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Visa v. Stoumbos

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Supreme Court of the United States
Visa v. Stoumbos
Docket number: 15-962
Term: 2016
Court: United States Supreme Court
Important dates
Argument: Unargued
Decided: Dismissed as improvidently granted
Court membership
Chief Justice John G. Roberts • Anthony Kennedy • Clarence Thomas • Ruth Bader Ginsburg • Steven G. Breyer • Samuel Alito • Sonia Sotomayor • Elena Kagan


Visa v. Stoumbos was scheduled for argument during the October 2016 term of the U.S. Supreme Court. Argument in the case was scheduled for December 7, 2016, but on November 17, 2016, the court issued an order dismissing the grant of certiorari in the case as having been improvidently granted.[1]

HIGHLIGHTS
  • The case: Visa is challenging a D.C. Circuit ruling that would permit trial on charges that Visa was part of a conspiracy to restrain trade in violation of the Sherman Act, a federal antitrust law.
  • The issue: Did the D.C. Circuit err in finding evidence of a conspiracy sufficient to proceed to trial on charges that Visa violated the Sherman Act?
  • The outcome: The court dismissed the petition for certiorari as having been improvidently granted.[1]


    • In brief: The plaintiffs in a February 2013 action before the United States District Court for the District of Columbia alleged that Visa was part of a conspiracy to restrain trade through use of restrictive network access fees for ATM transactions. The district court dismissed the plaintiffs' lawsuit finding that plaintiffs did not have standing to bring the suit nor did the plaintiffs have sufficient facts to prove a Sherman Act violation. A three-judge panel of the D.C. Circuit disagreed and vacated the district court's dismissal. The case was remanded for further proceedings in district court. Pending that action, Visa appealed to the U.S. Supreme Court. Oral argument in the case was scheduled for December 7, 2016, but on November 17, 2016, the court issued an order dismissing the grant of certiorari in the case as having been improvidently granted.[1]

    You can review the D.C. Circuit's opinion here.[2]
    Here's our page on the consolidated case, Visa v. Osborn

    Click on the tabs below to learn more about this Supreme Court case.

    Case


    Background

    Prior to the mid-1990s, a consumer who wished to draw on his or her bank accounts at an automated teller machine (ATM) was limited to those ATMs that were either bank-operated or physically located at a bank branch. When states began to revoke laws that prevented ATM operators from charging access fees directly to consumers, nonbanks began to enter the ATM market. This lead to the expansion of independent ATMs. These ATMs connect to a cardholder's bank through an ATM network, such as those operated by Visa (e.g., Plus, Interlink, or VisaNet) and MasterCard (e.g., Cirrus or Maestro). Other networks include NYCE, Star, and Credit Union 24. So long as the cardholder's bank card and an independent ATM are linked by at least one common network, the cardholder can access his or her bank account.[2]

    In order to access their networks, Visa and MasterCard require that an independent ATM operator may not charge a higher access fee to any customer for transactions conducted across Visa or Mastercard networks than those conducted across any other network. "Thus ... operators cannot say to cardholders: 'We will charge you $2.00 for a MasterCard or Visa transaction, but if your card has ... Star or Credit Union 24 ... on it, we will charge you only $1.75.'"[2]

    The plaintiffs in this case claimed that these rules constituted violations of federal antitrust law because they prevented independent ATM operators from offering incentives to customers to use cards that could be more efficient and/or less costly than MasterCard or Visa. Use of these cards arguably would both reduce transaction fees for consumers and raise profits for the ATM operators by allowing them to use alternative networks, and pay lower network fees, than the networks operated by Visa and MasterCard.

    In February 2013, three sets of plaintiffs brought their cases in federal district court. The court dismissed these cases on two separate grounds, stating that the plaintiffs had failed to establish facts that would suffice to prove standing to bring the case and that the facts presented were inadequate to bring a charge of illegal concerted activity under federal antitrust law.[2] Section 1 of the federal antitrust law, the Sherman Act, provides that "every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal."[3] The plaintiffs appealed the district court's dismissal of their case to the United States Court of Appeals for the District of Columbia Circuit.

    Standing The D.C. Circuit first addressed the district court's dismissal on the grounds that the plaintiffs lacked standing. In order to establish standing, (1) a plaintiff must have suffered an injury-in-fact (not a hypothetical injury), (2) a plaintiff must show a causal relationship between the defendant's actions and the injury suffered, and (3) the plaintiff must show that a favorable court decision will resolve and redress the injury. The district court ruled that the allegations made by the plaintiffs showed neither an injury-in-fact nor a means of redressability and dismissed the suit accordingly. The D.C. Circuit reversed, finding that "because the economic facts alleged by the Plaintiffs are specific, plausible, and susceptible to proof at trial, they pass muster for standing purposes at the pleadings stage."[2] In federal court, the pleadings stage is the beginning stage of a lawsuit when plaintiffs file their complaints and defendants present motions.

    Coerced activity under antitrust law
    The district court also dismissed the lawsuit because the plaintiffs "failed to plead adequate facts to establish the existence of concerted activity." In order to demonstrate illegal concerted activity in violation of the Sherman Act, a plaintiff "must allege 'that the challenged anticompetitive conduct stems from ... an agreement, tacit or express.' ... complaints are sufficient if they contain 'enough factual matter (taken as true) to suggest that an agreement was made.'" In antitrust terms, the plaintiffs alleged that Visa and MasterCard established a "horizontal conspiracy to restrain trade" because the conspiracy took place between competitors rather than one established by entities at differing levels of distribution (i.e., a vertical conspiracy). The D.C. Circuit held the plaintiffs' contention - that the rules under which MasterCard and Visa operate access fee pricing served to protect Visa and MasterCard against competition - could plausibly be argued as a horizontal conspiracy at trial based on the facts asserted. Thus, the district court's denial was wrong.[2]

    Petitioner's challenge

    Visa is challenging the D.C. Circuit's legal basis for determining that the plaintiffs have sufficient facts to plead that Visa was part of a horizontal conspiracy in violation of the Sherman Act.

    Certiorari granted

    On January 27, 2016, Visa Inc., the petitioner, initiated proceedings in the Supreme Court of the United States in filing a petition for a writ of certiorari to the United States Court of Appeals for the District of Columbia Circuit. The U.S. Supreme Court granted Visa's certiorari request on June 28, 2016, consolidating argument in the case with argument in Visa v. Osborn. Argument was scheduled for December 7, 2016, but on November 17, 2016, the court issued an order dismissing the grant of certiorari in the case as having been improvidently granted.[1]

    Arguments


    Question presented

    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, 15 U.S.C. § 1, as the Court of Appeals held below, or are insufficient, as the Third, Fourth, and Ninth Circuits have held."[4]


    Case dismissed

    Argument was scheduled for December 7, 2016, but on November 17, 2016, the court issued an order dismissing the grant of certiorari in the case as having been improvidently granted.[1]

    Outcome

    Argument was scheduled for December 7, 2016, but on November 17, 2016, the court issued an order dismissing the grant of certiorari in the case as having been improvidently granted.[1]

    The order

    Filings

    The court granted Visa's certiorari request on June 28, 2016.

    Merits filings

    Parties' filings

    • Visa Inc., the petitioner, filed a merits brief on September 1, 2016.
    • A group of consumer respondents filed a merits brief on October 17, 2016.
    • A group of non-consumer respondents filed a merits brief on October 17, 2016.

    Amicus curiae filings

    The following groups filed an amicus curiae brief in support of the petitioner, Visa Inc.

    • Brief of the American Society of Association Executives et al.
    • Brief of the Chamber of the United States of America et al.
    • Brief of various financial industry associations
    • Brief of various antitrust law professors

    The following groups filed amicus curiae briefs in support of the respondents.

    • Brief of the American Antitrust Institute
    • Brief of the ATM Industry Association
    • Brief of the National Retail Federation
    • Brief of Public Justice P.C.
    • Brief of the U.S. Public Interest Research Group Education Fund, Inc.
    • Brief of various antitrust law professors and economists

    Certiorari filings

    Parties' filings

    • Visa Inc., the petitioner, filed a petition for certiorari on January 27, 2016.
    • Mary Stoumbos et al., the respondents, filed a brief in opposition to certiorari on March 30, 2016.

    See also

    Footnotes

    1. ↑ 1.0 1.1 1.2 1.3 1.4 1.5 Supreme Court of the United States, "Order list: 580 U.S. - Certiorari-Summary Disposition," November 17, 2016
    2. ↑ 2.0 2.1 2.2 2.3 2.4 2.5 U.S. Court of Appeals for the District of Columbia Circuit, Sam Osborn, et al., v. Visa Inc., et al., Consolidated with 14-7005, 14-7006, decided August 4, 2015
    3. ↑ Cornell University's Legal Information Institute, "15 U.S. Code § 1 - Trusts, etc., in restraint of trade illegal; penalty," accessed September 23, 2016
    4. ↑ Supreme Court of the United States, Visa Inc. v. Stoumbos, June 28, 2016
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