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Author: GoCowboys Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308447  
Subject: VISA/Mastercard Suit Date: 6/10/2002 7:51 PM
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Below is an article taken from American Banker. Do you think the suit has merit? I don't - the spirit behind antitrust laws is CUSTOMER CHOICE, and this suit seeks to take away choice.

(I apologize for the length of this post.)

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The Supreme Court's decision Monday not to hear Visa U.S.A. and MasterCard International's appeal of the class-action status of the merchant plaintiffs in the Wal-Mart debit card lawsuit has cleared the way for a trial on the case's merits.

If the merchants win, the high damages they are seeking could force Visa and MasterCard into bankruptcy, industry experts say.

Lloyd Constantine, the merchants' lead counsel, said that the next step for his side will be to notify all four million merchants that qualify under the class designation and give them the chance to opt out of the case.

Then both sides must argue in favor of their proposed summary judgments, which could narrow the scope of the trial by removing any agreed-upon points, and a start date must be set, he said. A judge will probably set the start date for between December and February, Mr. Constantine speculated.

In deciding not to hear the appeal, the high court endorsed the majority opinion of the U.S. Court of Appeals for the Second Circuit, which had approved the class in a 2-to-1 vote.

Lawyers for Visa and MasterCard pointed out Monday that the Supreme Court's decision did not speak to the merits of the case, which was originally filed in 1996 by Wal-Mart Stores Inc. and other retailers.

The plaintiffs take issue with the higher fees they are charged for accepting Visa and MasterCard signature debit cards than they do for PIN debit, and are seeking permission to take Visa and MasterCard credit cards only, a practice currently barred under the associations' "honor all cards" rule.

Visa and MasterCard had argued that such a large class of plaintiffs was unwieldy.

In a press statement, Noah J. Hanft, MasterCard's general counsel, said he was disappointed by the Supreme Court's decision. He cited a recent op-ed piece in The Wall Street Journal by American Enterprise Institute fellow James Glassman, who argued that if the Supreme Court refused to hear the case, class actions, "already a virus spreading through the U.S. economy, could become an uncontrollable plague" that would ultimately cost consumers money.

"Visa's 'honor all cards' commitment is the linchpin to creating choice and convenience for cardholders and merchants alike," the company said in a press statement. "As this case moves forward, we look forward to addressing the merits and other important matters with the court."

According to Richard X. Bove, an analyst at Hoefer & Arnett Inc., at least one major bank card issuer - Bank of America Corp. - has said it would not pony up its share of the damages. "Basically, it is Bank of America's belief that if Visa or MasterCard were to lose their suits, they would go bankrupt, and therefore the matter would end at that point," he said.

Mr. Bove also said that executives at Bank One Corp. would not comment on its potential liability.

In an April speech at a card industry conference, Mr. Constantine said much the same. "Sane and sensible companies in Visa and MasterCard's situation would have settled this case long before it turned into their dance of death."
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