Opinion ID: 789039
Heading Depth: 3
Heading Rank: 1

Heading: Scope of the Release and Adequacy of Representation

Text: 17 At the district court, five of the eighteen objecting merchants challenged the scope of the release provided in the Settlement. All five of these merchants appealed. They are Reyn's Pasta Bella, LLC, Jeffrey Ledon DeWeese, M.D., Barry Leonard d/b/a Critter Fritters, and Hat-In-The-Ring, Inc. d/b/a Eddie Rickenbacker's (collectively, Pasta Bella), and NuCity Publications, Inc. The Settlement's release precludes actions for conduct occurring prior to January 1, 2004 that was or could have been alleged in the complaint. If approved by this Court, the release will bar class actions previously filed by Pasta Bella and NuCity. 18 Pasta Bella, purporting to represent a class, initiated an action against Visa and MasterCard and three member banks (collectively, the  Reyn's defendants) in the United States District Court for the Northern District of California on June 24, 2002. Reyn's Pasta Bella, LLC v. Visa U.S.A., Inc., 259 F.Supp.2d 992 (N.D.Cal.2003) ( Reyn's ). 7 Prior to the fairness hearing in this case, the California district court dismissed all but one of the Reyn's claims. Id. at 1004. The surviving claim alleged that the Reyn's defendants fixed credit card interchange fees charged by issuing banks to acquiring banks, which, in turn, set merchant discount fees charged by acquiring banks to merchants. See id. at 998. On March 4, 2004, the District Court for the Northern District of California dismissed Reyn's with prejudice, finding that the Settlement released the Reyn's defendants from further liability. 19 NuCity initiated a putative class action in the United States District Court for the Southern District of New York on November 13, 2001. In re Visa/MasterCard Membership Rules Antitrust Litigation, No. 01-CV-10027 ( Membership Rules ). 8 Membership Rules arose out of United States v. Visa U.S.A., Inc., 163 F.Supp.2d 322 (S.D.N.Y.2001), modified by 183 F.Supp.2d 613 (S.D.N.Y.2001), aff'd 344 F.3d 229 (2d Cir.2003), cert. denied, 125 S.Ct. 45 (2004) ( Government's Membership Rules ). In Government's Membership Rules, the Government established that Visa and MasterCard's exclusionary rules (also known as membership rules), which prohibited member banks from issuing competing payment cards, such as American Express or Discover, constituted an illegal boycott and an unreasonable restraint of trade in the credit card market. 9 Government's Membership Rules, 344 F.3d at 229. NuCity filed Membership Rules on behalf of merchants injured by the boycott proven in Government's Membership Rules. Pursuant to an order by the district court in that case, Membership Rules remains in limbo pending the outcome of this appeal. 20 On appeal, Pasta Bella and NuCity argue that the release is overbroad. Alternatively, they argue that the release is not valid with respect to them because their interests were inadequately represented during settlement. Issues involving the release of claims are discussed in Part I of the Discussion section of this opinion.