August 16, 2013

Dallas-area businesses sue Visa and MasterCard, alleging antitrust violations

More than 100 large merchants, including more than three dozen prominent North Texas-based businesses, have sued Visa and MasterCard, alleging the credit card companies forced them to pay excessive fees amounting to hundreds of millions of dollars.

The suit claims that Visa and MasterCard membership rules prevent banks that issue credit and debit cards from competing for merchant acceptance of those cards.

The suit, in part, is an attempt by the merchants to opt out of a settlement reached in a New York class action case last year.

At the center of the suit is the level of interchange fees, charges assessed to merchants each time a customer uses a credit card.

The suit was filed Tuesday in federal district court in Marshall.

Atlanta-based Delta Air Lines is the lead plaintiff in the case.

Delta is joined by prominent North Texas companies, including TXU Energy, ClubCorp USA, La Quinta Inns, Pier 1 Imports, RadioShack and Cinemark USA.

The suit claims that credit card fees are among a merchant’s largest expense items. It says the merchants have paid the card companies excessive fees totaling hundreds of millions of dollars. Eliminating them and restoring competition would lower retailer costs and benefit consumers, according to the suit.

Visa and MasterCard officials did not respond to requests for comment.

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 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 their 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, those merchants, Visa and MasterCard reached a $7.25 billion settlement. 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, Michaels Stores and 7-Eleven, court records show.

The Marshall litigation is an attempt by the 100-plus merchants to opt out of the New York settlement.

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