Barry’s Cut Rate Stores, Inc. v. Visa, Inc.

Visa, Inc. and Mastercard (defendants) operated networks for payment cards. The banks initially were owned by their member banks, but both were publicly owned by 2008. A putative class of nationwide merchants, including Barry’s Cut Rate Stores, Inc. (collectively, merchants) (plaintiffs), sued Visa, Mastercard, and various issuing and acquiring banks (collectively, banks) (collectively, defendants) for violating federal and California antitrust law. Issuing banks were banks that provided customers with Visa or Mastercard credit or debit cards. Acquiring banks were banks that served as intermediaries between merchants and issuing banks. The merchants’ complaint centered on allegedly collectively fixed, supracompetitive interchange fees that merchants were required to pay when customers used Visa or Mastercard cards. Per the merchants, such fees were supported by various anticompetitive network rules, which included the honor-all-cards rule (requiring merchants that accepted Visa or Mastercard cards to accept all such branded cards, allegedly precluding merchants from negotiating better terms) and several rules that prevented merchants from steering customers to particular cards or payment methods. In addition, the merchants cited the fact that before Visa and Mastercard went public, their member banks served on the Visa and Mastercard boards and that, even after Visa and Mastercard went public, the former member banks allegedly retained great board influence and representation. The merchants sought a declaratory judgment that the banks’ conduct violated antitrust law and an injunction prohibiting the banks’ misconduct going forward. The banks moved to dismiss the merchants’ claims for lack of standing and for failure to state a claim. Per the banks, industry changes since the merchants first sued (such as Visa and Mastercard having gone public, settlements with regulators, and statutory changes) sufficiently resolved the merchants’ grievances such that the merchants’ claims were hypothetical or contingent.