Fucile v. VISA USA Inc., No. S1560-03 Cnc (Norton, J., Dec. 27, 2004)

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STATE OF VERMONT                                                       SUPERIOR COURT
Chittenden County, ss.:                                            Docket No. S1560-03 CnC



ANTHONY J. FUCILE

v.

VISA U.S.A. INC. and MASTERCARD
INTERNATIONAL, INC.



                                            ENTRY
        The plaintiff, Anthony J. Fucile, sues Visa and Mastercard on behalf of himself
and all similarly situated individuals for damages incurred by purchasing products sold
by merchants who used the defendants’ debit card services. Mr. Fucile claims that
because of the defendants’ antitrust violations, merchants were forced to pay higher costs
for the use of debit cards. The merchants, in turn, passed these costs along to consumers
through the price of the goods they sold. Mr. Fucile brings this action under the Vermont
Consumer Fraud Act. The defendants move to dismiss for failure to state a claim upon
which relief can be granted, pursuant to Rule 12(b)(6) of the Vermont Rules of Civil
Procedure. Because Mr. Fucile lacks standing under the Consumer Fraud Act, the court
dismisses his complaint.
        This action stems from a class action in the U.S. District Court for the Eastern
District of New York. In that action, a class of retailers sued Visa and Mastercard for
antitrust violations, claiming that the two defendants illegally required retailers to accept
debit card services along with credit card services. The parties settled before trial,
resulting in more than $3 billion in damages and injunctive relief worth between $25
billion to $87 billion. See generally In re Visa Check/Mastermoney Antitrust Litig., 297
F. Supp. 2d 503 (E.D.N.Y. 2003).
       Mr. Fucile now seeks damages as a consumer from merchants affected by the
antitrust violations at issue in the prior class action litigation, claiming that these
violations constituted an unfair method of competition within the meaning of 9 V.S.A. §
2453(a). Mr. Fucile claims standing to bring this claim not as a purchaser, because he did
not actually purchase the financial services from the defendants, but as an “indirect
purchaser.”
       The defendants, however, argue that Mr. Fucile is neither a direct purchaser nor an
indirect purchaser. Rather, he is a “non-purchaser,” because he did not actually receive
the financial services that were affected by the defendants’ antitrust violation. Mr. Fucile
merely complains about prices of goods that may or may not have been affected by the
price of the defendants’ financial services. Therefore, the defendants argue, he lacks
standing.
        A motion to dismiss for failure to state a claim upon which relief can be granted
will issue only if it is beyond doubt that there exists no facts or circumstances that entitle
a plaintiff to relief. Powers v. Office of Child Support, 173 Vt. 390, 395 (2002). In a
motion to dismiss, the court assumes all facts that a plaintiff pleads are true and
disregards all of a defendant’s contrary assertions. Id. Here, the dispositive issue is
whether a person in Mr. Fucile’s position, having not actually acquired the product or
service that is alleged to be tainted by unlawful trade, can seek damages under the
Consumer Fraud Act. Because this standing issue is one of law, it is appropriate for
disposition on a motion to dismiss for failure to state a claim upon which relief can be
granted. See, e.g., Parker v. Town of Milton, 169 Vt. 74, 76–79 (1998).
        The Consumer Fraud Act, literally read, provides limitless standing to any
consumer. See 9 V.S.A. § 2451a(a) (defining consumer as “any person who purchases,
leases, contracts for, or otherwise agrees to pay consideration for goods or services”).
Courts will not, however, interpret statutes in a manner that leads to “absurd results
manifestly unintended by the Legislature.” In re G.T., 170 Vt. 507, 517 (2000). Although
courts should interpret the Consumer Fraud Act liberally in order to serve its remedial
purpose, courts should not “so freely stretch its meaning as to evade the Legislature's
intent.” Wilder v. Aetna Life & Cas. Ins. Co., 140 Vt. 16, 19 (1981). Thus, the court must
define some limits to who may have standing to sue under the Consumer Fraud Act.
        Although federal courts have limited antitrust actions to “direct purchasers” of
goods or services, see Illinois Brick Co. v. Illinois, 431 U.S. 720, 746 (1977), Vermont
has expressly disagreed with this limitation and allowed indirect purchaser suits under
state law. See 9 V.S.A. § 2465(b); Elkins v. Microsoft Corp., 174 Vt. 328, 337–38.
(2002). But the standing issue in the instant case is a separate matter from the indirect
purchaser issue. Indeed, the Illinois Brick Court did not address standing, stating that the
indirect purchaser issue “is analytically distinct from the question of which persons have
sustained injuries too remote to give them standing to sue for damages.” Illinois Brick,
431 U.S. at 728 n.7. Despite his claim that he qualifies as an “indirect purchaser,” Mr.
Fucile is far more remote than the plaintiff in Elkins. In Elkins, the plaintiff had actually
acquired the product that was allegedly tainted by unfair methods of competition. See
Elkins, 174 Vt. at 333. Here, Mr. Fucile never actually purchased the tainted financial
services, but merely claims damages through the purchase of other products, the price of
which may or may not have been affected by the financial services. Therefore, despite
Vermont’s indirect purchaser rule, the court must still determine if Mr. Fucile has
standing given his remote relationship to the alleged wrongdoing.
       Federal courts have generally split into two camps with respect to antitrust
standing. Some courts have opted for the “direct injury” test, which focuses on the
relationship between the parties. Under this test, if the plaintiff is separated by
intermediate victims, courts usually deny standing. See Annotation, “Target Area”
Doctrine as Basis For Determining Standing to Sue Under § 4 of Clayton Act (15
U.S.C.A. § 15) Allowing Treble Damages For Violation of Antitrust Laws, 70 A.L.R.
Fed. 637, §2[a]. Other courts have used the “target area” test, which focuses on the
general area of the economy injured by the antitrust violator. See id.
       The Supreme Court has not endorsed either test, but it has provided factors that
lower courts should consider in determining standing. Associated Gen. Contractors v.
Calif. State Council of Carpenters, 459 U.S. 519, 537 n.33 (1983). These factors include
(1) whether there is a causal connection between the antitrust violation and the alleged
harm, id. at 537; (2) the directness of the injury, considering the “chain of causation,” id.
at 540; (3) whether the violator had an improper motive, id. at 537 and n.35; (4) whether
the plaintiff’s injury was of a type that Congress sought to redress by providing a private


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remedy, id. at 538; (5) whether the alleged damages are speculative, id. at 542; and (6)
whether the nature of the action will keep “the scope of complex antitrust trials within
judicially manageable limits,” id. at 543.
        Simply by glancing at these factors, one can see that the Court did not pull them
from thin air. Rather, they reflect the Court’s standing factors to determine whether a case
or controversy exists, pursuant to Article III of the Constitution.1 The three primary
factors in this context are (1) injury, (2) causation, and (3) redressibility. See Lujan v.
Defenders of Wildlife, 504 U.S. 555, 560–61 (1992). The Vermont Supreme Court has
expressly adopted these factors in other contexts. See, e.g., Agency of Natural Resources
v. U.S. Fire Ins. Co., 173 Vt. 302, 306 (2001). Although the Vermont Consumer Fraud
Act has broader remedial purposes than federal statutes, the court nevertheless believes
that the Vermont Supreme Court would also draw upon the standing factors in Associated
General Contractors for guidance, at least to the extent that these factors are consistent
with allowing “indirect purchaser” standing.
       Therefore, in applying the general factors of Associated General Contractors, the
court holds that Mr. Fucile does not have standing in this case. First, the causal chain here
is simply too long. Mr. Fucile’s damages are through an alleged inflated cost of goods
sold by merchants who were injured by the defendants’ inflated cost of financial services.
He would have to demonstrate that the merchants actually passed their costs along to
consumers through the price of their goods, rather than absorbing them by other means.
The court would need to consider all other potential causes of inflated costs, such as any
number of supply problems that affected the price of each different product the plaintiff
class bought in Vermont during the relevant time period. This exercise in speculation
extends far beyond a court’s abilities. Although causation may be indirect, given the
indirect purchaser rule in Vermont, it cannot extend beyond a reasonable length, as it
does here. Thus, factors (1) and (2) weigh against standing.
      Second, the defendants’ intent in this case weighs in favor of standing. Although
the complaint is unclear as to the defendants’ intent to violate antitrust law, the extent of
money that the defendants allegedly made because of their tying arrangement


           1
               The Court has noted that antitrust standing is somewhat different from constitutional
               standing because it requires additional considerations, but both share the same basic
                             requirements. See Associated Gen. Contractors, 459 U.S. at 535 n.31.


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demonstrates that their actions were intentional. Moreover, the defendants are
associations providing financial services to thousands of banks. One cannot imagine that
they lack familiarity with antitrust laws in conducting their business, so inferring intent
here is appropriate. Therefore, factor (3) weighs in favor of standing for Mr. Fucile.
        Third, the injury here does not appear to be a type that the Legislature intended to
redress through the Consumer Fraud Act. Although, as the Vermont Supreme Court has
stated many times, courts should construe the Act liberally to effectuate its remedial
purpose, the court cannot imagine that the Legislature intended the Act to redress injuries
to all consumers, even those whose contact to the goods or services tainted by unfair
competition is remote and tangential. One could divine any number of hypothetical
scenarios analogous to this case that highlight the absurdity of allowing standing under
these circumstances.
        For instance, assume the plaintiff in Elkins was not a computer purchaser, but a
client whose attorney provided legal services using Microsoft software. The client could
claim that her bill was slightly higher because the attorney was forced to pay a higher
price for the software because of Microsoft’s antitrust violations. Whether or not the
client’s alleged injury is accurate, the court cannot reasonably assume that the Legislature
intended the Consumer Fraud Act to extend limitlessly. As Justice Brennan
acknowledged in his Illinois Brick dissent, “[t]here is, of course, a point beyond which
antitrust defendants should not be held responsible for the remote consequences of their
actions.” 431 U.S. at 749 n.2. The plaintiff here extends far beyond this point. Thus,
factor (4) weighs against standing.
        Finally, the alleged damages are highly speculative. Assuming that the merchants
actually passed along added expenses in the price of goods sold, the court would need to
determine the degree to which these expenses were passed along. This degree may vary
from one good to another. For instance, merchants may pass on greater costs in product
markets that are relatively inelastic and fewer costs in product markets that are relatively
elastic. See Illinois Brick, 431 U.S. at 750 n.3 (Brennan, J., dissenting). The court would
then have to determine actual sales of goods to the plaintiff class during the relevant time
period. Consumer fraud cases typically venture into the field of approximation, see id. at
758–59 (Brennan, J., dissenting), but these alleged damages venture into uncharted
territories of sheer guesswork. Factors (5) and (6) therefore weigh against standing.



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        Tallying the above analysis, the court grants the defendants’ motion to dismiss.
The court also notes that even should the Vermont Supreme Court ultimately adopt a
different standard than that in Associated General Contractors, such as the “target area”
test as it existed prior to Associated General Contractors, this court would still dismiss. In
its most liberal manifestation, the target area test considered not only whether an antitrust
violator’s actions were aimed at a particular sector of the market, but whether the violator
could have foreseen that its actions would affect the sector. See, e.g., Mulvey v. Samuel
Goldwyn Prod., 433 F.2d 1073, 1076 (9th Cir. 1970); see also Illinois Brick, 431 U.S. at
760 and n.18 (Brennan, J., dissenting) (discussing “more liberal” target area test). Even
under this test, Mr. Fucile lacks standing. The defendants could not be expected to
foresee an antitrust violation affecting merchants to result in increased cost of goods
throughout the entire consumer base and to so injure that consumer base as to result in
liability to every consumer in the country. General consumers were not the target area of
the defendants’ actions; merchants were. Therefore, the court would grant the defendants’
motion using this test, as well.
       Finally, the court briefly addresses Mr. Fucile’s request that the court permit an
amended answer to allow a narrower class, defined as those consumers who used debit
cards in their transactions. The court denies this request, as it would not result in a
different ruling. Mr. Fucile lacks standing because his injury—as a general consumer of
products that are not directly related to the defendants’ financial services—is too remote.
Whether he used a debit card, a credit card, a check, or cash is irrelevant. His injury
would still be that of a general consumer, and he would lack standing.
                                          ORDER
       For the foregoing reasons, the defendant’s motion to dismiss is GRANTED.


       Dated at Burlington, Vermont, Dec. 27, 2004.



                                                            ____________/s/____________
                                                                                  Judge




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