Weit v. Continental Illinois Nat. Bank and Trust Co. of Chicago

Decision Date13 April 1981
Docket NumberNos. 79-1077,s. 79-1077
Citation641 F.2d 457
Parties1980-81 Trade Cases 63,809 Jack WEIT et al., Plaintiffs-Appellants, v. CONTINENTAL ILLINOIS NATIONAL BANK AND TRUST COMPANY OF CHICAGO et al., Defendants-Appellees. & 79-2113.
CourtU.S. Court of Appeals — Seventh Circuit

James E. Beckley, Dennis C. Waldon, William L. Huyck, William R. Warnock, Roan & Grossman, Franklin J. Lunding Jr., Biggam, Cowan & Lunding, Chicago, Ill., for plaintiffs-appellants.

Keehan Landis, Bryson P. Burnham, Carl S. Lloyd, Jerald P. Esrick, Chicago, Ill., for defendants-appellees.

Before FAIRCHILD, Chief Judge, CUDAHY, Circuit Judge, and CAMPBELL, Senior District Judge. *

CAMPBELL, Senior District Judge.

Plaintiffs appeal from the entry of summary judgment on their claim of a price-fixing conspiracy in violation of Sections 1 and 2 of the Sherman Act. The District Court concluded that after eight years of discovery plaintiffs had failed to produce any significant probative evidence to support the complaint. 1 Based on our review of the record we, too, conclude that plaintiffs are unable to point to any significant probative evidence in support of the allegations in the complaint. Accordingly, we affirm.

This class action was initiated in 1970 by three charge cardholders in the Midwest Bank Card System, Inc. and its successor the Interbank-Master Charge Card System, Inc. (Mastercharge), against five Chicago banks. The plaintiffs alleged that defendants, Continental Illinois National Bank & Trust Company of Chicago (Continental), Harris Trust and Savings Bank (Harris), Pullman Bank and Trust Company (Pullman), Central National Bank in Chicago (Central), and American National Bank and Trust Company (American), conspired to fix the interest rate paid by consumer credit cardholders on extended payments at 1.5% per month, or 18% per annum. 2 Plaintiffs alleged that defendants engaged in a horizontal conspiracy among themselves, and a vertical conspiracy among themselves and their respective correspondent banks in Illinois. Plaintiffs sought five hundred million dollars in damages before trebling and injunctive relief requiring renegotiation of cardholder rates on an individual basis. 3

This controversy arises out of the formation of the Midwest Bank Card System by the defendant banks. As the District Court noted, the circumstances surrounding the In early 1966, First National Bank of Chicago held a meeting attended by representatives of Continental, Harris and the Northern Trust to discuss the establishment of a compatible credit card program. The idea of establishing a credit card system was well received, and further meetings ensued. A representative of American also participated in these meetings as an observer.

formation of Midwest and its successor, Mastercharge, are not in dispute. 4 Those facts are set forth in detail in the District Court's opinion. See Weit v. Continental Illinois National Bank & Trust Co., 467 F.Supp. 197, 200-205 (N.D.Ill.1978). However, a brief summary of the Midwest system is appropriate.

The banks sought to establish a compatible credit card system. That is a system which permits a card issued by one bank to be used for purchases from participating merchants who deal with other banks. The card issuing bank provides the consumer with a plastic charge card. The cardholder agrees to pay his bank for monies advanced to cover purchases by the cardholder with the charge card. The cardholder can use the charge card to make purchases from any merchant who accepts the Midwest Charge card. The merchant simply forwards the signed charge ticket to his own bank, and is credited with the full amount of the charged purchase, less a small "discount" or fee. The merchant's bank then receives a credit from the cardholder's bank. At the end of each month the cardholder is billed by his bank for the total amount of purchases made during the period. The merchant's bank generates revenues by charging the merchant a fee or "discount" for its services. If the cardholder pays his bank the full amount due within a specified period, he incurs no finance or interest charge. If he defers payment, however, his bank charges him interest on the unpaid balance. That interest rate, and how it was arrived at, is the subject of this controversy.

The Midwest Bank Card System, Inc. is a non-profit corporation established by the defendant banks, except American, 5 to administer the compatible charge card system. The defendant banks established the Midwest System in 1966 to facilitate the transfer or "interchange" of funds among participating banks. The defendants maintain that compatibility and a facilitated interchange of funds is essential to a successful bank charge system. Midwest was established, they argue, solely to assure an efficient compatible system.

The defendant banks also contend that an important aspect of a compatible charge card system is the integration of correspondent banks into the system. A correspondent bank maintains a deposit balance with a larger Metropolitan bank. The Metropolitan banks, in turn, provide services to their correspondents. Since Illinois is a "unit banking" State, which limits the use of branch banks, 6 major Metropolitan banks, such as the defendants, establish correspondent relationships with smaller banks in lieu of opening branches in other areas. Some banks would establish several correspondent relationships with major Metropolitan banks. 7 Each defendant recruited its correspondent bank to participate in the Midwest System. Plaintiffs claim that in doing so the defendants also conspired with their correspondent banks to fix the rate of interest charged at 18% per annum.

The initial meetings during the Spring and Summer of 1966, attended by representatives of defendants Continental and Harris, and by representatives of First and the Northern Trust, are outlined fully by the District Court and need not be restated here. See Weit v. Continental, supra, at 200-205. Continental and Harris were From the outset the defendant banks were aware of the potential anti-trust problems inherent in a joint venture such as this. At an early meeting on May 26, 1966, lawyers for First raised the anti-trust issue. The group agreed at that time, on advice of counsel, to exclude from their discussion interest rates, fees, advertising, and market research. On July 25, 1966, Miles Seeley, counsel for Continental, submitted a memorandum to the group warning that discussions must be limited to planning a compatible credit card system and prohibiting any discussion of "fees, discounts, billing and extended credit terms." 8 Thereafter, a member of Seeley's firm was present at all meetings to assure that this policy was adhered to, and that interest rates were not discussed, "even in jest." 9 Initial drafts of the "Compatible Credit Card System for Chicago Area Banks" also stated that card issuing banks "will be completely and solely responsible to determine ... credit policies and interest rates." 10

joined by Central National Bank in the Fall. Northern Trust dropped out of the program in August of 1966. Representatives of Pullman, a correspondent of First, Harris and Continental, began attending meetings in August. On October 24, 1966, First, Continental, Harris, Central and Pullman executed an interim agreement establishing the Midwest System. Midwest's regulations permitted membership by any commercial bank. On March 26, 1969, American petitioned for membership and became a member on May 16, 1969.

Nevertheless, plaintiffs argue, each defendant bank arrived at the same interest rate. 11 The defendants had ample opportunity to discuss interest rates at meetings of the Midwest group, at annual bankers' meetings, and even on social occasions. Plaintiffs point to several instances in the record where representatives of the defendant banks did discuss interest rates, though in the context of Illinois usury regulations. Plaintiffs further rely on an affidavit submitted by their expert, Bernard Shull, to the effect that "conscious cooperation" on the part of the members of the Midwest System was the likely cause of the 18% interest rate.

Plaintiffs argue that in addition to these factors which were considered by the District Judge, the lobbying efforts by the defendant banks also suggest the existence of a price fixing conspiracy. Those lobbying efforts were expressly not considered by the District Court. 12

When the Illinois General Assembly convened in 1967, several bills were introduced regulating interest charged on consumer credit cards. The general interest rate limit under the Illinois Usury Statute was 7% per annum. The Chief Counsel to the Illinois Comptroller 13 had, however, issued separate opinion letters to First and Continental indicating that National Banks could, under the Consumer Finance Act, charge 3% interest per month on balances up to $150, 2% on balances between $150 Plaintiffs contend that this evidence, provided by sworn affidavit or deposition, should at least create a genuine issue of material fact sufficient to defeat a defense motion for summary judgment under Rule 56, F.R.C.P.

and $300, and 1% on the remaining balance above $300. There was no Illinois precedent in accord with that conclusion. Several of the bills pending in the Legislature would have limited charge card interest to 1% per month. The defendant banks engaged a lobbyist, William R. Dillon, to seek passage of a bill which would permit monthly credit card interest of 1.5%. Dillon's efforts were successful, as the Legislature approved House Bill 2071 which contained the 1.5% limit.

The District Court found that the defendant's parallel interest rate; the opportunity to conspire to fix those rates; the specific references to interest rates in the record; and the opinion of Professor Shull did not create a reasonable inference of...

To continue reading

Request your trial
100 cases
  • In re Hart
    • United States
    • United States Bankruptcy Courts. Seventh Circuit. U.S. Bankruptcy Court — Northern District of Indiana
    • 3 Julio 1991
    ...could return a verdict for the non-moving party. Munson v. Friske, 754 F.2d 683, 690 (7th Cir.1985); Weit v. Continental Illinois National Bank & Trust Co., 641 F.2d 457, 461 (7th Cir.1981), cert. den., 455 U.S. 988, 102 S.Ct. 1610, 71 L.Ed.2d 847 Once a moving party has met its initial bur......
  • Proctor v. State Farm Mut. Auto. Ins. Co.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (District of Columbia)
    • 16 Marzo 1982
    ...E.g., Interstate Circuit, Inc. v. United States, 306 U.S. 208, 59 S.Ct. 467, 83 L.Ed. 610 (1939); Weit v. Continental Illinois National Bank & Trust Co., 641 F.2d 457, 462 (7th Cir. 1981), petition for cert. filed, 50 U.S.L.W. 3023 (U.S. July 10, 1981) (No. 81-152). Parallel business behavi......
  • Nur v. Blake Development Corp.
    • United States
    • U.S. District Court — Northern District of Indiana
    • 6 Febrero 1987
    ...(1986); Federal Deposit Ins. Corp. v. Meyer, 781 F.2d 1260 (7th Cir. 1986); Munson, 754 F.2d at 690; Weit v. Continental Illinois National Bank & Trust Co., 641 F.2d 457, 461 (7th Cir.1981), cert. denied 455 U.S. 988, 102 S.Ct. 1610, 71 L.Ed.2d 847 (1982). When the parties do not dispute th......
  • Ohio-Sealy Mattress Mfg. Co. v. Kaplan
    • United States
    • U.S. District Court — Northern District of Illinois
    • 20 Julio 1982
    ...the standing issue in antitrust cases that conserves "limited judicial time and resources." Weit v. Continental Illinois National Bank & Trust Company, 641 F.2d 457, 461 and 469 (7th Cir. 1981), cert. denied, ___ U.S. ___, 102 S.Ct. 1610, 71 L.Ed.2d 847 (1982); Solinger v. A & M Records, In......
  • Request a trial to view additional results
2 firm's commentaries
  • A Primer On Antitrust Law Fundamentals
    • United States
    • Mondaq United States
    • 1 Julio 2015
    ...such factors may be sufficient to permit an inference of conspiracy. See Weit v. Continental Illinois National Bank & Trust, 641 F.2d 457, 463 (7th Cir. 1981), cert. denied, 455 U.S. 988 (1982); United States v. Container Corp. of America, 393 U.S. 333, 335 (1969). In Cooper v. Forsyth ......
  • Loose Lips: The Danger Of Sharing Competitive Information With Competitors
    • United States
    • Mondaq United States
    • 3 Marzo 2015
    ...exclude the possibility that they did not avail themselves of such an opportunity."); Weit v. Continental Ill. Nat'l Bank & Trust Co., 641 F.2d 457 (7th Cir. 1981) (observing that "the mere opportunity to conspire, even in the context of parallel business conduct, is not necessarily pro......
5 books & journal articles
  • Dealing with Competitors
    • United States
    • ABA Antitrust Library Frequently Asked Antitrust Questions
    • 1 Enero 2013
    ...340 F.2d 1000, 1007 (9th Cir. 1965) (“A knowing wink can mean more than words.”); Weit v. Cont’l Ill. Nat’l Bank & Trust Co. of Chi., 641 F.2d 457, 475 (7th Cir. 1981) (“This exchange of information regarding the ‘regular’ interest rate and the interest rate being charged by Pullman is anal......
  • Relevance Issues in the Antitrust Context
    • United States
    • ABA Archive Editions Library Antitrust Evidence Handbook. Second Edition
    • 28 Junio 2002
    ...of conduct protected under Noerr to show an overall anticompetitive scheme. See , e.g. , Weit v. Cont’l Ill. Nat’l Bank & Trust Co. , 641 F.2d 457, 466-67 (7th Cir.) (evidence of lobbying activities to show conspiracy properly excluded as unduly prejudicial; no liability for engaging in Fir......
  • Table of Authorities
    • United States
    • ABA Archive Editions Library Antitrust Evidence Handbook. Second Edition
    • 28 Junio 2002
    ...(4th Cir. 1979) ............................................................. 89 Weit v. Continental Illinois National Bank & Trust Co. , 641 F.2d 457 (7th Cir.), cert. denied , 455 U.S. 988 (1982) ................. 66 Wessel Duval & Co. v. Bekaert Steel Wire Corp. , 1989-1 Trade Cas. (CCH)......
  • Regulated Industries
    • United States
    • ABA Antitrust Library Antitrust Law Developments (Ninth Edition) - Volume II
    • 2 Febrero 2022
    ...of conspiracy by banks to fix interest rates and engage in group boycott among banks); Weit v. Cont’l Ill. Nat’l Bank & Trust Co., 641 F.2d 457 (7th Cir. 1981) (affirming summary judgment for defendants on claim that banks conspired to fix credit card interest rates); Wilcox Dev. Co. v. Fir......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT