CHARLESTON – A nearly $12 million settlement with MasterCard and Visa happened because of a number of factors, according to the state's Chief Deputy Attorney General
Fran Hughes said Wednesday that the $11.6 settlement, reached Monday and announced Tuesday, can be attributed to, among other things, long hours, forward-looking legislators, a thorough judge and the tenacity of Attorney General Darrell McGraw.
The original suit, filed in 2003 in Ohio County, alleged the credit card companies violated state antitrust and consumer protection laws by forcing merchants to accept both credit and debit cards rather than only one. The merchants were charged the same fee for both types of cards, and McGraw's office said these increased costs were passed on to all consumers.
Merchants such as Target, WalMart and Sears settled a similar suit against the companies in 2003.
"We are one of a few states that allows recovery for indirect purchasers," Hughes said. "In this case, there already was a huge settlement on behalf of the merchants. It alleged violations of the antitrust. They're precluded from passing their increased cost to the cardholder. They have to recoup their money as the market dictates by spreading that cost over all retail products.
"We also are fortunate enough that our Legislature had the foresight to provide relief to consumers in this instance. When the added cost is something like a penny a product, a person can't correct the wrong. And you can't do it in a class action either.
"We also have a statute that allows us to aggregate the damages. Instead of going out and having to prove the increased cost on every product was caused by MasterCard and Visa's activities, we were able to use expert witnesses to come up with a statistically valid model."
Because of that, West Virginia is the only state to reach such a settlement with the card companies.
Hughes also praised Ohio Circuit Judge Ron Wilson for the work he did on the case.
"He really spent a lot of time reading through the voluminous documents," she said. "Then, Attorney General McGraw had the tenacity to stick with it. It has involved a lot of work, a lot of starts and stepping back and starting again. We're very proud of the settlement. I think everybody did a great job working on this case."
"This has been a long time coming and involved the devotion of a lot of time and resources," McGraw said in a press release. "I hope that the settlement clips the wings of anyone embarking on a course of illegal conduct in West Virginia."
As part of the settlement, the money must be used for tax relief. One idea mentioned by McGraw during a Tuesday press conference was a few tax-free holidays similar to ones held previously by the state.
"We're not proposing anything," Hughes said. "It's just an example of what could be done. It's up to the Legislature to determine what it (the tax relief) should look like. We're just holding the money in trust."
After the Legislature decides what course to take, Hughes said the AG's office then will prepare a notice to inform the public.
"We have to show we have done it in a way that majority of people are notified of this tax benefit," she said. "And it has to be approved by court. But we can't begin drafting the notice until the Legislature acts."
Hughes said when most of the money is exhausted, any remaining amount would go into the state's general revenue account.
Hughes said she and Doug Davis in the AG's Consumer Protection Division worked on the case, as well as outside counsel of Wheeling attorney Teresa Toriseva, Charleston attorney Guy Bucci and George Sampson, a Seattle attorney who worked on the similar case for merchants.
What compensation the outside counsel will receive is up to the court, Hughes said.
"That is up the court to determine," she said. "They certainly put a lot of hours in. There were a lot of difficult negotiations. When you're going up against a Goliath, it's not as simple as filing the lawsuit. It involved a lot of effort from a lot of people."