Visa 2007 Annual Report Download - page 160

Table of Contents
VISA U.S.A. INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
PSW Litigation
On August 17, 2004, PSW Inc.—a defunct company that processed credit card information for Internet merchants—sued Visa U.S.A., MasterCard,
First Financial Bank and First Data Merchant Services in United States District Court for the District of Rhode Island. Among other things, the complaint
alleged that Visa and MasterCard exercised monopoly power to exclude competition unreasonably, resulting in higher prices for network services and
excessive fines and penalties. In July 2006, the parties executed a settlement agreement to resolve all claims in this matter. The settlement was approved by
the receivership court and the case was dismissed on September 19, 2006.
CLI Litigation
In June 2003, a lawsuit was filed in California state court against Visa and MasterCard challenging certain corporate risk policies related to
chargebacks. As to Visa, the plaintiff claims that fines and fees assessed pursuant to Visa's programs monitoring acquirers whose merchants have excessive
chargebacks violate California's Unfair Competition Law. Purporting to act on behalf of all merchants that accept Visa- or MasterCard-branded cards, the
plaintiff seeks restitution of the fees and injunctive relief.
In December 2005, the court vacated all deadlines pending disposition of the Proposition 64 cases before the California Supreme Court. After the
Supreme Court found Proposition 64 applicable to pending cases, the trial court gave the plaintiff until November 6, 2006 to amend the complaint or have the
action dismissed. On August 23, 2006, Visa filed a motion to dismiss based on Proposition 64. The plaintiff elected not to pursue the case further and in
November 2006 the parties filed a stipulated judgment dismissing the case with prejudice.
ATM Exchange Litigation
On November 14, 2005, ATM Exchange sued Visa U.S.A. and Visa International in United States District Court for the District of Ohio. The plaintiff
asserts claims of promissory estoppel, negligent misrepresentation and fraudulent misrepresentation, alleging that Visa's "deferment" of a deadline for meeting
heightened ATM data encryption testing and approval standards harmed the plaintiff by reducing demand for its ATM upgrade solution.
The parties have engaged in written discovery, party and third-party depositions and expert discovery. On June 29, 2007, Visa U.S.A. and Visa
International filed motions for summary judgment on liability and damages. On July 30, 2007, the court vacated the tentative September 2007 trial date. The
court indicated that it would set another trial date, if necessary, in its forthcoming ruling on the motions for summary judgment.
TCF Financial Corporation Litigation
On April 26, 2006, TCF Financial Corporation (TCF) filed an action in Delaware Chancery Court against Visa U.S.A. and its Board members, seeking
to enjoin Visa's annual meeting, Visa's proposed restructuring and the filing of an amended Certificate of Incorporation and amended bylaws. TCF also sought
declaratory relief with respect to its breach of fiduciary duty claim, which is based on disclosures made in the proxy statement and corporate governance
changes within the corporate restructuring. The parties reached a confidential agreement in November 2006 pursuant to which all claims were dismissed with
prejudice.
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