Credit card transaction fees
Palladino v. JP Morgan Chase
Date: Oct. 20, 2025
Issue: Whether merchant banks and credit card networks violated the Cartwright Act by conspiring to raise credit card transaction fees.
Case Summary: A New York federal court denied a class of cardholders’ motion for reconsideration in its lawsuit accusing merchant banks and credit card networks of conspiring to raise credit card transaction fees.
As background, the Cartwright Act is California’s state-level antitrust law that makes certain anticompetitive business practices such as price fixing and bid rigging illegal.
In 2023, a class of California cardholders sued JP Morgan, its affiliated merchant banks, and credit card networks (collectively JP Morgan) in California state court under the Cartwright Act. The cardholder class claimed JP Morgan conspired to raise credit card transaction fees, violating California’s antitrust law. Further, the cardholder class alleged Visa and Mastercard — along with every bank issuing their payment cards, every bank processing those payments, and every merchant accepting such cards — formed a price-fixing conspiracy on interchange fees, forcing cardholders to pay those inflated costs as both direct and indirect purchasers. JP Morgan removed the lawsuit to federal court, and it was then transferred to the Eastern District of New York for consolidation.
On Feb. 9, 2024, JP Morgan moved to dismiss the complaint. Magistrate Judge Joseph A. Marutollo recommended dismissal of the Cartwright Act claim, finding that under Associated General Contractors v. California State Council of Carpenters, the cardholder class lacked antitrust standing as both indirect and “direct joint” purchasers since cardholders did not pay interchange fees directly.
The cardholder class sought reconsideration under Rules 59 and 60(b), arguing the court ignored their participation in the relevant market. However, on July 31, 2024, Chief Judge Margo Brodie denied the motion, concluding that the cardholder class participated only in the transaction market, rather than the market where the alleged collusion occurred. The cardholder class appealed on June 10, 2025, and filed another reconsideration motion, claiming the court erred in rejecting their market argument, denying leave to amend, and refusing an oral hearing under the Fifth Amendment.
First, the court rejected JP Morgan’s claim that the Eastern District of New York lacked jurisdiction because the cardholder class missed the 28-day filing deadline. The court ruled that although the cardholder class filed their Rule 59(e) motion 29 days after the May 12, 2025, decision — making it untimely — it could still review the motion under Rule 60(b). The court also rejected JP Morgan’s argument that the cardholder class’s notice of appeal stripped it of authority, explaining that while a district court cannot grant a Rule 60 motion during an appeal without circuit approval, it can deny one. Relying on Toliver v. County of Sullivan and similar cases, the court confirmed that it retained jurisdiction to evaluate and deny the cardholder class’s motion even while the appeal was pending.
The court also concluded the cardholder class failed to demonstrate a basis for reconsideration. It rejected the cardholder class’s argument that they participated in the relevant market under California’s Cartwright Act, explaining that antitrust standing requires showing an “antitrust injury” in the market where the alleged anticompetitive conduct occurred. The cardholder class only participated in consumer credit transactions, not in the market where interchange fees were set, and thus failed to meet this requirement. Even more so, the court found that the cardholder class’s alleged injuries speculative, indirect, and too remote from the conduct to confer standing.
The court also affirmed the denial of leave to amend, finding no abuse of discretion. It explained that under Rule 15, amendments may be denied when it would be futile—such as when a plaintiff fails to state a claim under Rule 12(b)(6). The court found the cardholder class’s proposed amendments, including assertions of a “two-sided transaction platform market,” would not cure the deficiencies because they still failed to show cardholder participation in the market where the alleged anticompetitive conduct occurred.
Finally, the court rejected the cardholder class claim that they were denied due process, explaining Rule 12 motions do not require oral hearings. Citing circuit precedent, the court held that briefing satisfies the “hearing” requirement and that oral argument is discretionary. The cardholder class had already participated in multiple conferences and a May 2024 hearing and submitted extensive written arguments. Accordingly, the court determined Chief Judge Brodie acted within her discretion in denying further argument on the second reconsideration motion.
Bottom Line: The court denied cardholders’ bid to revive their antitrust suit over credit card transaction fees, holding they lacked standing because they did not participate in the market where the alleged price fixing occurred and finding no due process or procedural errors.
Document: Opinion
