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Roger Bennett and Richard Allen Combs, On Behalf of Themselves and v. Wal-Mart Stores

September 2, 2011

ROGER BENNETT AND RICHARD ALLEN COMBS, ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS,
v.
WAL-MART STORES, INC., DEFENDANT.



The opinion of the court was delivered by: John Gleeson, United States District Judge:

MEMORANDUM AND ORDER

This case is an offshoot of the Visa-MasterCard antitrust litigation, the settlement of which I approved in 2003, see In re Visa Check/MasterMoney Antitrust Litig., 297 F. Supp. 2d 503 (E.D.N.Y. 2003) ("In re Visa Check"), aff'd sub nom. Wal-Mart Stores, Inc. v. Visa U.S.A. Inc., 396 F.3d 96 (2d Cir. 2005),*fn1 and it boasts a substantial procedural history of its own.

Plaintiffs Roger Bennett and Richard Allen Combs, two Tennessee consumers, brought this action to recover overcharges that were initially imposed on merchants by Visa and MasterCard via interchange fees (i.e., transaction costs) -- the precise tying arrangement challenged by the merchant plaintiffs in In re Visa Check -- and that were allegedly passed on to consumers like Plaintiffs in the form of inflated retail prices.

Plaintiffs filed the instant action in the Eastern District of Tennessee in 2005, on the heels of their defeat in Tennessee state court in a separate suit against Visa U.S.A. Inc. ("Visa") and MasterCard International, Inc. ("MasterCard"), see Bennett v. VISA U.S.A. Inc., 198 S.W.3d 747 (Tenn. Ct. App. 2006).*fn2 The case was transferred to this Court along with its companion case, Bennett v. Circuit City Stores, Inc., No. 06-CV-5303 (JG), in September 2006 due to the cases' relation to In re Visa Check. Circuit City Stores, Inc. ("Circuit City") and Wal-Mart moved to dismiss Plaintiffs' amended complaints in both actions in May 2007, and on September 25, 2007, I granted the motions as to Plaintiffs' federal claims against the defendants alleging violations of § 1 of the Sherman Act pursuant to § 4 of the Clayton Act, 15 U.S.C. § 15, and as to Plaintiffs' non-Tennessee state law claims. Temple v. Circuit City Stores, Inc., Nos. 06-CV-5303 and 06 CV 5304, 2007 WL 2790154 (E.D.N.Y. Sept. 25, 2007). I kept Plaintiffs' Tennessee state law claims alive, however, in the interest of giving the parties an opportunity to be heard on whether the case should be "transferred back to the federal court in Tennessee, in deference to that court's expertise in the applicable law." Temple v. Circuit City Stores, Inc., 2007 WL 2790154, at *9. In October 2007, Plaintiffs moved for reconsideration of my September 25, 2007 order, which I denied on September 26, 2008. Plaintiffs then requested, in a letter filed on February 25, 2011, that their remaining Tennessee state law claims be transferred to the district court for the Eastern District of Tennessee. After receiving Wal-Mart's letter in opposition to Plaintiffs' request to transfer, and holding a telephone conference on the issue on April 4, 2011, I decided that judicial economy would not be promoted by transferring the claims to the federal court in Tennessee and accordingly denied Plaintiffs' request to transfer on the record during the April 4 telephone conference. I further ordered the parties to submit supplemental briefing on Wal-Mart's motion to dismiss Plaintiffs' Tennessee state law claims. For the reasons stated below, Wal-Mart's motion to dismiss those claims is granted.

BACKGROUND

A. The Facts*fn3

Wal-Mart was a member of the class of merchant plaintiffs who sued Visa and MasterCard in In re Visa Check, alleging that the defendants leveraged their power in the credit card market to force the merchants to accept Visa's and MasterCard's debit cards, and that the defendants also attempted and conspired to monopolize the debit card services market. See In re Visa Check/MasterMoney Antitrust Litig., 2003 WL 1712568, at *1-*2 (E.D.N.Y. Apr. 1, 2003) (denying Visa's and MasterCard's motion for summary judgment, and granting in part and denying in part the merchant plaintiffs' motion for summary judgment). The merchant plaintiffs claimed that, as a consequence of this illegal tying arrangement,*fn4 they were required to pay excessive interchange rates for their customers' debit card purchases. See Temple v. Circuit City Stores, Inc., 2007 WL 2790154, at *2. Pursuant to the class action settlement approved by this Court, Visa and MasterCard agreed not to tie their debit and credit products together and to pay more than $3 billion to the merchant plaintiffs in exchange for the release of any and all claims that were or could have been filed against them or their member banks based on the conduct alleged. See Wal-Mart Stores, Inc. v. Visa U.S.A. Inc., 396 F.3d 96, 101 (2d Cir. 2005); Amended Compl. ¶¶ 2, 4.

Plaintiffs Bennett and Combs reside in Tennessee and are holders of Visa Check and MasterMoney debit cards, respectively, with which they purchased goods and/or services from the Wal-Mart store located in Washington County, Tennessee over a number of years. Plaintiffs claim that, despite the adversarial posture it assumed toward Visa and MasterCard in the In re Visa Check litigation, Wal-Mart knew that those companies were engaging in an illegal tying arrangement throughout the relevant time period in which Plaintiffs purchased goods and services from Wal-Mart (from 1992*fn5 until approximately January 4, 2005, when the Second Circuit affirmed the In re Visa Check settlement). Wal-Mart nevertheless ignored the illegality of the arrangement, agreed to accept debit cards from its customers, and strategically and "systematically" inflated the prices of its goods and services "for business reasons," i.e., in order to recoup the illegal fees imposed on it by the credit card companies. Plaintiffs claim that Wal-Mart therefore acted in concert with Visa and MasterCard and willingly participated in those companies' unlawful conspiracy. Id. ¶¶ 3-5, 12, 28, 41-43.

Plaintiffs filed their original complaint in this putative class action in the Eastern District of Tennessee on August 22, 2005. After the case was transferred to this Court on September 28, 2006, Plaintiffs filed an amended complaint on March 2, 2007. In that pleading, Plaintiffs alleged violations by Wal-Mart of (1) § 1 of the Sherman Act, 15 U.S.C. § 1, pursuant to § 4 of the Clayton Act, id. § 15, (2) the antitrust statutes of Tennessee and 23 other states, (3) the consumer-protection statutes of 20 states (not including Tennessee), and (4) the unjust enrichment and civil conspiracy laws of Tennessee and 23 other states. As noted above, as a result of my September 2007 decision granting Wal-Mart's motion to dismiss with respect to the Sherman Act claim and the non-Tennessee state law claims, the only remaining claims in the case are the Tennessee state law claims, which include a claim pursuant to the Tennessee Trade Practices Act (the "TTPA"), and common law claims of unjust enrichment and civil conspiracy.

DISCUSSION

A. Standard of Review

On a motion to dismiss for failure to state a claim upon which relief can be granted, "the issue is not whether [the] plaintiff is likely to prevail ultimately, but whether [he] is entitled to offer evidence to support the claims." Sims v. Artuz, 230 F.3d 14, 20 (2d Cir. 2000) (quotation marks and brackets omitted). Wal-Mart's Rule 12(b)(6) motion to dismiss thus tests the legal, not the factual, sufficiency of Plaintiffs' amended complaint. In ruling on this motion, I must accept the factual allegations in the amended complaint as true. Erickson v. Pardus, 551 U.S. 89, 94 (2007). I give no effect, however, to "legal conclusions couched as factual allegations." Port Dock & Stone Corp. v. Oldcastle Ne., Inc., 507 F.3d 117, 121 (2d Cir. 2007).

In order to survive a motion to dismiss, a complaint "must contain sufficient factual matter . . . to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. The plaintiff therefore is obligated to "provide the grounds of his entitlement to relief" with "more than labels and conclusions," and "a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555 (quotation marks and brackets omitted). "'[W]here the well-pleaded facts do not permit ...


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