U.S. Supreme Court Rules in Favor of Convenience-Store Retailer in Debit Card Swipe Fee Case

Justice Barret issues ‘straightforward’ decision, but dissenters see ‘flawed reasoning’
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Photograph: Shutterstock

The U.S. Supreme Court today decided in favor of a convenience-store retailer’s 2021 legal challenge to Federal Reserve Board regulation of debit card interchange or “swipe” fees that the retailer said are higher than the law allows. Visa, MasterCard and other card networks set the fees, with a cap of 21 cents per transaction established by the Federal Reserve in 2011.

A district court dismissed a lawsuit by Corner Post, a truckstop and convenience store in Watford City, North Dakota, because it missed a six-year statute of limitations on filing a challenge under the Administrative Procedure Act (APA).

The retailer argued, according to court documents, that it should not be bound by the statute of limitations to bring a challenge because the store opened in 2018, after that statute of limitations had run out. It argued that the six-year time limit should not start until a business is adversely affected, which for Corner Post would be March 2018, when it accepted its first debit card payment.

Justice Amy Coney Barret delivered the opinion of the court in Corner Post Inc. v. Board of Governors of the Federal Reserve System, joined by Justices John Roberts, Clarence Thomas, Samuel Alito, Neil Gorsuch and Brett Kavanaugh. Justice Kavanaugh filed a concurring opinion. Justice Ketanji Brown Jackson filed a dissenting opinion, joined by Justices Sonia Sotomayor and Elena Kagan.

“We must decide when a claim brought under the Administrative Procedure Act ‘accrues’ for purposes of this provision. The answer is straightforward. A claim accrues when the plaintiff has the right to assert it in court—and in the case of the APA, that is when the plaintiff is injured by final agency action,” Justice Barret said in the opinion.

The retailer argued that the Federal Reserve’s 21-cent fee cap “is unreasonably high and therefore arbitrary and capricious under the APA.”

In a concurring opinion, Justice Kavanaugh said that the APA authorizes vacating “unlawful” agency rules, “remedying the adverse downstream effects” of the rule on Corner Post. The retailer argued that the board’s 21-cent fee cap “is unreasonably high and therefore arbitrary and capricious under the APA.”

He added, “Corner Post would be harmed by a fee rule that allows unreasonably high fees and would benefit from a fee rule that more strictly limits the fees that banks may charge.”

In a dissenting opinion, Justice Jackson said, “The flawed reasoning and far-reaching results of the Court’s ruling in this case are staggering. … The Court’s baseless conclusion means that there is effectively no longer any limitations period for lawsuits that challenge agency regulations on their face. Allowing every new commercial entity to bring fresh facial challenges to long-existing regulations is profoundly destabilizing for both government and businesses. It also allows well-heeled litigants to game the system by creating new entities or finding new plaintiffs whenever they blow past the statutory deadline.”

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