Weird Class Settlement Structures?

By chance I just came across the supplement in my credit card bill from Bank of America that alerted me to this class action settlement regarding the foreign transaction fees charged by Mastercard and Visa.  If you've used a MC or Visa abroad in the last 10 years or so, chances are you're a member of the class, and it's worth your while to take the few minutes to fill out the form to get your restitution, such as it might be. The Court has set a deadline of January 9, 2008, to file claims for a refund. 

A couple reactions: I admit to being surprised and disappointed to see these charges on my statement, which for the most part I recall seeing in substantial amounts after last year's AALS conference in Vancouver, but for all I know,  I was paying them well before then too, either when I lived abroad and used my credit card, or when I visited my hometown a lot during law school.

Also, the structure of settlement seems odd. The credit card companies, I would surmise, surely know (at least for the last few years) what everyone's foreign expenditure exposure is but rather than have them just make the determination on all the accounts, the settlement calls for consumers to estimate their own amounts of expenditures abroad.

Here's another oddity: according to the site, "the $336 million gross settlement fund represents approximately 9% of the maximum total amount of foreign transaction fees" estimated to be damages to the class. Why was such a measly amount accepted at settlement then? Read on...    

Here's what the parties argue were the justifications for the amount of settlement:

The amounts of foreign transaction fees involved in the litigation could be significantly lower than $3.8 billion if the case were not settled and proceeded to trial. The proposed settlement damages class is larger than the damages class sought by plaintiffs in the underlying litigation. Furthermore, the amounts of foreign transaction fees involved in that litigation depend upon a variety of factors, including appeals currently pending before the United States Court of Appeals for the Second Circuit. For example, the trial court in this matter ruled that many cardholders would be required to arbitrate their claims instead of pursuing them in court. Both the plaintiffs and defendants appealed this ruling, and those appeals were pending at the time of the settlement. An appellate order upholding the trial court's ruling would remove from the litigation a substantial portion of the foreign transaction fees described above. And an appellate court order in defendants' favor could remove even more, or substantially all, of the foreign transaction fees from the litigation and require those cardholders to pursue their claims only in arbitration.

In addition, there is disagreement between the parties as to what portion, if any, of the amounts of foreign transaction fees involved would constitute damages in the litigation even if the case proceeded and plaintiffs won at trial. Defendants maintain that they did nothing wrong, unlawful or improper and therefore there is no liability. They also say that even if plaintiffs proved liability, damages would be sharply limited or eliminated altogether by a number of factors including, without limitation, the prices that would have prevailed in the marketplace in the absence of the challenged conduct, the benefits provided to cardholders, defendants' costs, and defendants' changed business practices. Plaintiffs contend that, even accounting for defendants' changed business practices and purported costs and benefits to cardholders, the potential damages are as high as the total amount of foreign transaction fees collected.

What do you think? After all, you're probably a member of the settlement class.  Anyone feeling that an opt-out is a better route...or that the plaintiffs' lawyers could have done a better job?  My guess is that we're pretty lucky the credit card companies paid anything but I'm doubtful we'll be adequately recompensed.  And I'm certain I wouldn't have bothered to opt out.*

*Hey civ pro prawfs: have there been any interesting empirical studies of opt-outs in class actions?