Sam Osborn v. Visa Inc.

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 20, 2015 Decided August 4, 2015

No. 14-7004

SAM OSBORN, ET AL.,
APPELLANTS

v.

VISA INC., ET AL.,
APPELLEES

Consolidated with 14-7005, 14-7006

Appeals from the United States District Court
for the District of Columbia
(No. 1:11-cv-01831)
(No. 1:11-cv-01882)
(No. 1:11-cv-01803)

Steve W. Berman argued the cause for appellants. With
him on the briefs were Craig L. Briskin, Michael G.
McLellan, Douglas G. Thompson, Brooks E. Harlow, and
Don A. Resnikoff. David A. LaFuria entered an appearance.

Kenneth A. Gallo argued the cause for appellees. With
him on the brief were Mark R. Merley, Matthew A. Eisenstein,
Mark P. Ladner, Michael B. Miller, William F. Cavanaugh,
 2
and Peter E. Greene. Robert P. LoBue and Ana Maria Iquat
entered appearances.

Before: TATEL, SRINIVASAN and WILKINS, Circuit
Judges.

Opinion for the Court filed by Circuit Judge WILKINS.

WILKINS, Circuit Judge: Users and operators of
independent (non-bank) automated teller machines (ATMs)
brought these related actions against Visa, MasterCard, and
certain affiliated banks, alleging anticompetitive schemes for
pricing ATM access fees. The crux of the Plaintiffs’
complaints is that when someone uses a non-bank ATM, the
cardholder pays a greater fee and the ATM operator earns a
lower return on each transaction because of certain Visa and
MasterCard network rules. These rules prohibit differential
pricing based on the cost of the network that links the ATM to
the cardholder’s bank. In other words, the Plaintiffs allege
anticompetitive harm because Visa and MasterCard prevent
an independent operator from charging less, and potentially
earning more, when an ATM transaction is processed through
a network unaffiliated with Visa and MasterCard.

The District Court concluded that the Plaintiffs had failed
to allege essential components of standing, and also that they
had failed to allege an agreement in restraint of trade
cognizable under the Sherman Antitrust Act. See 15 U.S.C.
§ 1. We disagree, and so we vacate and remand these cases
for further proceedings based on the proposed amended
complaints.
 3
I.

ATMs “have been a part of the American landscape since
the 1970s – beacons of self-service and convenience, they
revolutionized banking in ways we take for granted today.”
Linda Rodriguez McRobbie, The ATM is Dead. Long Live
the ATM!, SMITHSONIAN.COM (Jan. 8, 2015),
http://www.smithsonianmag.com/history/atm-dead-long-live-
atm-180953838/. One view is that “[t]hey live to serve; we
only really notice them when we can’t seem to locate one.”
Id. But Plaintiffs tell us they do take notice of ATMs –
specifically, of the fee structure that attaches to their use and
what they gain or lose from it. We credit for purposes of this
appeal all facts alleged in the proposed amended complaints.

Some background history: Until the mid-1990s,
consumers who wished to withdraw cash from their bank
accounts generally could do so only by visiting a bank branch
or a bank-operated ATM. But states began to abolish various
laws that had prohibited ATM operators from charging access
fees directly to cardholders. This created a financial incentive
for nonbanks to enter the ATM market, and independent
ATMs took root accordingly. See National ATM Council
Proposed Second Amended Complaint (“NAC Prop.
Compl.”) ¶ 43; Osborn Proposed Second Amended Complaint
(“Osborn Prop. Compl.”) ¶ 66. These independent ATMs
connect to a cardholder’s bank through an ATM network.
The most popular networks are operated by Visa (the Plus,
Interlink, and VisaNet networks) and MasterCard (the Cirrus
and Maestro networks). Rival networks include Star, NYCE,
and Credit Union 24. NAC Prop. Compl. ¶ 40.

Today, a cardholder can use any independent ATM to
access her bank account, so long as her bank card and the
ATM are linked by at least one common network. Most bank
 4
cards indicate the networks to which they are linked with
logos printed on the back of the card, referred to colloquially
as “bugs.” Id.

Independent ATM operators rely on two streams of
revenue to sustain their businesses. The first is the “net
interchange” fee: the gross interchange fee paid by the
cardholder’s bank to the ATM operator, which runs between
$0.00 and $0.60 per transaction, less any network services fee
charged by the ATM network. MasterCard and Visa
generally charge high network services fees, which means
that ATM operators receive low net interchange fees –
running between $0.06 and $0.29 for domestic transactions,
and even less for international transactions – for transactions
on these networks. Several competing networks charge
comparatively low network services fees, thus enabling an
ATM operator to collect a higher net interchange fee (up to
$0.50 per transaction) when using the lower-fee networks. Id.
¶ 59.

The second source of revenue comes from the ATM
access fees paid by the cardholder. The average access fee in
2012 was $2.10. See Osborn Prop. Compl. ¶ 99 (citing GOV’T
ACCOUNTABILITY OFFICE, GAO-13-266, AUTOMATED TELLER
MACHINES: SOME CONSUMER FEES HAVE INCREASED 14
(2013)).

Visa and MasterCard each impose, as a condition for
ATM operators to access their networks, a sort of non-
discrimination or most favored customer clause called the
“Access Fee Rules.” These rules provide that no ATM
operator may charge customers whose transactions are
processed on Visa or MasterCard networks a greater access
fee than that charged to any customer whose transaction is
 5
processed on an alternative ATM network. 1 Thus, under the
Access Fee Rules, operators cannot say to cardholders: “We
will charge you $2.00 for a MasterCard or Visa transaction,
but if your card has a Star or Credit Union 24 bug on it, we
will charge you only $1.75.”

Both Visa and MasterCard were owned and operated as
joint ventures by a large group of retail banks at the time that
the Access Fee Rules were adopted. NAC Prop. Compl. ¶ 89.
Although these member banks later relinquished direct
control over the bankcard associations through public
offerings, the IPOs did not alter the substance of the Access
Fee Rules, which remain intact to this day.

1
The challenged Visa rule provides:

An ATM Acquirer may impose an Access Fee if: It
imposes an Access Fee on all other Financial
Transactions through other shared networks at the same
ATM; The Access Fee is not greater than the Access Fee
amount on all other Interchange Transactions through
other shared networks at the same ATM . . . .

NAC Prop. Compl. ¶ 68 (citing Visa Int’l Operating Regulations
¶ 4.10A (Oct. 15, 2012)). The challenged MasterCard rule
provides:

An Acquirer must not charge an ATM Access Fee in
connection with a Transaction that is greater than the
amount of any ATM Access Fee charged by that Acquirer
in connection with the transactions of any other network
accepted at that terminal.

Id. ¶ 64 (citing MasterCard’s Cirrus Worldwide Operating Rule
¶ 7.14.1.2 (Dec. 21, 2012)).
 6
Plaintiffs assert that these rules illegally restrain the
efficient pricing of ATM services. They characterize the
Access Fee Rules as constituting an “anti-steering” regime
that prevents independent ATM operators from incentivizing
cardholders to choose and use cards “that are more efficient
and less costly than either Visa or MasterCard’s.” NAC Prop.
Compl. ¶ 1.

This consolidated appeal arises from decisions in three
separate but related civil actions. The first action, Stoumbos
v. Visa, was filed by a debit cardholder, Mary Stoumbos, who
paid access fees in connection with ATM transactions at
various independent ATMs. The second action, Mackmin v.
Visa (referred to here as the Osborn case), was filed by four
consumers of independent and bank-run ATM services. The
third action, National ATM Council v. Visa, was brought by a
leading association of independent ATM operators and
several individual ATM operators. The Plaintiffs allege
violations of Section 1 of the Sherman Act as well as various
state laws, and they name Visa and MasterCard entities as
defendants. In addition, the Osborn plaintiffs name certain
member banks as co-defendants.

On February 12, 2013, the District Court concluded that
the Plaintiffs’ respective complaints had failed to allege facts
sufficient to establish standing and, in the alternative, lacked
adequate facts to establish concerted activity under Section 1
of the Sherman Act. Nat’l ATM Council, Inc. v. Visa Inc.,
922 F. Supp. 2d 73 (D.D.C. 2013) (“NAC I”). It dismissed
not just the complaints, but the cases without prejudice.

In an attempt to toll the statute of limitations, Plaintiffs
timely moved the District Court to modify its judgment from
dismissal of the cases without prejudice to dismissal of the
complaints with leave to replead. Plaintiffs simultaneously
 7
submitted proposed amended complaints. On December 19,
2013, the District Court denied Plaintiffs’ motions after
concluding that their proposed amended complaints still
lacked sufficient facts to establish standing or a conspiracy.
Nat’l ATM Council, Inc. v. Visa Inc., 7 F. Supp. 3d 51
(D.D.C. 2013) (“NAC II”). The Plaintiffs appeal.

II.

Procedural quirks notwithstanding, we review de novo
the District Court’s determination that the filing of the
amended complaints would be futile due to the perceived
deficiencies of those complaints under Rules 12(b)(1) and
12(b)(6). See Kim v. United States, 632 F.3d 713, 715 (D.C.
Cir. 2011) (stating standard of review for FED. R. CIV. P.
12(b)(1) & 12(b)(6)). To reach that bottom line, we must do
some procedural untangling.

The District Court’s February 12 order dismissed the
cases without prejudice. The principle guiding a dismissal
without prejudice is that absent futility or special
circumstances (such as undue delay, bad faith, or dilatory
motive), a plaintiff should have the opportunity to replead so
that claims will be decided on merits rather than
technicalities. Foman v. Davis, 371 U.S. 178, 181-82 (1962);
see also English-Speaking Union v. Johnson, 353 F.3d 1013,
1021 (D.C. Cir. 2004). Where, as it appears was the case
here, a plaintiff has not notified the district court that a statute
of limitations issue might bar the plaintiff “from correcting
the complaint’s defects and filing a new lawsuit,” a dismissal
of the case without prejudice is not an abuse of discretion.
See Ciralsky v. CIA, 355 F.3d 661, 671 (D.C. Cir. 2004).

Plaintiffs followed an appropriate course against this
background, asking the District Court to modify its judgment
 8
pursuant to Rule 59 – so that merely the complaint, and not
the case, would have been dismissed – and simultaneously
filing a proposed amended complaint. See Firestone v.
Firestone, 76 F.3d 1205, 1208 (D.C. Cir. 1996) (describing
this as proper procedure). In its December 19 opinion on
those motions, the District Court asked and answered the
essential question – whether leave to amend was futile – but
the accompanying order purported to deny on the merits
Plaintiffs’ motion for leave to amend their complaints, and to
deny as moot their motion to modify the February 12
judgment. As a technical matter, the District Court lacked
authority to rule on the merits of the Rule 15(a) motion
because it did not modify its final judgment dismissing those
cases. See Ciralsky, 355 F.3d at 673; Firestone, 76 F.3d at
1208.

Because the District Court’s denial of the Plaintiffs’ Rule
59(e) motion as moot was based on its conclusion that
amendment of the complaints would be futile, see NAC II, 7
F. Supp. 3d at 54, we review the decision below as a denial on
the merits of the motion to modify the judgment. On this
question, we look for abuse of discretion. Firestone, 76 F.3d
at 1208 (citing Browder v. Dir., Ill. Dep’t of Corrections, 434
U.S. 257, 263 n.7 (1978)). An abuse of discretion necessarily
occurs when a district court misapprehends the underlying
substantive law, and we examine the underlying substantive
law de novo. Conservation Force v. Salazar, 699 F.3d 538,
542 (D.C. Cir. 2012); see also Dyson v. District of Columbia,
710 F.3d 415, 420 (D.C. Cir. 2013) (reviewing de novo
questions of law underlying district court’s denial of
plaintiff’s Rule 59(e) motion). In other words, the District
Court’s futility conclusion turned on a legal determination –
here, the sufficiency of the proposed amended complaints
 9
under Rule 12(b)(1) or Rule 12(b)(6) – and we review those
legal determinations independently of the District Court. 2

That brings us to the substantive questions we must
decide. We look first, as always, at the question of whether
the Plaintiffs have standing and second, whether the
Plaintiffs’ proposed amended complaints adequately stated a
claim.

A.

The District Court determined that the Plaintiffs lacked
Article III standing because their allegations showed neither
injury nor redressability. NAC II, 7 F. Supp. 3d at 60-61. To
establish standing, a plaintiff must show that (i) it has
“suffered a concrete and particularized injury in fact, (ii) that
was caused by or is fairly traceable to the actions of the
defendant, and (iii) is capable of resolution and likely to be
redressed by judicial decision.” Sierra Club v. EPA, 755 F.3d
968, 973 (D.C. Cir. 2014) (citing Lujan v. Defenders of
Wildlife, 504 U.S. 555, 560-61 (1992)).

Plaintiffs contend that “in the absence of the access fee
rules, ATM operators would offer consumers differentiated
access fees at the point of transaction, consumers would then
demand multi-bug PIN cards from their banks, their banks
would provide these cards, and the market for network

2
The parties have focused on the sufficiency of the proposed
amended complaints, rather than the complaints originally
dismissed by the District Court, and the Plaintiffs have not argued
that the initial complaints should not have been dismissed. See
Appellants’ Br. 8 n.4 (explaining that the complaints dismissed on
February 12 are of “questionable” relevance here, as this appeal is
confined to the District Court’s rulings on the proposed amended
complaints).
 10
services would become more competitive, all resulting in
more choice of networks and lower access fees for
consumers.” NAC II, 7 F. Supp. 3d at 60. The District Court
held that this was an “attenuated, speculative chain of events[]
that relies on numerous independent actors, including the PIN
card issuing banks.” Id. We disagree, and we think the
District Court was demanding proof of an economic theory
that was not required in a complaint.

A plaintiff’s burden to demonstrate standing grows
heavier at each stage of the litigation. See Lujan, 504 U.S. at
561. Thus, “[a]t the pleading stage, general factual
allegations of injury resulting from the defendant’s conduct
may suffice, for on a motion to dismiss we presum[e] that
general allegations embrace those specific facts that are
necessary to support the claim.” Id. (internal quotation marks
omitted); see also Am. Nat. Ins. Co. v. FDIC, 642 F.3d 1137,
1139 (D.C. Cir. 2011) (observing that on a Rule 12(b)(1)
motion, we “grant[] plaintiff the benefit of all inferences that
can be derived from the facts alleged”).

Two distinct theories of injury are relevant in this appeal.
First is the ATM operators’ theory of harm. The operators
allege that MasterCard and Visa, working in concert with the
member banks, have maximized their own returns on each
transaction, thereby minimizing the independent ATM
operators’ cut. See NAC Prop. Compl. ¶¶ 77-88. According
to the operators, in a competitive market, the imbalance
between low- and high-cost networks “would be corrected by
a price differential for the final service, and consumers would
respond to lower prices for a fungible service by switching.”
Id. ¶ 79. But while ATM operators can respond by routing
transactions on multi-bugged cards over the lowest priced
networks, they are prevented from using differential pricing to
incentivize customers to use such cards. As the operator
 11
plaintiffs put it, “ATM operators are prohibited from setting
the price differential needed to encourage consumers to
switch.” Id. Visa and MasterCard are thereby insulated from
competition with other networks and can charge supra-
competitive network services fees with impunity.

The consumers’ theory of harm complements that of the
operators. The consumers allege that they pay inflated access
fees when they visit ATMs. They believe that the Access Fee
Rules inhibit competition in both the network services market
and the market for ATM access fees. But for the Rules, some
ATM operators would offer discounted access fees for cards
linked to lower-cost ATM networks, and this discounting
would create downward pressure on access fees generally.
Osborn Prop. Compl. ¶ 94-107; Stoumbos Proposed Second
Amended Complaint (“Stoumbos Prop. Compl.”) ¶¶ 81-100.

Economic harm, such as that alleged here, “is a classic
form of injury-in-fact.” Danvers Motor Co. v. Ford Motor
Co., 432 F.3d 286, 293 (3d Cir. 2005). But the Defendants
painted Plaintiffs’ allegations as speculative and conclusory,
and the District Court agreed. NAC II, 7 F. Supp. 3d at 60.
The District Court reasoned that the “protracted chain of
causation” alleged by Plaintiffs “fails both because of the
uncertainty of several individual links and because of the
number of speculative links that must hold for the chain to
connect the challenged acts to the asserted particularized
injury.” Id. (quoting Fla. Audubon Soc’y v. Bentsen, 94 F.3d
658, 670 (D.C. Cir. 1996) (en banc)) (internal quotation
marks omitted). This was error.

At the pleadings stage, a court “must accept as true all
material allegations of the complaint,” Warth v. Seldin, 422
U.S. 490, 501 (1975), an obligation that we have recognized
“might appear to be in tension with the Court’s further
 12
admonition that an allegation of injury or of redressability that
is too speculative will not suffice to invoke the federal judicial
power,” United Transp. Union v. ICC, 891 F.2d 908, 911
(D.C. Cir. 1989) (internal quotation marks omitted). But “this
ostensible tension is reconciled by distinguishing allegations
of facts, either historical or otherwise demonstrable, from
allegations that are really predictions.” Id. at 912 (emphasis
added). Thus, “[w]hen considering any chain of allegations
for standing purposes, we may reject as overly speculative . . .
those types of allegations that are not normally susceptible of
labelling as ‘true’ or ‘false.’” Id.

Plaintiffs’ theories here are susceptible to proof at trial.
The Plaintiffs allege a system in which Visa and MasterCard
insulate their networks from price competition from other
networks. This insulation yields higher profits for Visa and
MasterCard (and higher returns for their shareholders), at the
cost of consumers and independent ATM operators. The
economic injury alleged is present and ongoing.

Moreover, the complaints contain factual details,
including details about the Plaintiffs’ own conduct, that
support the alleged causal link between the Access Fee Rules
and the economic harm. According to the Plaintiffs, Visa and
MasterCard currently capture over half of all ATM
transactions, despite charging higher fees than rival networks.
See Osborn Prop. Compl. ¶¶ 91, 101. Plaintiffs further allege
that independent ATM operators (such as the operator
plaintiffs) have the desire and technical capacity to offer
discounts on cards linked to low-cost networks. See NAC
Prop. Compl. ¶¶ 79, 82; Stoumbos Prop. Compl. ¶ 85. They
contend that consumers, such as Stoumbos and the Osborn
plaintiffs, are “sensitive to differences in ATM Access Fees
and where possible will seek out ATMs with the lowest
 13
Access Fees.” Stoumbos Prop. Compl. ¶ 86; accord Osborn
Prop. Compl. ¶ 105.

To be certain, Plaintiffs also rely on certain economic
assumptions about supply and demand: that other consumers
besides the Plaintiffs are price conscious; that bank operators
will respond to consumer demand for cards tied to low-cost
networks; and that in the face of competitive pressure, ATM
networks will reduce their network fees. But these sorts of
assumptions are provable at trial. See United Transp. Union,
891 F.2d at 912 n.7 (allegations “founded on economic
principles,” while “perhaps not as reliable as allegations based
on the laws of physics, are at least more akin to demonstrable
facts than are predictions based only on speculation.”); Ill.
Brick Co. v. Illinois, 431 U.S. 720, 758 (1977) (recognizing,
in the context of damages, that antitrust cases often involve
“tracing a cost increase through several levels of a chain of
distribution”). Indeed, allegations of economic harm “based
on standard principles of ‘supply and demand’” are “routinely
credited by courts in a variety of contexts.” Adams v. Watson,
10 F.3d 915, 923 (1st Cir. 1993).

In deciding that the Plaintiffs had failed to establish
injury and redressability, the District Court relied on cases
that had been decided at summary judgment. See NAC II, 7 F.
Supp. 3d at 60 (citing Lujan, 504 U.S. at 560-61; Valley
Forge Christian Coll. v. Ams. United for Separation of
Church and State, Inc., 454 U.S. 464, 496 n.10 (1982); Fla.
Audubon Soc’y, 94 F.3d at 670); see also NAC I, 922 F. Supp.
2d at 81 (citing Dominguez v. UAL Corp., 666 F.3d 1359,
1362 (D.C. Cir. 2012); Gerlinger v. Amazon.com Inc.;
Borders Group, Inc., 526 F.3d 1253, 1255-56 (9th Cir.
2008)). On a motion for summary judgment by a defendant,
the question is not whether the plaintiff has asserted a
plausible theory of harm, but rather whether the plaintiff has
 14
offered sufficient evidence for a reasonable jury to conclude
that its theory is correct. See Fla. Audubon Soc’y, 94 F.3d at
672 (at summary judgment, the court “need not accept
appellants’ alleged chain of events if they are unable to
demonstrate competent evidence to support each link”);
Dominguez, 666 F.3d at 1362-64 (evaluating plaintiff’s theory
of supra-competitive pricing and concluding that no record
evidence supported its theory of harm). A Rule 12(b)(1)
motion, however, is not the occasion for evaluating the
empirical accuracy of an economic theory. Because the
economic facts alleged by the Plaintiffs are specific, plausible,
and susceptible to proof at trial, they pass muster for standing
purposes at the pleadings stage.

B.

We next turn to the District Court’s alternative holding
that the Plaintiffs failed to plead adequate facts to establish
the existence of concerted activity. Under the familiar
Twombly-Iqbal standard, “[t]o survive a motion to dismiss, a
complaint must contain sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its face.’”
Jones v. Horne, 634 F.3d 588, 595 (D.C. Cir. 2011) (quoting
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

Section 1 of the Sherman Act prohibits any “contract,
combination . . . or conspiracy, in restraint of trade or
commerce.” 15 U.S.C. § 1. Thus, to make out a claim under
this section, the Plaintiffs must allege that “the challenged
anticompetitive conduct stems from . . . an agreement, tacit or
express.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 553
(2007) (internal quotation marks and brackets omitted). If
such an agreement is among competitors, we refer to it as a
horizontal restraint. See Bus. Electronics Corp. v. Sharp
Electronics Corp., 485 U.S. 717, 730 (1988) (contrasting
 15
horizontal agreements from vertical restraints imposed by
firms at different levels of distribution). The complaints are
sufficient if they contain “enough factual matter (taken as
true) to suggest that an agreement was made.” Id. at 556. We
conclude that the Plaintiffs have alleged a horizontal
agreement to restrain trade that suffices at the pleadings stage.

According to the Plaintiffs, the member banks developed
and adopted the Access Fee Rules when the banks controlled
Visa and MasterCard. The rules served several purposes.
First and foremost, the rules protected Visa and MasterCard
from competition with lower-cost ATM networks, thereby
permitting Visa and MasterCard to charge supra-competitive
fees. Osborn Prop. Compl. ¶ 80. The rules also benefited the
banks, who were equity shareholders of the associations (and
therefore financial beneficiaries of the deal). Id. ¶¶ 116-117.
And the rules protected banks from competition with each
other over the types of bugs offered on bank cards. See id.
¶ 80 (alleging that “banks were assured that their MasterCard
customers would not have to pay more in fees than their Visa
cardholders, and they would not face competition at the
network level”).

That the rules were adopted by Visa and MasterCard as
single entities does not preclude a finding of concerted action.
The Supreme Court has “long held that concerted action
under [Section] 1 does not turn simply on whether the parties
involved are legally distinct entities,” but rather depends upon
“a functional consideration of how the parties involved in the
alleged anticompetitive conduct actually operate.” Am.
Needle, Inc. v. Nat’l Football League, 560 U.S. 183, 191
(2010). Thus, “a legally single entity violate[s] [Section] 1
when the entity [i]s controlled by a group of competitors and
serve[s], in essence, as a vehicle for ongoing concerted
activity.” Id.
 16
The allegations here – that a group of retail banks fixed
an element of access fee pricing through bankcard association
rules – describe the sort of concerted action necessary to make
out a Section 1 claim. See, e.g., Nat’l Soc’y of Prof’l Eng’rs
v. United States, 435 U.S. 679 (1978) (upholding antitrust
action against association that imposed ethical rule
prohibiting competitive bidding by members); Robertson v.
Sea Pines Real Estate Cos., 679 F.3d 278, 288-89 (4th Cir.
2012) (finding adequate allegations that real estate brokerages
agreed to restrain market competition through anticompetitive
service rules in their joint venture). Indeed, in 2003 the
Second Circuit upheld a trial court’s finding that rules
adopted by Visa and MasterCard that prohibited member
banks from issuing American Express or Discover cards
violated Section 1 of the Act. United States v. Visa U.S.A.,
Inc., 344 F.3d 229 (2d Cir. 2003) (affirming United States v.
Visa U.S.A., Inc., 163 F. Supp. 2d 322 (S.D.N.Y. 2001)).

The Defendants correctly observe that “[m]ere
membership in associations is not enough to establish
participation in a conspiracy with other members of those
associations.” Fed. Prescription Serv., Inc. v. Am. Pharm.
Ass’n, 663 F.2d 253, 265 (D.C. Cir. 1981); see also Kendall v.
Visa U.S.A., Inc., 518 F.3d 1042, 1048 (9th Cir. 2008)
(“[M]embership in an association does not render an
association’s members automatically liable for antitrust
violations committed by the association.”). But the Plaintiffs
here have done much more than allege “mere membership.”
They have alleged that the member banks used the bankcard
associations to adopt and enforce a supracompetitive pricing
regime for ATM access fees. See, e.g., Osborn Prop. Compl.
¶ 81 (“The unreasonable restraints . . . originated in the rules
of the former bankcard associations agreed to by the banks
themselves.”) (emphasis added); NAC Prop. Comp. ¶¶ 89-90
(alleging that member banks appointed representatives to the
 17
bankcard associations’ Boards of Directors, which in turn
established the anticompetitive access fee rules, with the
cooperation and assent of the member banks). That is enough
to satisfy the plausibility standard.

Defendants next seek refuge in the fact that the banks
reorganized MasterCard and Visa as publicly held
corporations in 2006 and 2008, respectively. The Defendants
contend that even if there had been agreements or
conspiracies, the public offerings terminated them. See
Appellees’ Br. 40-41. In their view, the offering constituted a
withdrawal by the member banks – and with that withdrawal,
the cessation of any concerted action. The Rules that
remained intact no longer represented an agreement by the
member banks, but rather unilateral impositions by the
bankcard associations themselves, over which the banks no
longer had control.

To establish withdrawal, a defendant may show that it
has taken “[a]ffirmative acts inconsistent with the object of
the conspiracy and communicated in a manner reasonably
calculated to reach co-conspirators.” United States v. U.S.
Gypsum Co., 438 U.S. 422, 464 (1978); accord Watson
Carpet & Floor Covering, Inc. v. Mohawk Indus., Inc., 648
F.3d 452, 460 (6th Cir. 2011); In re Brand Name Prescription
Drugs Antitrust Litig., 123 F.3d 599, 616 (7th Cir. 1997).
Even where a member of the conspiracy appears to sever ties
with other co-conspirators, there is no withdrawal if that
member continues to support or benefit from the agreement.
See United States v. Eisen, 974 F.2d 246, 269 (2d Cir. 1992)
(finding no withdrawal from conspiracy where defendant
resigned from corrupt firm but continued to receive a portion
of profits); United States v. Antar, 53 F.3d 568, 583 (3d Cir.
1995) (holding that resignation from conspiracy is insufficient
if the defendant “continues to do acts in furtherance of the
 18
conspiracy and continues to receive benefits from the
conspiracy’s operations”), overruled on other grounds, Smith
v. Berg, 247 F.3d 532, 534 (3d Cir. 2001). Whether there was
an effective withdrawal is typically a question of fact for the
jury. See United States v. Bafia, 949 F.2d 1465, 1480 (7th
Cir. 1991); In re Cathode Ray Tube (CRT) Antitrust Litig.,
No. C-07-5944, 2014 WL 1091589, at *9 (N.D. Cal. Mar. 13,
2014) (noting that withdrawal generally “is a fact-sensitive
affirmative defense”).

According to the complaints, each member bank “knew
and understood that it and each and every other member of
the applicable network would agree or continue to agree to be
bound” by the rules both before and after the public offerings.
NAC Prop. Compl. ¶ 102. To support that allegation, the
plaintiffs point out that the banks have continued to issue
Visa- and MasterCard-branded cards and to comply with the
Access Fee Rules at their own ATMs. Id. ¶¶ 101, 103.
Furthermore, even though the banks no longer directly control
Visa and MasterCard, the plaintiffs observe, the banks work
with those associations to route more transactions over their
networks. For example, at least some member banks offer
single-bug cards so that independent ATM operators have no
choice but to run those transactions over a high-cost network
run by Visa or MasterCard. See Osborn Prop. Compl. ¶¶ 83-
85 (alleging that Bank of America, Wells Fargo, and Chase
struck deals with Visa to drop alternative networks); id. ¶ 87
(alleging that Capital One and Fifth Third banks offer
MasterCard debit cards with no rival bugs on the back).
Based on these allegations, a jury could no doubt conclude
that, in so doing, the banks continue to protect Visa and
MasterCard from price competition.

Plaintiffs also allege that several member banks continue
to benefit indirectly from the Access Fee Rules. Because the
 19
major banks still own shares in Visa and MasterCard, see
NAC Prop. Compl ¶¶ 99-100; Osborn Prop. Compl. ¶¶ 116-
117, it can be inferred that the banks reap some ongoing
financial benefit from increased profits at Visa and
MasterCard. And by removing any incentive for customers to
demand multi-bugged debit cards, the banks are able to avoid
competition with each other on network offerings attached to
their cards. See NAC Prop. Compl. ¶ 105 (referring to
“collusive agreement not to compete on the basis of the
efficiency of each bank’s ATM services”).

We therefore reject the Defendants’ assertion that the
public offerings dispelled any hint of conspiracy. The
Plaintiffs have adequately alleged an agreement that
originated when the member banks owned and operated Visa
and MasterCard and which continued even after the public
offerings of those associations. 3

In a final attempt to defeat the proposed complaints, the
Defendants contend that even if the Plaintiffs have adequately
pleaded standing and agreement, they have failed to state a
claim because their allegations do not establish antitrust
injury. Appellees’ Br. 21-22; see Brunswick Corp. v. Pueblo
Bowl-O-Mat, Inc., 429 U.S. 477, 489 (1977) (defining
antitrust injury as “injury of the type the antitrust laws were
intended to prevent and that flows from that which makes
defendants’ acts unlawful.”). The Defendants do not provide

3
The Plaintiffs plead in the alternative that the Access Fee Rules
constitute unlawful vertical conspiracies to restrain trade. See
Osborn Prop. Compl. ¶¶ 155-170; NAC Prop. Compl. ¶¶ 125-134.
Stoumbos puts forward an alternative theory that the rules stem
from unlawful “hub-and-spoke” conspiracies. See Stoumbos Prop.
Compl. ¶ 53. Because we conclude that the proposed amended
complaints allege a horizontal conspiracy, we do not reach the
question of whether Plaintiffs’ alternative theories are tenable.
 20
a meaningful argument as to why antitrust standing is not
present here, where the Plaintiffs have alleged that the Access
Fee Rules chill competition among network service providers,
leading to artificially high access fees for consumers and
artificially low margins for the Defendants. See, e.g., NAC
Prop. Compl. ¶ 108 (arguing that Defendants’ anticompetitive
conduct has forced the independent operators to pay supra-
competitive network fees). We therefore decline Defendants’
invitation to affirm on that basis.

III.

For the foregoing reasons, we hold that the District Court
erred in concluding that the Plaintiffs had failed to plead
adequate facts to establish standing or the existence of a
horizontal conspiracy to restrain trade. We therefore vacate
the District Court’s December 19 order denying the Plaintiffs’
motion to amend the judgment, and we remand for further
proceedings consistent with this opinion.4

So ordered.

4
As futility was the sole ground articulated by the District Court
for denying the Plaintiffs’ motions to amend the judgment and to
file amended complaints, we see no reason that the motions should
not be granted on remand. See Foman, 371 U.S. at 181-82
(explaining that if “the underlying facts or circumstances relied
upon by a plaintiff may be a proper subject of relief, he ought to be
afforded an opportunity to test his claim on the merits”); Ciralsky,
355 F.3d at 672-73 (recognizing that it may be appropriate to
convert a judgment that dismisses a case into an order dismissing a
complaint for statute of limitations purpose). But we leave this
discretionary decision to the district judge, see Firestone, 76 F.3d at
1208, whose view of the case is more nuanced than our own.