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Interchange Litigation Moves Forward, Cases Consolidated

A seven-judge panel overseeing a recent multidistrict litigation (MDL) hearing organized 14 different lawsuits concerning interchange fees and other complaints against the card Associations and their member banks into one group. The panel also decided that the cases will go before Judge John Gleeson in U.S. District Court in the Eastern District of New York.

The panel heard arguments from plaintiffs and defendants to determine how and where the many similar cases would be heard. It based its decision on the fact that "Gleeson is already familiar with the operation of the credit card networks," wrote D. Lowell Jensen, the panel's Chairman.

Gleeson presided over the landmark seven-year class action antitrust lawsuit concerning debit card fees that Wal-Mart Stores Inc. and millions of other retailers brought against Visa U.S.A. and MasterCard International. In the months before a trial was scheduled to begin, he declined numerous requests from the card Associations to throw out the suit.

Visa and MasterCard ultimately settled with the merchants before the trial even started (see "What Happened: $3 Billion Payout, Lower Fees, 'Honor All Cards' to Change," The Green Sheet, May 12, 2003, issue 03:05:01 ).

In response to the recent MDL ruling, a MasterCard spokeswoman said, "We were not surprised that the cases were consolidated with Judge Gleeson given that he has knowledge of the industry and issues raised in the complaints." However, she added, "we believe that the lawsuits are without merit."

Visa said in a statement that it "will vigorously defend interchange and our rules" but believes the grouping "will allow the cases to be managed in a more efficient and effective manner."

Interchange and No-Surcharge Rules

Not all the combined cases involve interchange. Some are concerned with litigation challenging the card Associations' no-surcharge rule, which prevents merchants from surcharging credit- and debit card-paying customers in order to recoup fees associated with accepting cards as payment.

Plaintiffs in the no-surcharge cases do not believe that the two issues should be combined. They say that the fact-finding sessions for each issue will produce different results.

The MDL panel thought differently. "All actions share factual questions arising out of allegations that the imposition of a no-surcharge rule and/or the establishment of the interchange fee causes the merchant discount fee to be set at supracompetitive levels in violation of federal antitrust laws," Jensen wrote.

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