Court Rules Against Visa/Mastercard in Class Action Affecting 5 Million Merchants Nationwide
NEW YORK – A court decision in New York yesterday in a case led by a Seattle law firm could give an estimated five million merchants a green light in a class-action lawsuit alleging credit card titans Visa and Mastercard conspired to force small retailers to use their less-efficient debit system.
The U.S. District Court in New York issued a summary judgment that gave a stunning blow to two major credit card companies and cleared the way for five million retailers and merchants to move forward to recoup on allegedly inflated credit card transaction costs.
George Sampson, Seattle attorney with the law firm Hagens Berman said today's court ruling was an exceptional victory for the class members.
"It's significant because we believe the court ruled overwhelmingly in favor of plaintiffs at this stage," said Sampson. "It's a huge vindication when you are able to present the facts of the case in a clear manner that allows for swift justice."
The summary judgment, issued by Judge John Gleeson, denied all of Visa and MasterCard's motions against the suit, and agreed with five of the seven claims by retailers, leaving only two issues to take to trial.
"Judge Gleeson's summary judgment and dismissal of the defendants' motions shows the extent to which Visa and MasterCard have taken advantage of these merchants," Sampson continued.
A trial to decide the remaining merchants' claims against Visa and MasterCard has been set for April 28, 2003 and at stake is literally billions in damages sought by the court-approved class action.
The suit alleges that the two credit card companies responded to competitive threats from smaller debit companies by creating their own less-efficient debit system and using their market dominance to force retailers to use it. The offline debit transactions offered by the defendant companies cost up to 16 times more than competing networks, with Visa and MasterCard charging as much as $1.49 for a $100 transaction compared to nine cents for online debit transactions through competing regional networks such as STAR.
Filed in October 1996, the lawsuit took a new turn in June 2002, when the U.S. Supreme Court allowed the case to move forward as a class, representing five million retailers, including Wal-Mart, Sears and Safeway. The suit affects millions of merchants who were forced to accept more expensive debit cards by Visa and MasterCard or risk losing access to credit-card processing.
Lead counsel Hagens Berman has been assisted by 30 other law firms including co-lead counsel Constantine and Partners in New York.
# # #
About Hagens Berman
Hagens Berman Sobol Shapiro LLP is a consumer-rights class-action law firm with offices in ten cities. The firm has been named to the National Law Journal’s Plaintiffs’ Hot List eight times. More about the law firm and its successes can be found at www.hbsslaw.com. Follow the firm for updates and news at @ClassActionLaw.