he Department of Justice, on behalf of the U.S. government, filed a claim for a portion of the combined $3 billion resulting from two separate, out-of-court settlements reached between each card Association and a class of retailers led by Wal-Mart Stores Inc. in 2003.

Specifics of the federal government's claim were not available. The Wall Street Journal reported that the government is seeking roughly $100 million dollars, much more than Wal-Mart's $80 million claim.

The government's move isn't sitting well with the plaintiffs. "There is a legal question as to if the U.S. is allowed to participate in the lawsuit," said Lloyd Constantine, Lead Counsel for the merchants in the so-called "Wal-Mart suit."

The settlement resulting from this suit threw out the card Associations' "honor all cards" rules and decoupled debit and credit card interchange fees (see "What happened: $3 billion payout, lower fees, 'honor all cards' to change," The Green Sheet, May 12, 2003, issue 03:05:01).

Various federal government entities that take MasterCard- and Visa-branded cards for payment were also forced to "honor all cards," so they were "injured in the same way that the merchants were injured," Constantine said. But because this is a government claim and not from an individual or merchant, he said that a legal question arises.

On Feb. 1, 2006, Constantine sent a letter to Judge John Gleeson, the judge presiding over the Wal-Mart suit, in which he expressed "serious doubts" concerning the validity of the government's claim.

(Constantine said that he has the authority to accept or reject a claimant's right to a portion of the settlement, but because of his doubts, he did not want to make that decision on his own and turned it over to Gleeson instead.)

Uncle Sam has until March 7, 2006 to file a brief in support of its claim. Constantine then has until April 6 to submit a brief that relays retailers' concerns.

Gleeson will hear oral arguments from both sides on May 5. A decision could be reached that day, but it will likely take more time. An appeal is possible regardless of the decision.

Constantine would not officially confirm the claim amounts but said, "At the end of the day $80 million for Wal-Mart and $100 million for the government sounds about right. If anyone would know it's me, and I don't know."

The Department of Justice would not comment on the issue except to confirm that a claim has been filed. A department spokeswoman would not release or discuss dates, dollar figures or the validity of the government's claim.

Merchant deadline passed

The deadline for merchants to file a claim for their portion of the settlement was Dec. 28, 2005; however, late claims are still being accepted. As of Jan. 26, 2006, 714,000 claims were filed, although no dollar amounts have been revealed.

Constantine said the settlement money is being distributed in three separate dispersals. The first is for all plaintiffs in the suit. The second is only for merchants claiming injury in relation to PIN debit fees. Finally, any money that is left will be given to all merchants who filed for the first dispersal.