The first of what is expected to be a series of credit card interchange antitrust lawsuits seeking class-action status has been filed against Visa U.S.A., MasterCard International, and more than a dozen of their member banks.
The suit, filed Wednesday in the U.S. District Court for Connecticut, seeks unspecified damages and claims the issuers violate antitrust regulations by collectively fixing card interchange fees through the associations. The five plaintiffs, all obscure retailers, are being represented by the Minneapolis firm Robins, Kaplan, Miller & Ciresi LLP, which won a $521 million jury award from Microsoft Inc. two years ago.
K. Craig Wildfang, a partner at Robins Kaplan, said that even if one considers only interchange charged since the 2003 Wal-Mart settlement, "it is tens of billions in damages." If the suit succeeds, the merchants will also ask for a change in how interchange is negotiated, Mr. Wildfang said.
Craig J. Maurer, an analyst with Fulcrum Global Partners LLC, said the case "seems to be an also-ran lawsuit." The plaintiffs "are insignificant," he said. "I've never even heard of them."
But Kenneth Posner, an analyst at Morgan Stanley, said there are several factors in the plaintiffs' favor.
"The associations have already been found to have market power" in the Wal-Mart case and the Department of Justice suit that successfully challenged the associations' exclusionary rules, he said. "Retailers have already been marshaled into a class, and the associations have visibly been [increasing] prices." Also, "the theoretical damages are enormous, which creates a lot of bargaining power" for settlements.
Several analysts said the absence of big-name retailers from the plaintiffs' list could be the result of individual deals the associations cut to reduce interchange.
And Mark Nagle, a partner in the Washington office of Sheppard, Mullin, Richter & Hampton LLP, said those deals could undercut the suit's chances for class-action certification.
"The bigger players' being able to negotiate their own deals tends to show that the claims are not common," he said, though he called the plaintiffs' case "very robust."
Mr. Wildfang said his firm is talking with several large merchants that may join the suit. However, "we don't need the really big merchants," he said. "We have adequate resources to take this on." His colleague, David Balto, a former Federal Trade Commission lawyer, is also working on the case.
Mallory Duncan, the senior counsel for the National Retail Federation, said the case "won't necessarily be the only lawsuit filed on this issue."
Mr. Wildfang said he was hopeful that the associations, especially Visa, would want to negotiate a settlement rather than face another expensive court battle.
Carl Pascarella, Visa's longtime chairman, is due to step down in September, and a new leader might be eager to avoid litigation, Mr. Wildfang said. "Whoever they bring in as chief executive has got a whole passel of problems they have to deal with. It can't be a happy situation to have all of your customers mad at you. Visa will try to figure a way out of litigation."
Josh Floum, Visa's general counsel, said Visa is "very optimistic about our prospects" for winning in court. "Interchange is the core of Visa and MasterCard. A court is going to understand that."
When asked if negotiating with the large merchants may have helped keep them off the case, Mr. Floum said, "I hope so."
Mr. Maurer said Visa has been "a lot more vocal" than MasterCard about negotiations, "although I don't know if that means they are doing more."
A spokeswoman for MasterCard said officials were unavailable for comment Thursday.
