## Facts

- Visa, Inc. and Mastercard operated payment-card networks that connected cardholders, merchants, and banks.
- A putative nationwide class of merchants, including Barry’s Cut Rate Stores, Inc. (merchants), accepted Visa- and/or Mastercard-branded cards and, as a condition of acceptance, were subject to network rules.
- Defendants included Visa, Mastercard, and various issuing and acquiring banks (banks). Issuing banks issued Visa/Mastercard cards to customers; acquiring banks acted as intermediaries for merchants in card transactions.
- The merchants alleged they were required to pay interchange fees when customers used Visa or Mastercard cards, and that defendants collectively set those fees at supracompetitive levels.
- The merchants alleged the interchange-fee levels were maintained through network rules that restrained merchant choice and limited merchants’ ability to influence consumers’ payment decisions.
- The challenged rules included the honor-all-cards rule (requiring merchants that accept a brand to accept all cards of that brand) and rules restricting merchants from steering customers toward particular cards or other payment methods.
- The merchants also alleged that, although Visa and Mastercard became publicly traded companies by 2008 (after having been owned by member banks), the banks continued to exercise significant influence through board representation and related governance.
- The merchants sought declaratory relief and an injunction barring the alleged anticompetitive conduct going forward, asserting claims under federal antitrust law and California antitrust law.
- The banks moved to dismiss for lack of standing and failure to state a claim, arguing that later industry developments—such as Visa and Mastercard’s IPOs, regulatory settlements, and statutory changes—meant the merchants’ claims were hypothetical or contingent rather than presenting a live controversy.

## Issues

1. Whether the merchants plausibly alleged Article III standing to seek prospective declaratory and injunctive relief based on continued exposure to alleged supracompetitive interchange fees and ongoing application of network rules.
2. Whether changes in the payment-card industry after the suit began (including Visa/Mastercard becoming public companies and other legal or regulatory developments) defeated justiciability by rendering the alleged injury speculative or resolved.
3. Whether the complaint plausibly alleged concerted action and antitrust injury sufficient to state federal and California antitrust claims based on interchange-fee setting and network rules, despite the post-IPO corporate structure.

## Decision

- The court denied the motion to dismiss.
- The court held the merchants plausibly alleged a live controversy and a real threat of continuing harm tied to interchange fees and continued operation of the challenged network rules, supporting standing for forward-looking relief at the pleading stage.
- The court rejected the argument that intervening industry, corporate, or regulatory changes made the claims merely hypothetical or contingent for purposes of dismissal.
- The court held the merchants plausibly stated antitrust claims based on allegations that Visa, Mastercard, and the banks collectively set interchange fees and used network rules (including honor-all-cards and anti-steering limits) to maintain those fee levels.

## Legal Principles

- A plaintiff seeking declaratory or injunctive relief must plausibly allege a continuing injury or a sufficiently imminent threat of future injury; allegations limited to completed past harm are not enough.
- At the motion-to-dismiss stage, continued participation in a system that allegedly imposes supracompetitive fees, combined with ongoing contractual or rules-based restraints, can support standing for prospective relief.
- Corporate restructuring and later regulatory or statutory developments do not automatically moot antitrust claims where plaintiffs plausibly allege the challenged conduct continues and still causes harm.
- A Sherman Act claim may be adequately pleaded by alleging collective price setting and agreement-supported rules that restrict competitive pressure (including limits on merchants’ ability to steer customers), resulting in antitrust injury.

## Conclusion

Barry’s Cut Rate Stores held that merchant plaintiffs plausibly alleged ongoing harm from interchange fees and network rules and therefore had standing to pursue declaratory and injunctive relief; the court further concluded that the complaint adequately alleged coordinated anticompetitive conduct and resulting injury despite later structural and legal changes in the payment-card industry, and it denied defendants’ motion to dismiss.


Barry's Cut Rate Stores, Inc. v. Visa, Inc., 2019 WL 7584728 (2019)