Merchants including Target Corp. (TGT:US) and Macy’s Inc. (M:US) pursued their cases after dropping out of an earlier $5.7 billion settlement over the charges known as swipe fees. Today, a federal judge in Brooklyn, New York, refused to throw out those lawsuits. He also rejected Visa’s request to dismiss a similar lawsuit filed by Wal-Mart Stores Inc. (WMT:US) seeking at least $5 billion in damages.
U.S. District Judge John Gleeson said his decision was “in large part driven by the requirement that I accept all well-pleaded factual allegations as true” because the cases were in the early stages of litigation. It isn’t a ruling on the merits of the complaints.
Gleeson in December approved the card companies’ settlement with merchants nationwide following years of antitrust litigation over the fees.
Dozens of large retailers appealed the approval of the accord. Many also dropped out of the deal and filed their own lawsuits, contending it wasn’t enough compensation for the hundreds of billions of dollars in fees paid.
In a revised complaint filed this month, Target and Macy’s said the card companies “have obtained and maintained market power in the market for merchant acceptance of credit cards” causing merchants “to pay excessive interchange fees.”
Wal-Mart alleged in its complaint that “Visa’s monopoly power has enabled it to dictate price and inhibit competition.” The Bentonville, Arkansas-based retailer announced in April that MasterCard will handle transactions for store-branded credit cards. MasterCard isn’t named in Wal-Mart’s swipe-fee complaint.
Visa and MasterCard argued that the merchants’ claims for damages should be barred by legal releases in an earlier settlement in 2003. They also said the claims should be thrown out because the merchants don’t directly pay fees to banks that issue Visa and MasterCard branded cards. The fees are deducted from payments merchants receive after processing.
Separately, Gleeson also denied requests by Wal-Mart and another group of merchants to dismiss lawsuits filed against them by the card firms seeking to stop their litigation over the fees in its tracks. The request the card firms are making in those cases is “properly invoked,” Gleeson said.
“We’re not seeking an unfair tactical advantage, we’re seeking finality,” said Michael Shuster, a lawyer for Visa, during the hearing today.
Paul Cohen, a spokesman for Foster City, California-based Visa, declined to comment on the judge’s rulings.
“Judge Gleeson’s ruling was at the earliest stage of the case,” Seth Eisen, a spokesman for Purchase, New York-based MasterCard, said in an e-mail. “We look forward to putting this matter behind us and continuing to work productively with the merchant community.”
The case is In Re: Payment Card Interchange Fee and Merchant Discount Antitrust Litigation -- Opt Out Cases, 1:14-md-01720, U.S. District Court, Eastern District of New York (Brooklyn).
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