MasterCard was pleased to have this opportunity to present our arguments for reversal of the grant of class certification before the Second Circuit Court of Appeals. We believe the questions raised in Judge Gleeson's ruling, the unmanageability of such an enormous class, flaws in the merchants' economic theories and the district court's failure to assess the legal reliability of those theories, provide a strong argument for why the class certification should be overturned.

In February 2000, the U.S. District Court for the Eastern District of New York certified a class in the antitrust lawsuit brought by a group of merchants against the MasterCard and Visa associations, creating what is perhaps the largest class ever in a tying case. The class includes approximately four million U.S. merchants - including mass merchandisers, high-end department stores, mom-and-pop stores, internet vendors and mail order houses - who have chosen to accept MasterCard- or Visa-branded payment cards. The merchants claim that all members of the class were injured by the alleged antitrust violations.

In his certification decision, U.S. District Court Judge John Gleeson acknowledged that the merchants' certification motion 'raise[d] substantial and novel questions involving the standards a district court should apply in evaluating a class motion and the interaction of those standards with antitrust principles.' He urged the Second Circuit to review his decision.

MasterCard and Visa contend that the merchants' theory of harm to members of the class cannot be demonstrated by proof common to all four million merchants. The wide range of participants makes it impossible for the economic theories of damage proposed by plaintiffs to apply to all merchants alike. MasterCard and Visa argued today that the district court did not scrutinize the economic theory offered by plaintiffs' expert to determine the plausibility of the assumptions made, but deferred such scrutiny for some indefinite future time in the case.

We hope that the Second Circuit will agree that the certification of the case is both unwarranted and undeserved. Moreover, we look forward to presenting our defense to the district court and are confident that we will prevail on the merits of the case and ultimately succeed in preserving the broadest choice in payment methods for all consumers.