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February 2017: U.S. Supreme Court Victory for Consumers Against Visa and MasterCard

February 2017

The firm obtained an important victory in the U.S. Supreme Court on behalf of a plaintiff class of consumers challenging price-fixing of ATM access fees by Visa, MasterCard, and the big banks. This is an antitrust action brought pursuant to Section 1 of the Sherman Act on behalf of a proposed class of consumer plaintiffs who have been charged artificially inflated, supra-competitive fees to access the money in their bank accounts when making cash withdrawals from ATMs using debit cards issued by the defendant banks. Quinn Emanuel has been appointed co-lead interim class counsel for this proposed class, who allege that the ATM Access Fee rules agreed to and perpetuated by the ATM network and bank defendants constitute unreasonable restraints on trade in that they required these collusively-set, higher prices.

The district court granted the defendants’ motion to dismiss, holding that the complaints lacked adequate facts to establish concerted activity under Section 1. The D.C. Circuit reversed, holding that the allegations—that a group of retail banks fixed an element of access fee pricing through bankcard association rules—describe concerted action sufficient for a Section 1 claim. The defendants filed a petition for certiorari in the Supreme Court, proposing the following question presented: “Whether allegations that members of a business association agreed to adhere to the association’s rules and possess governance rights in the association, without more, are sufficient to plead the element of conspiracy in violation of Section 1 of the Sherman Act . . . .” They argued that the allegations of the banks’ membership and participation in the Visa and MasterCard associations and adherence to their rules did not show concerted action, relying on a supposed conflict on this issue between the D.C. Circuit and the Ninth Circuit’s decision in Kendall v. Visa U.S.A., Inc., 518 F.3d 1042 (9th Cir. 2008).

The Supreme Court granted certiorari, but defendants in their merits briefs focused on a new argument: that Visa and MasterCard each constituted a single entity for purposes of the antitrust laws, and thus the member banks could not have used Visa and MasterCard to conspire in violation of Section 1. Along with co-counsel, Quinn Emanuel drafted the merits brief for the consumer plaintiffs. The firm insisted that the defendants had improperly changed their arguments from those that they had made in support of their petition. The firm also explained that the defendants’ new argument was meritless under American Needle, Inc. v. National Football League, 560 U.S. 183 (2010), where the Supreme Court held that the NFL was not a single entity for antitrust purposes and that their member teams could therefore conspire in violation of Section 1.

Before oral argument was set to occur, the Supreme Court dismissed the petition for certiorari as improvidently granted. The Court’s stated reason for doing so was that “[a]fter having persuaded us to grant certiorari on th[e] issue” stated in the question presented, “petitioners chose to rely on a different argument in their merits briefing.” The dismissal of a petition as improvidently granted (a “DIG” in Supreme Court parlance) is a rare outcome, occurring only a few times per year. In addition to being a cautionary tale for those thinking of switching arguments in the Supreme Court after a grant of certiorari, the dismissal means that the D.C. Circuit’s opinion stands. The case will therefore go forward in the district court, where Quinn Emanuel will continue to represent the consumers there as co-lead counsel.