Brooklyn Judge Grants Class Action Status to Retailers

In a surprise event that stunned Visa and MasterCard, U.S. District Judge John Gleeson in Brooklyn, N.Y. gave retailers and merchants a pre-trial legal victory February 23, by certifying a class action in the 1992 case filed by retailers. Judge Gleeson, while certifying the class, otherwise made clear in his 45-page written decision that he was not ruling on the merits of the case.

The 3-year-old lawsuit accuses Visa USA, Inc., and MasterCard International of using a monopoly in credit cards since 1992 to force businesses to pay exorbitant transaction fees to accept debit cards.

The case claims an $8.1 billion damage estimate which, according to retailers, is the amount they are being overcharged by the credit card companies. If the retailers win, under antitrust law the damage award could triple to $24.3 billion.

Gleeson acknowledged that the litigation “poses enormous financial risks for the defendants, risks that are obviously increased drastically by certification of the class.’’

A trial is set to begin November 27. The class of plaintiffs will now consist of about four million merchants, including Wal-Mart Stores, Sears, Roebuck & Co., Safeway Stores Inc., Circuit City Stores, Inc., and the National Retail Federation.

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