Visa 2007 Annual Report Download - page 159

Table of Contents
VISA U.S.A. INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Other Litigation
First Data Litigation
In April 2002, Visa U.S.A. filed a complaint against First Data Corporation, First Data Resources, Inc. and First Data Merchant Services Corporation
(collectively, First Data) in United States District Court for the Northern District of California. The action was based on First Data's attempt to implement,
without Visa's prior approval, a "private arrangement" among Visa members by which First Data would authorize, clear and settle Visa transactions,
bypassing VisaNet. Visa asserted trademark and related contract claims and sought declaratory relief, injunctive relief and damages. First Data filed
counterclaims in November 2002, alleging that Visa violated federal and state antitrust laws by banning private arrangements. First Data also asserted
common law contract and tort claims and a claim under California state consumer protection law. In August 2004, First Data filed amended counterclaims,
adding a "concerted refusal to deal" claim under federal antitrust laws and expanding the market definition to include "debit card network processing
services."
On July 5, 2006, the parties signed a confidential settlement agreement, pursuant to which First Data will transition existing private arrangements
between itself and Visa member financial institutions onto VisaNet. Both parties' claims were dismissed with prejudice on July 6, 2006.
Parke Litigation
On June 27, 2005, a purported merchant and consumer class action was filed in California state court against Visa International, Visa U.S.A.,
MasterCard, Merrick Bank and CardSystems Solutions, Inc. (Parke). The complaint alleges that Visa's failure to inform cardholders of a security breach at
CardSystems Solutions, Inc. in a timely manner constitutes an unlawful and/or unfair business practice under California's Unfair Competition Law and
violates California privacy law. The court denied the plaintiffs' application for a temporary restraining order, except with respect to the defendants' retention
of affected account-identifying information and for a preliminary injunction. In September 2005, the court dismissed the claims brought by the merchants and
on November 18, 2005, the defendants answered the remaining claims.
CardSystems Solutions, Inc. filed for bankruptcy in United States District Court for the District of Arizona in May 2006. The Parke plaintiffs removed
the case to United States District Court for the Northern District of California on August 10, 2006 and then sought to transfer the case to federal court in
Arizona. Visa and MasterCard moved for remand to state court. On October 11, 2006, the court granted the defendants' motion for remand and denied the
plaintiffs' motion to transfer the case. The parties are currently engaged in settlement negotiations. The potential settlement amount is not considered material
to the Company's consolidated financial statements.
Debit Hold Litigation
On July 23, 2004, a purported class action was filed against Visa U.S.A. in United States District Court for the District of South Carolina, asserting
claims of conversion, civil conspiracy and negligence (Lemacks). The plaintiff alleged that Visa directed, allowed, or conspired with banks and restaurants to
place holds on her account in an amount exceeding the purchase price of the meals. The plaintiff sought compensatory and punitive damages, disgorgement of
profits allegedly realized and an injunction prohibiting the practice. In December 2005, the parties executed a settlement agreement to resolve all claims and
the case was dismissed.
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