Two legal battles involving MasterCard and Visa have taken new twists.

A federal court judge late last week dismissed Advanta Corp.'s claim that Visa and MasterCard rules preventing its marketing alliance with American Express Co. are a violation of antitrust regulations.

The judge, however, gave Advanta 30 days to amend its claim against the card associations.

Meanwhile, in another antitrust card squabble, two major retailers, Safeway Inc. and Circuit City Stores Inc., have joined the suit that Wal- Mart Stores Inc. and The Limited Inc. filed against Visa U.S.A. and MasterCard International last fall. That suit alleges that the associations coerce merchants into accepting debit cards at roughly the same prices as credit cards.

Taken together, the suits represent some of the most potent legal challenges ever mounted against the rulemaking powers of the card associations. And they coincide with a U.S. Department of Justice investigation that is probing the very heart of Visa's and MasterCard's business practices.

In a win for Visa and MasterCard, a March 27 ruling by Judge Charles A. Legge of the U.S. District Court for the Northern District of California in San Francisco, let stand the associations' claim that Advanta's program, Rewards Accelerator, infringes on their trademarks.

Visa sued Advanta in November, claiming that Rewards Accelerator inappropriately linked its trademark with an arch rival, American Express. MasterCard later joined the suit against Advanta, the nation's eight largest bank card issuer.

Springhouse, Pa.-based Advanta then lodged a complaint against both associations, charging them with violating antitrust law.

According to Visa's lead attorney, M. Laurence Popofsky, a partner at Heller, Ehrman, White & McAuliffe, Judge Legge found Advanta had access to both the Visa and MasterCard networks, so its antitrust claim carried no weight.

"Stopping the program did not seem to impair competition between the three brands," he said. "Hence Advanta had no standing for the claim."

But Edward F. Mannino, senior partner at Wolf, Block, and Advanta's lead attorney, said the judge merely rejected the way the claim was presented. Advanta plans to present the claim again.

"We talked about a systems market, and he said we are not a systems producer," he said. "He wanted Advanta to plead as an issuer" and show "what effect it would have on the consumer."

Legal experts expressed surprise that the antitrust aspect of the case was dismissed so quickly, while the trademark portion, which is less complex, was allowed to stand.

"I am surprised the judges dismissed the antitrust claims at this early stage of the litigation," said Anta Boomstein, partner, Hughes, Hubbard & Reed. "The real crux is not the trademark portion, but the antitrust portion. It's always been a question of competition."

"Associations can impose fairly stringent standards about who can and can't participate," added Lynne Barr, partner, Goodwin, Procter, & Hoar, Boston. "The grant that Visa gives to use its mark is so strict and restrictive that from a legal perspective, there is not much of a case. Either they have violated it or not."

"From a legal perspective, the antitrust issue is more important," she added.

Advanta, which recently announced a $20 million loss for the first quarter, is holding the Rewards Accelerator program at a standstill, servicing existing accounts without soliciting new ones. Some attorneys familiar with the case said Advanta is likely to settle its claims against Visa and MasterCard out of court next week.

Advanta had no comment other than to say there is a hearing scheduled for April 10.

As for the retailers' suit against Visa and MasterCard, experts said the addition of Safeway and Circuit City is evidence that more storm clouds are brewing on the horizon for the card associations. Sears Roebuck and Co., the International Mass Retail Association, and the National Retail Federation joined the suit last fall.

Retailers are ultimately seeking an "untying" agreement, where they could accept credit cards without having to accept debit cards.

Under the associations' current bylaws, merchants are required to accept both at nearly the same prices. Retailers argue that off-line debit cards lack the same risks as credit transactions since the transactions are deducted directly from the cardholder's account. And on-line debit card transactions cost pennies to process through regional networks.

Visa declined to comment on the development pending additional information. MasterCard said its brand name would be irreparably harmed if merchants were free to accept certain MasterCard cards and refuse to accept others."

"Visa and MasterCard have used their marketing power to coerce retailers to take debit cards, which are inferior products," said Lloyd Constantine, partner, Constantine and Partners, and the lead lawyer for retailers. "If Wal-Mart, which is the world's largest retailer, has no option, what about Bernie's Army Navy?"

Recently rental car companies such as Avis and Hertz have announced they will no longer accept debit cards in lieu of credit cards to rent cars.

The case involving retailers will be in discovery until next year, and experts said additions of the new plaintiffs have a greater political significance than a legal one.

They said it is easier for new plaintiffs to climb on the legal bandwagon once a class action suit has been established.

"The industry and card associations can fight off one or two or three cases," Ms. Boomstein said. "But the tide turns and the more retailers complaining, means it is harder for MasterCard and Visa to hold up the front and not meet their needs."

"The retailers may never win this case, but it is a question of losing the battle but winning the war," she added.

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