December 2, 2023


The Supreme Court on Friday granted a petition from a group of North Dakota merchants who brought a case against the Federal Reserve Board in 2021 over the central bank’s setting of a debit card fee cap.

The merchants’ petition for review isn’t with respect to the merits of the case, but rather an appellate court’s affirmation last year that the merchants brought their case too late, past a statute-of-limitations period for challenging a Fed action in setting the fee cap.

The Supreme Court’s notice that it’s willing to hear the case may mean that the court is at odds with the U.S. District Court in North Dakota that ruled the complaint was tardy, and the U.S. Court of Appeals for the 8th Circuit subsequent ruling upholding that lower court’s decision.

“That’s a very big event,” attorney Lloyd Constantine said of the high court’s grant. Constantine’s New York firm has played a lead role in card litigation against the card network giants Visa and Mastercard for years. He said “more often, it’s the case, that the court takes a case to reverse than to affirm.”

If the court were to reverse the appellate court’s decision and allow the case to be heard on its merits, that would mean the Fed’s cap is still at risk of being called out as too high. If it was found to be too high, card issuers and their payments partners might have to reduce fees charged for processing debit cards.

“That begins a whole possible sequence of events,” Constantine explained. The plaintiff “is a surrogate for millions of merchants.”

There are tens of billions of dollars at stake in the litigation across all those transactions nationwide, Constantine estimated. “Prospectively, it’s a lot money,” he said.

U.S. District Court Judge Daniel Traynor, presiding over the case in Bismarck, North Dakota, dismissed the case in March 2022, siding with a Federal Reserve motion arguing that a six-year statute of limitations on challenging federal agency actions had elapsed.

The lawsuit contended the Fed “has failed to properly follow Congress’s instructions to ensure that debit-card processing fees are reasonable and proportional to the costs of debit-card transactions.” It was filed in April 2021 by the North Dakota Retail Association and the North Dakota Petroleum Marketers Association. (The plaintiffs’ amended complaint filed last July added a North Dakota truck stop store as a plaintiff and essentially made the same argument.)

The National Retail Federation, which backed the lawsuit, applauded the Supreme Court’s action Friday. “Some lower courts have held that the statute of limitations to challenge the cap has run out even for small businesses that didn’t exist until long after it was issued,” NRF Chief Administrative Officer and General Counsel Stephanie Martz said in a press release. “Regulations that ignore the intent of Congress and harm a business owner later don’t become less arbitrary merely by the passage of time.”

With the Supreme Court’s decision, oral arguments for the case, Corner Post v. Board of Governors, Federal Reserve System, will be heard at some point between October and April of next year.


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