May 04, 2026|Franchise Frontlines
May 4, 2026 | United States Court of Appeals for the Second Circuit | Published Opinion
Executive Summary
In a published opinion, Judge Park of the United States Court of Appeals for the Second Circuit affirmed summary judgment for Visa, Inc. and Mastercard, Inc. in a putative class action brought by branded gasoline retailers asserting state-law antitrust claims based on allegedly supra-competitive interchange fees. The retailers argued that they were not members of a prior federal antitrust settlement class because their gasoline suppliers, not the retailers, directly paid the challenged fees in fuel transactions. Visa and Mastercard argued that the retailers were members of the prior settlement class, did not opt out, received settlement consideration, and released the claims they later tried to assert. The Second Circuit agreed with Visa and Mastercard. It held that the district court did not clearly err in finding that the settlement parties intended to include the gasoline retailers in the settlement class, and it further held that the retailers’ later indirect-purchaser claims were validly released because they rested on the same factual predicate and were adequately represented in the prior settlement.
Relevant Background
The decision arises from the long-running payment-card interchange-fee antitrust litigation against Visa and Mastercard. In 2019, Visa and Mastercard agreed to pay more than $5.6 billion to settle federal antitrust claims brought on behalf of merchants that accepted Visa- or Mastercard-branded payment cards during the settlement period. The settlement class included “all persons, businesses, and other entities” that accepted Visa- or Mastercard-branded cards in the United States from January 1, 2004, to January 24, 2019, subject to exceptions not relevant to the appeal. Class members released claims arising out of or relating to the challenged conduct to the fullest extent permitted by federal law.
The Old Jericho plaintiffs are branded gasoline retailers operating in states that allow indirect purchasers to bring antitrust claims. They contract with large gasoline brands, including BP, Cenex, Chevron, and Shell, for gasoline and card-acceptance services. In a typical fuel transaction, the customer uses a payment card at the branded gas station, the retailer transmits transaction data to the supplier, the supplier relays the information to the acquiring bank, and the acquiring bank later transfers funds to the supplier. The supplier then remits funds to the retailer after deducting amounts that may include card-processing fees and the wholesale cost of fuel.
The Old Jericho plaintiffs did not opt out of the 2019 settlement. Instead, after the opt-out period expired, they filed their own putative class action asserting state-law indirect-purchaser antitrust claims based on the same allegedly supra-competitive interchange fees and the same alleged antitrust violations. Visa and Mastercard asserted that the prior settlement released those claims. The district court agreed, found the retailers were members of the settlement class, and entered judgment for Visa and Mastercard. The retailers appealed.
Decision
The Second Circuit first rejected the retailers’ argument that its prior decision in Fikes Wholesale, Inc. v. HSBC Bank USA, N.A. required the district court to determine settlement-class membership solely by identifying the “direct payor” of the challenged fees. The retailers relied on language from Fikes discussing ascertainability, but the Second Circuit explained that they read that language too broadly. Fikes addressed whether the settlement class was ascertainable, not whether every later dispute over class membership had to be resolved through a rigid direct-payor test.
The court emphasized that settlement agreements are construed according to ordinary contract principles. The settlement agreement was governed by New York law, and when a settlement term is ambiguous, courts may consider extrinsic evidence to determine the parties’ intent. The key term here was “accepted,” because both suppliers and gas stations could plausibly claim to have “accepted” payment cards in the branded gasoline transaction structure. The district court therefore looked to extrinsic evidence to decide whether the settlement parties intended to include the branded retailers or their suppliers in the class.
The Second Circuit found no clear error in the district court’s conclusion that the retailers were class members. The district court had considered contracts between the retailers and their suppliers, many of which stated that suppliers authorized the gas stations to accept payment cards. The court also considered the practical reality of the transaction: the customer swipes or presents the card at the gas station, and the gas station accepts the card at the point of sale. The district court further observed that many retailers contracted directly with acquirers for ancillary businesses, such as convenience stores and restaurants, where suppliers were not intermediaries. Those facts supported the finding that the retailers, not their suppliers, accepted cards within the meaning of the settlement agreement.
The Second Circuit also rejected the retailers’ argument that, even if they were class members, their later state-law indirect-purchaser claims were not released. The court applied the “identical factual predicate” and “adequacy of representation” doctrines. Together, those doctrines allow a class settlement to release claims that share the same integral facts as the settled claims, so long as the released claims were adequately represented before settlement. A settlement can therefore bar claims that were not, and even could not have been, asserted in the original class action, if those requirements are satisfied.
The retailers’ later claims met that standard. The Second Circuit held that the retailers alleged the same antitrust injury and challenged the same interchange fees as the rest of the settlement class. Although the retailers framed their claims under a different legal theory—state-law indirect-purchaser claims—the factual predicate remained the same. The retailers argued that the presence of an additional intermediary, the gasoline supplier, distinguished their claims. The court disagreed, explaining that every merchant in the settlement class had an intermediary between it and Visa or Mastercard because payment-card transactions already involve acquiring banks and related participants. The presence of a second intermediary did not create a different factual predicate.
The court also found adequate representation. In the prior Fikes appeal, the Second Circuit had explained that gas franchisees and franchisors shared an interest in maximizing recovery for all class members. The Old Jericho plaintiffs were also entitled to a pro rata share of the settlement fund, just like other class members. If they wanted to avoid the risk of being bound by the settlement and release, the court explained, they needed to opt out. They did not, and the settlement barred their later claims.
Looking Forward
This decision has practical significance for franchise systems, branded retailers, and franchisors whose networks participate in system-wide payment, supplier, or processing arrangements. It does not decide a traditional franchise dispute, and it does not address franchisor-franchisee liability. Its importance lies in the court’s treatment of settlement-class membership and release language in a commercial setting where franchisees, suppliers, payment processors, and brand relationships all overlap.
For franchisees, the case illustrates the importance of monitoring class-action settlements that may affect claims tied to system operations. The Old Jericho plaintiffs did not opt out of the prior Visa/Mastercard settlement, and that decision had consequences. Their later attempt to pursue state-law indirect-purchaser claims failed because the court found they had already released claims arising from the same interchange-fee conduct. Franchisees should not assume that a claim remains available merely because their transactions flow through a supplier, distributor, processor, or other intermediary.
For franchisors and branded systems, the case highlights the need for clear communication when major settlements affect system participants. Payment-card fees, supplier rebates, procurement programs, delivery platforms, software vendors, and other system-wide commercial arrangements can generate claims that touch both brand-level and unit-level economics. When a class settlement covers those issues, franchisors may need to assess whether franchisees, affiliates, company-owned units, suppliers, or other participants fall within the class definition and whether opt-out decisions should be made at the appropriate level.
The decision also underscores that class settlement releases can reach later claims framed under different legal theories. The retailers tried to proceed under state-law indirect-purchaser antitrust statutes, while the settled case involved federal antitrust claims. That distinction did not save the claims because the factual predicate was the same: the same alleged interchange-fee conduct, the same alleged antitrust injury, and the same payment-card networks. In franchise systems, that reasoning may matter when later claims are repackaged as state-law, indirect-purchaser, unfair-competition, or business-tort theories after a broader settlement has already resolved claims arising from the same conduct.
Franchisors should also take note of the court’s contract-interpretation approach. The Second Circuit did not impose a mechanical direct-payor test to determine class membership. Instead, it looked to the settlement language, the parties’ intent, the contractual arrangements between retailers and suppliers, and the practical reality of how transactions occurred. That approach may be important in other franchise-adjacent disputes involving layered payment flows, branded supply chains, and delegated acceptance of customer payments.
The defensive lesson is straightforward: releases matter, opt-out decisions matter, and transaction structure may not defeat a settlement release when the later claim seeks recovery for the same alleged injury. Franchise systems should evaluate settlement notices with the same seriousness as litigation pleadings. A failure to opt out may foreclose later claims, even when a franchisee later believes that its supplier, processor, franchisor, or another system participant occupied a different position in the payment chain.
For franchisors, this decision is also a reminder that commercial litigation affecting a franchise system may not be limited to the party whose name appears most prominently in the transaction documents. Courts may examine who accepted payment, who bore the economic injury, who was compensated under the settlement, and whether the later claim shares the same factual predicate as a prior release. Careful tracking of settlement notices, claims administration, franchisee communications, and system-level payment relationships can help avoid confusion when large class settlements intersect with branded networks.
Taken together, Old Jericho Enterprise v. Visa is a useful franchise-adjacent commercial litigation decision. It does not create a franchise-law rule, but it offers a practical warning for branded retailers and franchise systems: when a class settlement reaches claims arising from system-wide payment practices, parties who do not opt out may find that later claims are gone before they are filed.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case.
Thomas O’Connell is a Partner at Buchalter LLP and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
This communication is not intended to create, and does not create, an attorney-client relationship or any other legal relationship. No statement herein constitutes legal advice, nor should it be relied upon or interpreted as such. This communication is for general informational purposes only and is not a substitute for legal counsel. Readers should not act or refrain from acting based on any information provided without seeking appropriate legal advice specific to their situation. For more information, visit www.buchalter.com.
