STRATEGIC PARTNERS
June 9, 2002
WASHINGTON -- The U.S. Supreme Court on June 10 rejected an appeal by Visa U.S.A. and MasterCard of a ruling that made 4 million retailers part of an antitrust lawsuit said to be seeking as much as $100 billion in damages from the credit card companies, according to a Reuters report.
The justices let stand a ruling by a U.S. appeals court in New York that gave the retailers class-action status in a 1996 lawsuit accusing Visa and MasterCard of using their power in the credit card industry to force merchants to accept their allegedly costly debit cards.
The lawsuit, led by Wal-Mart Stores Inc., the world's biggest retailer, alleged that Visa and MasterCard forced the retailers to pay excessive transaction fees, driving up costs to consumers.
In the Supreme Court appeal, Visa and MasterCard said the retailers seek damages of about $100 billion and contended that the large class could make damages so high that they will be coerced into settling, regardless of the merits of the claims.
But the retailers derided the $100 billion figure as "fanciful" and concocted for its "apparent shock value." The case involved a preliminary damages estimate of $8 billion, the retailers told the court.
Wal-Mart and the other retailers objected to having to accept Visa and MasterCard debit cards that are used to make signature-based purchases, saying those cards carry higher transaction fees than other ATM cards that require customers to enter a PIN.
Signature-based purchases are routed through the Visa and MasterCard networks and carry higher interchange fees than PIN-based purchases, which are routed through regional networks such as Star and NYCE.
The appeals court, by a 2-1 vote, upheld a federal judge's decision allowing class certification, clearing the way for the case to go back to the trial judge for more proceedings.
