Scfc Ilc, Inc. v. Visa Usa, Inc.

936 F.2d 1096 (10th Cir. 1991)

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Nature of the Case

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Facts

In mid-1989, Sears, through its wholly-owned subsidiary, Greenwood Trust Corporation (the issuer of the Discover Card), applied to Visa, U.S.A. ('Visa') to become a Visa member. Visa denied Sears' application. Immediately thereafter, the Board of Directors of Visa enacted several amendments to the Visa by-laws and operating regulations specifically precluding Sears or any of its subsidiaries from issuing Visa cards. On May 25, 1990, SCFC ILC, Inc. (P) another wholly-owned subsidiary of Sears, acquired Mountain West Savings & Loan, a small Utah savings & loan, from the Resolution Trust Corporation ('RTC'). As a result of its purchase of Mountain West, Sears acquired a small Visa program which had been operated by the former Mountain West for the benefit of the local depositors. In June of 1990, following the P takeover, Visa requested Mountain West to reapply for Visa membership pursuant to its interpretation of Visa By-law § 2.08. Mountain West filled out the forms as requested, but because it was taking the position that the 'Visa membership asset' had not been transferred, it printed at the top of the forms, 'updating existing membership information.' Mountain West did not at that time notify Visa that it was owned by a subsidiary of Sears, P. On January 8, 1991, Visa's suspicions were aroused when it was notified that Mountain West had ordered 1.5 million Visa cards. The size of the order alone was sufficient to trigger an investigation by Visa because Mountain West, prior to being acquired by P, had issued only 5,800 Visa cards to its account holders. Mountain West requested that the cards be printed with a 'Prime Option' logo, which is a registered trademark of Dean Witter, a Sears' subsidiary. Once Visa realized that Mountain West was indirectly owned by Sears and that Sears was attempting to use Mountain West’s membership in Visa to launch its very aggressive Prime Option credit card program, Visa refused to approve the card order. Mountain West filed suit in the United States District Court for the District of Utah raising federal and state antitrust and state unfair trade practice claims. Shortly after filing the lawsuit, Mountain West moved for a preliminary injunction to force Visa to approve the manufacture and delivery of the 1.5 million cards ordered by Mountain West. The district court granted the preliminary injunction. Visa appealed to this court and requested that we stay the injunction pending our resolution of the issues. We granted Visa's request for a stay.