Ever since Visa (NYSE: V) and MasterCard (MA) struck a $7.25 billion deal last summer to settle a long-running class-action lawsuit with retailers, many of the nation's largest merchants have been trying to wriggle free.
But the disgruntled merchants, whose ranks include Wal-Mart, Home Depot, 7-Eleven and many other major chains, have endured a series of unfavorable rulings by U.S. District Judge John Gleeson, who is presiding over the interchange fee case.
That's the relevant backdrop for the new federal lawsuit filed Thursday by Target, Macy's, JC Penney, and a number of other big-name retailers, against the two major card networks.
The new suit, much like the earlier case, alleges that Visa and MasterCard violated antitrust laws, leading the suing merchants to pay higher interchange fees than they should have. The plaintiffs say they collectively paid the two card networks more than $1 billion in interchange fees in their last fiscal year.
Arguably the most important fact about the new suit is where it was filed in New York's southern district. Gleeson is a judge in the Empire State's eastern district.
"We think this could be a move by the retailers to have a different judge hear their case," Sanjay Sakhrani, an analyst at Keefe, Bruyette & Woods, wrote Thursday in a research note, "but would note that there is a possibility the case could be assigned back to Judge Gleeson given his knowledge around the merchant litigation case."
Sakhrani stated that he would not be surprised if Wal-Mart and other retailers either joined the new lawsuit or filed their own cases. That speculation was echoed by a source close to MasterCard and Visa.
But even if the large retailers are able to present their arguments to a different judge, they appear unlikely to escape Judge Gleeson's shadow.
That's because the proposed settlement if it's approved would severely limit the ability of merchants to sue Visa and MasterCard. That's even true of those retailers that opt out of the settlement.
Starbucks, to give just one example, has stated that it is opting out. By doing so, the coffee chain relinquishes its claim to a cut of the money that will be distributed to retailers if the settlement is approved.
Starbucks and other dissenters have also said that they are considering additional legal action against Visa and MasterCard. Any such legal action would presumably look similar to the lawsuit filed Thursday by Target, Macy's and JC Penney.
But Thursday's lawsuit, which seeks damages for alleged antitrust violations dating back to 2004, can only achieve so much.
It would not affect the ability of Visa and MasterCard to establish interchange prices in the future, which is the key provision in the settlement from the perspective of the two card networks and their partner banks.
In other words, the new lawsuit could mean that the backward-looking price tag for Visa, MasterCard and the banks will rise above $7.25 billion. But going forward, the new suit shouldn't affect their businesses.
The language of the proposed settlement is so broad that it limits the ability of Target, Macy's and their allies to sue, says Doug Kantor, a lawyer who represents the National Association of Convenience Stores, a trade group that opposes the settlement. "But it's a good effort to hold Visa and MasterCard accountable," he adds.
Target, Macy's and the other plaintiffs are being represented in the new lawsuit by Vorys, Sater, Seymour and Pease LLP, a Columbus, Ohio, law firm. A spokesman for the firm declined comment.
The proposed settlement of the earlier suit is being pushed by nine retailers, none of which are industry giants, and their Minneapolis-based law firm, Robins, Kaplan, Miller & Ciresi L.L.P.
Merchants have until Tuesday to opt out of the settlement. Judge Gleeson will decide later whether to approve the proposal. Visa and MasterCard have been seeking to portray the deal's approval as a fait accompli, but however Gleeson rules, the decision will be subject to appeal.
Thursday's lawsuit is largely an effort by merchants to find a new judge, according to Trish Wexler, spokeswoman for the Electronic Payments Coalition, which represents Visa, MasterCard and banks that issue their cards.
"This forum shopping is a legal Hail Mary that simply won't work," Wexler said in an email.