A U.S. District Court judge last week struck down requests from Visa and MasterCard to have more than 30 merchant cases seeking billions in damages in antitrust cases involving their setting of interchange rates.
The cases involve merchants that had opted out of a 2012 settlement where both card brands agreed at the time to pay $7.25 billion to merchants who sued. Some 8,000 merchants had opted out. In his ruling last week, Judge John Gleeson refused to dismiss the separate cases brought by merchants that included Target and Macy’s. He also reportedly rejected Visa’s request to dismiss Walmart’s lawsuit seeking $5 billion in damages.
Gleeson’s decision wasn’t based on the merits of the case. However, because of the early stage of the litigation, he said his ruling was “in large part driven by the requirement that I accept all well-pleaded factual allegations as true.”
Gleeson approved the card companies’ settlement with merchants nationwide late last year. The National Retail Federation and dozens of large retailers soon afterward appealed that decision, saying the amount of the settlement was too small.
In a revised complaint filed this month, according to Reuters, 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.”
In its lawsuit against Visa, Walmart alleged the network “engaged in a conspiracy with some of the nation’s largest banks” to fix fees charged during credit card transactions. Walmart did not name MasterCard in its suit, and MasterCard in April announced that MasterCard would process its store-branded cards.
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.
Gleeson also reportedly denied requests from Wal-Mart and another group of merchants to dismiss lawsuits filed against them by the card firms seeking to stop their litigation. The judge ruled that the request from the card firms in those cases is “properly invoked,” Reuters reported.
The merchants opting out of the litigation come from a wide range of sectors, including Major League Baseball, In March, the Minnesota Twins accused Visa and MasterCard of anticompetitive business practices in relation to their interchange-fee structures, and it launched its own lawsuit in the wake of a settlement between the issuers and many other U.S. merchants.
“The new suit, filed by Minnesota Twins LLC and a group of Minnesota retailers, alleges that the credit card giants colluded with banks that carried their credit cards to keep swipe fees high and to keep information about those fees from consumers,” NBC Sports reported. “Visa and MasterCard also prevented retailers from incentivizing customers to use cards with lower fees, according to the complaint.”