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Legal news from Saturday, November 10, 2012 |
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Federal judge gives preliminary approval to credit card fee settlement
Jaimie Cremeans on November 10, 2012 4:50 PM ET

[JURIST] A judge for the US District Court for the Eastern District of New York [official website] on Friday preliminarily approved a proposed settlement of $7.2 billion between merchants and Visa and Mastercard [corporate websites], which would be the largest settlement ever made in an antitrust case. This would end a seven-year class action against Visa and Mastercard alleging that they conspired with banks to fix the fees merchants pay when their credit cards are used. Although Visa and Mastercard representatives have said they are happy with the deal, some members of the merchant class, including Wal-Mart, Home Depot and Target [corporate websites] have expressed their opposition [Bloomberg report] to the settlement. The National Retail Federation [official website], which asked [brief, press release] the court earlier this month to reject the settlement agreement, said the proposed settlement "does nothing to keep these soaring fees from continuing to drive prices higher for American consumers, and would block merchants who believe in true swipe fee reform from ever having their day in court." Although it survived preliminary approval, the settlement will still be subject to final approval by the court.
Earlier this year the European General Court [official website], the EU's second highest court rejected [JURIST report] a challenge by MasterCard over its cross-border credit card fees. The court upheld a decision by the European Commission [official website] that the fees violate EU antitrust rules. In 2010 the US Department of Justice (DOJ) [official website] filed a civil antitrust lawsuit [JURIST report] against MasterCard, Visa and American Express [corporate website]. The lawsuit challenged rules utilized by the companies that prevented merchants from providing discounts and rewards for using credit cards with lower merchant fees. The DOJ contended that these rules unfairly inflate costs for both consumers and merchants. Visa and MasterCard agreed to a settlement that required the companies to allow merchants using their cards to express a preference for types of payments accepted, to offer discounts to consumers for using a particular card or type of payment and to provide consumers with information regarding the costs incurred by the merchant when a particular type of credit card is used. In 2008 Visa and Mastercard settled an antitrust suit [JURIST report] with Discover Financial Services [corporate website] for $2.75 billion. The settlement was the result of a 2004 lawsuit filed by Discover after a DOJ suit [opinion] determined Visa and Mastercard were in violation of section 1 of the Sherman Antitrust Act by prohibiting banks from using Discover's services.


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Supreme Court to rule on Voting Rights Act, Maryland DNA collection
Max Slater on November 10, 2012 10:09 AM ET

[JURIST] The US Supreme Court [official website] granted certiorari [order list, PDF] on Friday in Shelby County v. Holder [docket, cert. petition, PDF] to determine whether Congress exceeded its authority when it renewed Section 5 of the Voting Rights Act of 1965 [Cornell LII backgrounder]. Section 5 requires jurisdictions with a history of preventing minority groups from voting to receive preclearance from the US Department of Justice or a three-judge panel of the US District Court for the District of Columbia [official websites] before making any changes to their voting laws. Shelby County, Alabama, which is a jurisdiction covered by Section 5, has contended that Section 5 violates state sovereignty under the Tenth Amendment and also exceeds Congress' authority under the Fourteenth and Fifteenth Amendments [text]. The case is on appeal from the US Court of Appeals for the District of Columbia Circuit [official website] which upheld the constitutionality of Section Five [opinion; JURIST report].
The court also agreed to hear Maryland v. King [docket, cert. petition, PDF] which concerns whether the Fourth Amendment [text] permits states to collect DNA samples from individuals charged with serious crimes. The respondent in the case, Alonzo King, challenged the validity of Maryland's DNA Collection Act [text, PDF] after state officials used his DNA to implicate him in a later crime. In July Supreme Court Chief Justice John Roberts [official profile] issued a temporary stay [JURIST report] that blocked a ruling by the Maryland Court of Appeals [official website] that barred police from collecting DNA from criminal suspects without a warrant.
The court also granted certiorari in Peugh v. United States [docket, cert. petition, PDF] to determine whether a court violated the US Constitution's Ex Post Facto Clause [Cornell LII backgrounder] when it applied the US Sentencing Guidelines [materials] at the time of the sentencing rather than at the time of the offense. The petitioner in the case, Marvin Peugh, argued that the US Court of Appeals for the Seventh Circuit [official website] erred when it used the 2009 sentencing guidelines rather than the guidelines that were in place in 1998, the year he committed the crime in question. There is a circuit split among the US Courts of Appeals over whether a court violates the Ex Post Facto Clause when it sentences a criminal defendant based on the guidelines at the time of the sentencing.
Finally, the court agreed to hear American Express Co. v. Italian Colors Restaurant [docket, cert. petition, PDF] which deals with whether the Federal Arbitration Act (FAA) [Cornell LII backgrounder] allows courts to nullify arbitration agreements if the agreements do not permit class arbitration of a federal law claim. The plaintiffs in the case are several retail businesses that have accepted American Express charge cards. They argue that American Express's arbitration clause, which forbids plaintiffs from filing as a class, violates the FAA. The US Court of Appeals for the Second Circuit [official website] ruled [opinion, PDF] in February that American Express's arbitration clause was unenforceable.


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