794 F.Supp.3d 610
D.N.D.2025Background
- In 2010, Congress passed the Durbin Amendment, part of the Dodd-Frank Act, to regulate debit card interchange fees by requiring they be "reasonable and proportional to the cost incurred by the issuer."
- The Federal Reserve Board promulgated Regulation II in 2011, setting and capping allowable interchange fees but included a broader range of costs than what Corner Post (a small business merchant) claims were permitted by statute.
- After initial legal challenges failed under Chevron deference, Corner Post sued following a Supreme Court decision holding its claim was not time-barred; the case was remanded for consideration on the merits post-Chevron.
- The dispute centers on whether the Board exceeded statutory authority by including certain broad cost categories (fixed costs, network fees, transaction-monitoring costs, and fraud losses) and by using a "one-size-fits-all" cap, rather than issuer-specific standards.
- Extensive amici briefing included both merchant and banking interests, with updates to the regulation pending during litigation.
- The court, post-Loper Bright, reviewed the statutory interpretation de novo, with no deference to the agency.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Scope of Permissible Costs Under Durbin Amendment | Only incremental ACS (authorization, clearance, settlement) costs may be considered; all others are barred. | Broad discretion to include "transaction-specific" costs, beyond incremental ACS costs. | Only incremental ACS costs are allowed; Board's broader inclusion violated the statute. |
| Inclusion of Fixed ACS, Network Processing, Transaction-Monitoring, Fraud Losses | These four costs are excluded by the text and structure of the Durbin Amendment. | Each can be justified as tied to the transaction or issuer’s role. | All were impermissibly included under the statute and must be excluded. |
| Universal vs. Issuer/Transaction-Specific Fee Standard | Durbin requires the Board to create standards based on each issuer and transaction, not a single universal cap. | Uniform cap is permitted and practical; statute allows for aggregate standards. | Statute compels issuer- and transaction-specific standards; single cap unlawful. |
| Deference to Agency Interpretation Post-Chevron | Post-Loper Bright, no agency deference; courts decide statutory meaning. | Deference still warranted via other statutory signals and agency expertise. | No deference; issue decided de novo by the court. |
Key Cases Cited
- Marbury v. Madison, 5 U.S. (1 Cranch) 137 (1803) (establishing judicial review and courts’ role in saying what the law is)
- Loper Bright Enterprises v. Raimondo, 603 U.S. 369 (2024) (abrogating Chevron deference, courts interpret statutes de novo)
- Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984) (previously established deference to agency interpretation; now overruled)
- NACS v. Bd. of Governors of the Fed. Reserve Sys., 746 F.3d 474 (D.C. Cir. 2014) (upheld Regulation II under Chevron, but specific cost inclusions remained questionable)
- BedRoc Ltd., LLC v. United States, 541 U.S. 176 (2004) (courts must presume Congress means what it says in statutory text)
- Bufkin v. Collins, 145 S. Ct. 728 (2025) ("shall" imposes a mandatory command)