, 2008 (boomark / email).