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Consumers’ claims of injury against MasterCard and Visa based on antitrust allegations that were settled with retailers for $3 billion last year are too remote to give store customers standing to bring a class action against the card issuers, a New York judge has ruled. Acting Justice Bernard J. Fried last week dismissed the amended complaint in Ho v. Visa U.S.A. Inc., 112316/00, in which three plaintiffs alleged that stores which were forced to accept MasterCard and Visa debit cards as well as their credit cards passed along the higher transaction costs of the debit cards to consumers in higher prices for their products. Several large retailers had alleged similar facts in an antitrust action they filed in the U.S. District Court in Brooklyn. That case ended last year on the eve of trial with a $3 billion settlement. The card issuers agreed to stop requiring stores to handle both debit and credit cards and to cut the debit-card transaction fees. In the more recent case, Siolen Kelly Ho and her co-plaintiffs alleged that Visa and MasterCard were violating New York’s Donnelly Act, the state’s version of the federal Sherman Antitrust Act, and General Business Law � 349, New York’s consumer protection act prohibiting deceptive acts and practices. But Justice Fried said the alleged injuries were “far too remote to provide antitrust standing under the Donnelly Act.” The plaintiffs’ amended complaint “appears to cover all of the purchases that they made as individual consumers at any retail store that accepts Visa and MasterCard, not merely at the handful of named stores — purchases which potentially range from a few cents to hundreds, or even thousands, of dollars,” he wrote. “The complexity and speculative nature of plaintiffs’ claims are overwhelming.” In any event, the judge observed, any recovery would likely be duplicative because the retailers had already resolved their claims with respect to the debit cards and obtained a multi-billion dollar settlement. “Therefore, this is obviously not a situation where the antitrust violators will go unpunished,” he said. The plaintiffs asserted that the defendant card issuers had engaged in a “wide and far-reaching advertising campaign” to convince consumers to acquire debit cards without disclosing that the retailers were charged high prices for accepting them, and that the cost was being passed along to consumers in the form of higher prices. Fried noted that no specific advertisements were cited in the complaint, nor were any specific portions of the ads identified as misleading. The plaintiffs argued that a deceptive-practices claim could be stated that was not limited to deceptive advertising, but the judge said such a claim for indirect injuries would again depend on the question of the remoteness of the injuries. “[I]f plaintiffs were permitted to bring their � 349 claims as a class action … the complexity and speculative nature of calculating damages would increase geometrically, for those claims could involve nearly all the purchases of all the consumers in the state of New York,” he said. Irving Bizar of Ballon Stoll Bader & Nadler represented the plaintiffs. The defense counsel included Robert C. Mason of Arnold & Porter and Stephen V. Bomse of Heller Ehrman White & McAuliffe in San Francisco for Visa USA and Kenneth A. Gallo of Paul, Weiss, Rifkind, Wharton & Garrison’s Washington office, and Randi D. Adelstein of Paul Weiss in New York for MasterCard.

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