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Two years ago, Visa U.S.A. Inc. conceded a hefty $3 billion to settle antitrust allegations with retailers over its “honor all cards” policy that forced stores to accept debit cards and pay higher processing fees. Plaintiffs’ lawyers nationwide have been quick to follow with a spate of similar “indirect purchaser” lawsuits on behalf of consumers, filing a total of 39 separate lawsuits in 20 state courts nationwide since the 2003 antitrust settlement. But courts have been largely inhospitable, finding that Visa and MasterCard’s relationship to consumers is too tenuous to support antitrust claims. “The indirect purchasers face an extraordinary uphill struggle,” said Lloyd Constantine of New York’s Constantine & Cannon, who represented the retailers in the catalytic In re Visa Check/MasterMoney Antitrust Litigation, No. 96-CV-5238 (JG) (E.D.N.Y.). Constantine, who is not involved in the current “copycat” litigation, said that it is no surprise that the lawsuits are being dismissed. Courts have found the relationship between Visa and consumers, who do not actually purchase anything from Visa, too remote to sustain damages. A March 22 decision by a New York state appellate court concluded: “Whatever damages [consumers] suffered are barely in the zone of injury, and would be virtually impossible to calculate.” Ho v. Visa, (N.Y. App. Div., 1st Dep’t). A North Carolina special superior court business judge made a similar determination in a 45-page opinion in October 2004, saying that “indirect purchaser” claims need to be narrowly construed and allowed only when “there is non-speculative proof of direct impact on consumers at something other than a negligible level.” Morris v. Visa, No. 03CVS2514. Seven other state courts have dismissed consumer claims against Visa and MasterCard since October: Arizona, Iowa, Kansas, Maine, Nebraska, Vermont and Wisconsin. 17 CLAIMS DISMISSED Since 2003, about 17 antitrust claims have been dismissed, according to Visa. Visa is represented by Heller Ehrman White & McAuliffe, Washington’s Arnold & Porter and San Francisco’s Townsend and Townsend and Crew. Visa has met the litigation head on, in part, the company asserts, to dissuade the plaintiffs’ bar from treating it like a cash cow. “We want to send a message to the plaintiffs’ bar that Visa and other large companies are not just piggy banks,” said Joshua Floum, Visa’s general counsel. Floum said that the plaintiffs’ bar was mistaken if it viewed the settlement with Wal-Mart Stores Inc. as a lack of resolve by Visa to defend itself and an opportunity to cash in. “Claims that go to consumer harm are simply unmeritorious,” said Floum. Plaintiffs’ lawyer Irving Bizar of New York’s Ballon Stoll Bader & Nadler, who represented consumers in the New York action, said he did not want to trade shots with the defense bar, but pointed out that “indirect purchasers” have a right to litigate. “At the end of the day, it’s the little people that paid the higher prices and didn’t get any repayment,” Bizar asserted. The fact that a number of claims have been dismissed does not mean the plaintiffs’ claims are irrelevant, he said, adding that the dismissals simply mean that the courts have construed the law differently. Only those who purchase products directly from a manufacturer can bring antitrust claims under federal law. In 1977, the U.S. Supreme Court, ruling in Illinois Brick v. Illinois, 431 U.S. 720 (1977), established that consumers do not have antitrust standing to sue under the federal Clayton Act. Following that decision, a number of states amended their antitrust laws to include an Illinois-Brick repealer to allow so-called “indirect purchasers” to sue for overcharges passed onto the consumer. The indirect purchasers in these lawsuits are customers of any of the 4 million merchants, like Wal-Mart and Sears, that were part of the class that settled with Visa two years ago. They allege that the merchants were forced to raise prices on consumers to offset the monopolistic practices by Visa and MasterCard. But in dismissing their lawsuits, courts have concluded that consumers are seeking redress for claims already relieved by Visa’s settlement of the Wal-Mart litigation.

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