Kanne v. Visa U.S.A. Inc.
| Decision Date | 03 November 2006 |
| Docket Number | No. S-05-299.,S-05-299. |
| Citation | 723 N.W.2d 293,272 Neb. 489 |
| Parties | Todd A. KANNE and Jeanette W. Sherman, on behalf of themselves and all others similarly situated in the State of Nebraska, appellants v. VISA U.S.A. INC. and MasterCard International, Inc., appellees. |
| Court | Nebraska Supreme Court |
Marvin O. Kieckhafer, of Smith Peterson Law Firm, L.L.P., Council Bluffs, IA, and Daniel M. Cohen, of Cuneo, Gilbert & LaDuca, L.L.P., Washington, DC, for appellants.
Fredric H. Kauffman, of Cline, Williams, Wright, Johnson & Oldfather, L.L.P., Lincoln, and Lyman L. Larsen, and, on brief, Michael J. Leahy, of Stinson, Morrison & Hecker, L.L.P., Omaha, for appellees.
Stephen V. Bomse, of Heller, Ehrman, White & McAuliffe, L.L.P., San Francisco, CA, for appellee Visa U.S.A. Inc.
CONNOLLY, GERRARD, STEPHAN, McCORMACK, and MILLER-LERMAN, JJ.
In their class action claims, appellants, Todd A. Kanne and Jeanette W. Sherman, allege that appellees, Visa U.S.A. Inc. (Visa) and MasterCard International, Inc. (MasterCard), violated provisions of Nebraska's unlawful restraint of trade statutes (referred to as the "Junkin Act"), Neb.Rev.Stat. §§ 59-801 to § 59-831 (Reissue 2004) and Neb.Rev.Stat. §§ 59-1603 to 59-1609 (Reissue 2004) of the Consumer Protection Act. In addition, appellants allege a claim for unjust enrichment for money had and received.
Appellants claim that Visa and MasterCard each tied the sale of credit and debit network processing services to their member banks and that this tying resulted in Visa's and MasterCard's member banks charging merchants excessive fees for processing debit transactions. Appellants further claim that because of the excessive fees, the merchants passed those costs on to consumers in artificially inflated prices.
Visa and MasterCard moved to dismiss for lack of standing. See Neb. Ct. R. of Pldg. in Civ. Actions 12(b)(6) (rev.2003). The district court dismissed appellants' claims, finding that appellants lacked standing under either the Junkin Act or the Consumer Protection Act and that they failed to allege an unjust enrichment claim. We granted bypass.
We hold that appellants lack standing for their antitrust claims because their alleged injuries are derivative and remote. Appellants' claims for unjust enrichment fail because Visa and MasterCard were not unjustly enriched. We affirm.
Appellants allege the following facts: Visa and MasterCard are membership corporations whose member banks issue debit and credit cards to consumers. Credit cards provide the consumer with the option to buy now and pay later, whereas debit cards deduct the purchase amount directly from the cardholder's bank account.
To accept these cards, a merchant must enter into a contract with one of the member banks. Under these contracts, merchants agree to pay a merchant discount fee, which typically ranges from 1.4 to 4.5 percent of the transaction amount. In exchange, merchants get processing services and a guarantee from the member bank that the merchants will be paid when a customer uses a Visa or MasterCard.
According to appellants, Visa and MasterCard used their market power to force merchants to purchase their debit card processing services by tying credit card services to debit card services. Under this tying arrangement, Visa and MasterCard forced merchants to accept their debit cards as a condition of accepting their credit cards. Visa and MasterCard charged the same fees for both types of cards even though the risks associated with credit cards are greater than for debit cards. Merchants normally would not pay these higher rates, but to be competitive, they need the credit card services. This arrangement restrained the market for the provision of debit card processing services by foreclosing competition and preventing the development of more efficient and less expensive services. The tying arrangement caused merchants to pay "supra-competitive, artificially inflated costs" for their debit card processing services, and as a result, the merchants passed these costs to consumers through inflated prices for goods.
In conclusion, appellants allege the tying arrangement was an attempted monopolization that violated the provisions of the Junkin Act and the Consumer Protection Act. They also allege common-law claims for unjust enrichment.
The district court granted Visa and MasterCard's motion to dismiss appellants' petition for lack of standing. The court first addressed appellants' claims under the Junkin Act and found that because the remedial provisions in § 59-821 were similar to federal antitrust law, federal antitrust precedent was persuasive. The court then applied the standing factors set forth in Associated General Contractors v. Carpenters, 459 U.S. 519, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983), and concluded that appellants lacked standing. The court also held that appellants are not indirect purchasers entitled to bring suit because they did not purchase Visa's or MasterCard's debit card services, either directly or indirectly.
The court also dismissed appellants' claim under the Consumer Protection Act after noting the remedial language of § 59-1609 is virtually identical to that of the Junkin Act and, therefore, the same Associated General Contractors standing analysis applies. Finally, the court dismissed appellants' common-law claims for unjust enrichment because appellants did not state a cause of action under either the Junkin Act or the Consumer Protection Act. The court also found that Visa and MasterCard did not retain any potential enrichment because they had settled with the merchants for the contested debit processing services.
Appellants assign that the trial court erred in granting Visa and MasterCard's motion to dismiss.
Appeals of a district court's grant of a motion to dismiss for failure to state a claim require this court to accept as true all the facts which are well pled and the proper and reasonable inferences of law and fact which may be drawn therefrom, but not the conclusions of the pleader. See, Kellogg v. Nebraska Dept. of Corr. Servs., 269 Neb. 40, 690 N.W.2d 574 (2005); Butler Cty. Sch. Dist. No. 502 v. Meysenburg, 268 Neb. 347, 683 N.W.2d 367 (2004).
Appellants claim that Visa and MasterCard engaged in tying that violated the Junkin Act. The Junkin Act provides that "[e]very contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce . . . is hereby declared to be illegal." § 59-801. It prohibits an "attempt to monopolize . . . any part of the trade or commerce, within this state." § 59-802. The Junkin Act further provides a potential damages remedy to a "person who is injured in his or her business or property" by a violation of the act, whether the injured person "dealt directly or indirectly with the defendant." § 59-821.
Like the Junkin Act, § 4 of the federal Clayton Act, codified at 15 U.S.C. § 12 et seq. (2000), also provides a potential damages remedy to a person "injured in his business or property by reason of anything forbidden in the antitrust laws." 15 U.S.C. § 15(a). The Junkin Act mandates that when its provisions are "similar to the language of a federal antitrust law, the courts of this state in construing such [provisions] shall follow the construction given to the federal law by the federal courts." § 59-829. Because the remedial provisions of the Junkin Act and Clayton Act are so similar, § 59-829 requires that we follow the federal courts' construction of the Clayton Act.
Despite the broad remedial language of the Clayton Act, not every person claiming an injury from an antitrust violation can recover damages under § 4. Although a "literal reading of the [federal] statute is broad enough to encompass every harm that can be attributed directly or indirectly to the consequences of an antitrust violation," the "federal courts have been `virtually unanimous in concluding that Congress did not intend the antitrust laws to provide a remedy in damages for all injuries that might conceivably be traced to an antitrust violation.'" (Emphasis supplied.) Associated General Contractors v. Carpenters, 459 U.S. 519, 529, 534, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983), quoting Hawaii v. Standard Oil Co., 405 U.S. 251, 92 S.Ct. 885, 31 L.Ed.2d 184 (1972).
Here, appellants do not allege that their injuries stem from their purchases of the purportedly tied debit network processing services that Visa and MasterCard provided to the merchants. Instead, appellants claim only derivative and remote injuries through their purchases from the merchants of a variety of retail goods that Visa and MasterCard neither manufactured nor sold.
In discussing remote injuries, the U.S. Supreme Court, in Associated General Contractors, identified five factors for determining whether a plaintiff asserts an injury too remote from an alleged antitrust violation to confer standing to recover damages: (1) whether the plaintiff is a consumer or competitor in the allegedly restrained market; (2) whether the injury alleged is a direct, firsthand impact of the restraint alleged; (3) whether there are more directly injured appellants with motivation to sue; (4) whether the damages claims are speculative; and (5) whether the plaintiff's claims risk duplicative recoveries and would require a complex apportionment of damages. Applying the above factors, the U.S. Supreme Court held that the claims of a labor union, which alleged that defendants had coerced third parties to enter into relationships with nonunion firms, should be dismissed. Id.
The Eighth Circuit Court of Appeals and other federal courts have routinely applied the standing factors identified in Associated General Contractors to dismiss claims based on derivative or remote injuries under federal antitrust law. See, e.g., Henke...
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