© 2013 The Texas Lawbook.
By Jeff Bounds
Staff Writer for The Texas Lawbook
(Aug. 14) – More than 100 large merchants from across the globe, including more than three dozen prominent Texas-based businesses, filed an anti-trust suit against Visa and MasterCard Tuesday, alleging they have been forced to pay excessive fees amounting to hundreds of millions of dollars.
The plaintiffs, including TXU Energy Retail, La Quinta Inns, Pier 1 Imports, RadioShack Corp. and Reliant Energy, claim that Visa and MasterCard membership rules prevent banks that issue credit and debit cards from competing for merchant acceptance of those cards, court documents show.
At the center of the suit are what the merchants call “excessive” interchange fees, which are essentially charges that payment card firms and their member banks assess to merchants when customers use cards to pay.
The merchants “collectively have paid hundreds of millions of dollars in their last fiscal year alone in credit and debit interchange fees to issuing banks that are members of Visa and MasterCard,” according to the complaint, which was filed in federal district court in Marshall.
“Interchange fees are generally one of a merchant’s largest operating expense items. Elimination of modification of (the interchange fees) and restoration of competitive markets for merchant acceptance would substantially reduce interchange fees, allowing plaintiffs to operate more efficiently and at lower costs, to the benefit of consumers,” the lawsuit states.
Attorneys for the plaintiffs and spokespeople for Visa and MasterCard did not respond to requests for comment made on Tuesday evening and Wednesday.
Jeffrey Angelovich and Brad Seidel of Nix, Patterson & Roach in Austin are the lead lawyers for the plaintiffs. Other law firms representing the plaintiffs include Beck Redden and Crowley Norman in Houston, Kelly Hart & Hallman in Fort Worth, and Jackson Walker and Wick Phillips Gould & Martin in Dallas.
The lead plaintiff in the case is Atlanta-based Delta Airlines. But some of the most prominent companies in Texas are also named plaintiffs, including The Men’s Wearhouse, Valero Energy, ClubCorp USA, Travelocity.com, Emerald Foods, NRG EV Services, Pennywise Power, Service Corporation International, Kiosk Operations, TXU Energy Retail Company and Cinemark USA.
The city of Houston and Harris County also joined the lawsuit.
The plaintiffs are seeking unspecified damages as compensation for the supposedly unlawful behavior of Visa and MasterCard, along with punitive damages and attorneys’ fees, court documents show.
The roots of the Marshall litigation extend to 2005, when various merchants began filing class actions across the country against Visa, MasterCard, and the banks that are part of the Visa and MasterCard networks. The suits, which challenged rules relating to interchange fees and other matters, were consolidated into a large class action case in federal district court in New York.
In July of last year, the merchants, Visa and MasterCard reached a $7.25 billion settlement of the omnibus class action. But many merchants objected to the settlement, including such prominent retailers as Wal-Mart Stores Inc. and Target Corp., along with North Texas companies like Alon USA Energy Inc., Michaels Stores Inc. and 7-Eleven Inc., court records show.
A number of the objections maintain that the omnibus settlement does not address some key problems with rules governing interchange fees and related matters. For instance, an “Honor All Issuers” rule dictates that any merchant that accepts a Visa or MasterCard credit or debit card from one bank, it must accept all credit or debit cards with the Visa or MasterCard brand from other banks as well. That prevents merchants from rejecting Visa or MasterCard cards from a given bank, according to court documents.
The Marshall litigation is an attempt by the 100-plus merchants to opt out of the New York settlement.
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