Read Online Priceless: The Case That Brought Down the Visa/MasterCard Bank Cartel by Lloyd Constantine - Free Book Online Page B
Authors: Lloyd Constantine
Ads: Link
Trade Commission in this cause, as the FTC shares the federal government’s antitrust jurisdiction with the Department of Justice. I met with Christine Varney, an FTC Commissioner; Bill Baer, the FTC’s Competition Bureau Director; and FTC Chairman, Bob Pitofsky. Pitofsky said that our facts were interesting but that there really wasn’t any tying arrangement involved in Visa/MasterCard’s practices. He said that even though stores were forced to accept signature debit card transactions, they were still free to accept other forms of payment as well. This pronouncement, which contained a basic legal error, confirmed to me that getting the government involved in our cause would be of little help and might actually hurt. Pitofsky, a renowned antitrust scholar, a personal hero, and, in my estimation, the best federal antitrust enforcement official of the last thirty years, remembered that early 1996 meeting. Seven years later, after we won summary judgment on the tying claim, which asserted that stores accepting Visa/MasterCard credit were forced to accept their debit transactions, Pitofsky went out of his way to admit his skepticism and to congratulate me for staying the course. Pitofsky’s admission was doubly gracious, given the fact that after he left the FTC in 2001, he joined Arnold & Porter (A&P), one of the two firms that represented Visa in the Merchants’ case.
Although Wal-Mart had come to me, it was clear that they weren’t quite sure what they were doing with me. C&P was new, small, and virtually unknown to them. Wal-Mart had gotten a positive reference about our firm from lawyers at the New York law firm, Weil, Gotshal & Manges, but this recommendation helped only so much. C&P was not only an unknown quantity to Wal-Mart, but the role of the injured antitrust plaintiff, a reversal of Wal-Mart’s usual defendant status, made the potential lawsuit, and their leading role in it, seem strange to them. The corporate culture of Wal-Mart identified with defense arguments and the defense bar. On top of this, the case had to be filed as a class action. This was almost too much to bear for a company constantly fending off class actions.
I explained to Wal-Mart and The Limited that once they filed an antitrust case, there would be copycat class actions filed by other antitrust firms representing nominal clients. Unless we preemptively filed the case as a class action, the other firms would turn it into a class action and seize control of the litigation. Wal-Mart would be at the mercy of firms like Milberg Weiss and Hagens Berman. Wal-Mart despised such firms because they believed that plaintiffs’ lawyers were constantly filing frivolous class actions against Wal-Mart. Wal-Mart eventually accepted the fact that our case had to be filed as a class action, but that fact continued to rankle them on principle.
Months of discussion about the fee arrangement then ensued. Wal-Mart was famous for buying everything—including the services of law-yers—cheaper than anyone else. When my friends at Weil Gotshal called to tell me that they had sung my praises to Wal-Mart, they implicitly warned me to be careful for what I wished for. They said that Wal-Mart would relentlessly force me to lower fees and swallow costs. Armed with this knowledge, I counterpunched assoon as Wal-Mart demanded fees lower than our normal billing rates. Our rates were low for New York, but higher than Wal-Mart was accustomed to paying firms based in Fayetteville and Little Rock, Arkansas.
I told Wal-Mart I would take the case on a contingency fee basis, meaning that they would pay no legal fees unless they recovered damages. Our fee would come from their recovery, if any. I believed that the idea of being a class representative in a big contingency fee class action was so alien to Wal-Mart that they really didn’t know what to do except say yes. I informed The Limited that since Wal-Mart would go the contingency fee route, they should as well, and
Although Wal-Mart had come to me, it was clear that they weren’t quite sure what they were doing with me. C&P was new, small, and virtually unknown to them. Wal-Mart had gotten a positive reference about our firm from lawyers at the New York law firm, Weil, Gotshal & Manges, but this recommendation helped only so much. C&P was not only an unknown quantity to Wal-Mart, but the role of the injured antitrust plaintiff, a reversal of Wal-Mart’s usual defendant status, made the potential lawsuit, and their leading role in it, seem strange to them. The corporate culture of Wal-Mart identified with defense arguments and the defense bar. On top of this, the case had to be filed as a class action. This was almost too much to bear for a company constantly fending off class actions.
I explained to Wal-Mart and The Limited that once they filed an antitrust case, there would be copycat class actions filed by other antitrust firms representing nominal clients. Unless we preemptively filed the case as a class action, the other firms would turn it into a class action and seize control of the litigation. Wal-Mart would be at the mercy of firms like Milberg Weiss and Hagens Berman. Wal-Mart despised such firms because they believed that plaintiffs’ lawyers were constantly filing frivolous class actions against Wal-Mart. Wal-Mart eventually accepted the fact that our case had to be filed as a class action, but that fact continued to rankle them on principle.
Months of discussion about the fee arrangement then ensued. Wal-Mart was famous for buying everything—including the services of law-yers—cheaper than anyone else. When my friends at Weil Gotshal called to tell me that they had sung my praises to Wal-Mart, they implicitly warned me to be careful for what I wished for. They said that Wal-Mart would relentlessly force me to lower fees and swallow costs. Armed with this knowledge, I counterpunched assoon as Wal-Mart demanded fees lower than our normal billing rates. Our rates were low for New York, but higher than Wal-Mart was accustomed to paying firms based in Fayetteville and Little Rock, Arkansas.
I told Wal-Mart I would take the case on a contingency fee basis, meaning that they would pay no legal fees unless they recovered damages. Our fee would come from their recovery, if any. I believed that the idea of being a class representative in a big contingency fee class action was so alien to Wal-Mart that they really didn’t know what to do except say yes. I informed The Limited that since Wal-Mart would go the contingency fee route, they should as well, and
Similar Books
