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EAS1H:ii D1SiRICT-Wl
UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WISCONSIN

U.S. LIi:,; F(1\;~',~COUfn

FILED

°08 MAY 22 P3 :51
MONTANA FOOD DISTRIBUTORS ASSOCIATION, on behalf of themselves and all others similarly situated, Plaintiff, v. INTERNATIONAL OUTSOURCING SERVICES, LLC; INMAR, INC.; CAROLINA MANUFACTURER'S SERVICES; and CAROLINA SERVICES. Defendants.

JON W. ::',!.\.HF ILiPPO

("18 Civil Action No~> ," ".-" . - OJ~57 ~""
CLASS ACTION COMPLAINT JURY TRIAL DEMANDED

C

CLERK

CLASS ACTION COMPLAINT

1.

This case arises in the coupon processing industry, a highly concentrated industry

beset with fraud, corruption, and agreements among competitors to allocate customers and not to compete. The industry is dominated by three coupon processors: International Outsourcing Services ("lOS"), Inmar, Inc. ("Inmar"), and NCR Marketing Services, Inc. ("NCR"). Two of these competitors - Defendants lOS and Inmar (and Inmar's Defendant subsidiaries) - engaged in an enterprise whereby they conspired to (a) breach fiduciary agreements and/or obligations with retailer, state association, and wholesale customers, (b) allocate customers, (c) increase the amount and type of coupon processing fees imposed on customers, and (d) defraud customers to minimize the amount customers received from manufacturers for coupons redeemed at retail stores. This Complaint is brought for breach of fiduciary duty, participation in breach of
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fiduciary duty, violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. ("RICO"), violations of the Sherman Act, as well as common law fraud, conspiracy to defraud, and unjust enrichment.
The Parties

2.

Plaintiff Montana Food Distributors Association ("MFDA") is a Montana non

profit organization with its principal place of business in Helena, Montana. The MFDA provides services and programs for its retail members, including a coupon redemption program in which roughly 162 retailers participate. Under its coupon program, the MFDA secures the processing services of a coupon processor, and retail participants in the program submit coupons to the processor. Each retailer then shares with the MFDA a small portion of the amount the coupon processor receives from manufacturers for coupons redeemed at retail outlets. From around 1993 to 2007, the MFDA used lOS to provide processing services for the MFDA's coupon program. 3. Defendant International Outsourcing Services, LLC is an Indiana limited liability

company with principal offices in El Paso, Texas and Bloomington, Indiana. lOS, formerly known as International Data, LLC, acts as a processor/agent for retailers in the coupon redemption process. Throughout this Complaint, the term "lOS" refers collectively to

International Outsourcing Services, LLC and International Data, LLC. 4. Defendant Inmar, Inc. is a North Carolina corporation with its principal offices in

Winston Salem, North Carolina. Through its subsidiaries Carolina Manufacturer's Services ("CMS") and Carolina Services ("CS"), Inmar acts as a processor/agent for both manufacturers and retailers in the coupon redemption process. Throughout this Complaint, the term "Inmar" refers collectively to Inmar, Inc., Carolina Manufacturer's Services, and Carolina Services.
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Jurisdiction, Venue, and Interstate Commerce

5.

The Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1331 (federal

question) and 28 U.S.C. § 1337(a) (commerce and antitrust regulation), because certain claims in this action arise under sections 1 and 2 of the Sherman Act (15 U.S.C. §§ 1 and 2) and sections 4 and 16 of the Clayton Act (15 U.S.C. §§ 15(a)); and further pursuant to 28 U.S.C. § 1331 (federal question), because certain claims in this action arise under the Racketeering Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-1968; and pursuant to 28 U.S.C. § 1332 (diversity jurisdiction), because this action is brought as a class action, diversity of citizenship exists between the parties, and the aggregate amount in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs. With respect to Plaintiffs common law claims, this Cowt also has supplemental jurisdiction pursuant to 28 U.S.C. § 1367. 6. Venue in this District is proper pursuant to 28 U.S.c. § 1391 and 18 U.S.C. §

1965(a); and 15 U.S.C. §§ 15,22, and 26, in that Defendants inhabit, transact business, reside, are found, or have an agent in this district, and a significant portion of the affected interstate trade and commerce described below has been carried out in this district. 7. Defendants' fraudulent and anticompetitive activities were within the flow of

and had a proximate, direct, substantial, and reasonably foreseeable effect on interstate commerce.
Industry Background Coupon Redemption Process

8.

Consumer goods manufacturers ("manufacturers") issue coupons to consumers

through a variety of distribution mechanisms, such as free standing inserts in newspapers, weekly circulars at retailers, the internet, the mail, at retail checkouts, on product packages, and
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at retail shelves.

Coupons typically have a set value for consumers, such as $1.00 off the

purchase price of a product. 9. Typically, manufacturers issue coupons to consumers, and consumers redeem the

coupons at retailers in connection with the purchase of a product. Retailers give consumers discounts off the purchase price of a product equal to the value of the coupons redeemed and then seek reimbursement from manufacturers for the discounts given to consumers, plus a small processing fee. To seek reimbursement from manufacturers, retailers retain or otherwise secure the services of retail coupon processors, also known in the industry as clearinghouses or agents (collectively referred to hereafter as "Retail Agents"). 10. Just as their name suggests, Retail Agents serve as agents of retailers for which

they provide processing services and have a fiduciary obligation to their retail clients. lOS is the largest Retail Agent in the United States. 11. Retailers compile coupons redeemed at their stores and send them to Retail

Agents. Retail Agents sort and count the coupons, and send the coupons and invoices for the coupon values to manufacturer coupon processors (referred to hereafter as "Manufacturer Agents"). Manufacturer Agents are retained by, and serve as agents for, manufacturers in the coupon redemption process. lnmar and NCH are the two primary Manufacturer Agents in the United States. 12. Manufacturer Agents audit the coupons submitted by Retail Agents, and inform

manufacturers of the value of the coupons that should be remitted to Retail Agents or individual retailers. Manufacturers then pay the Retail Agent or retailer. 13. While the coupon redemption process described above is typical, some variations

exist. For instance, Procter & Gamble does not use a Manufacturer Agent, but interacts directly
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with Retail Agents in processing coupons. 14. In addition, a number of retailers - particularly small retailers - retain the services Under these

of Retail Agents through state association or wholesaler coupon programs.

programs, state associations and wholesalers collect coupons from retailers and/or retain or otherwise engage Retail Agents to provide processing services. Individual retailers then share with the state associations and wholesalers a small portion of the amount a Retail Agent secures from manufacturers (less fees charged or amounts kept by the Retail Agent) for coupons redeemed at retail outlets. Any scheme by Retail Agents that minimizes the amount retailers receive for coupons submitted for redemption or otherwise results in higher prices for Retail Agent processing services, adversely affects each organization that retains or otherwise engages the Retail Agents to provide processing services, including individual retailers, state associations (including the MFDA), and wholesalers.

The Role of "Chargebacks"
15. As part of its audit function, a Manufacturer Agent may contend that certain

coupons submitted by a Retail Agent have not been properly redeemed for a variety of different reasons, such as (a) the coupons may have expired, (b) the appearance of the coupons suggests they were not handled by consumers, (c) the product for which the coupon was purportedly redeemed for was not carried by the retailer, or (d) the volume of coupons submitted by a single retailer appears excessive, etc. In instances in which a Manufacturer Agent contends that some coupons were not properly redeemed, the agent will instruct the manufacturer to deny payment or "chargeback" to the Retail Agent (or retailer) the value of the coupons that it contends were not properly redeemed. For instance, if lOS (a Retail Agent) submits on behalf of an individual retailer $100 in coupons to Inmar (a Manufacturer Agent) and Inmar informs a manufacturer that
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$80 of the coupons were properly redeemed and $20 of the coupons were not properly redeemed, the manufacturer will pay $80 of the submitted coupon value and chargeback $20. 16. Manufacturers may also chargeback the value of certain fees Retail Agents

attempt to impose on manufacturers. For instance, in connection with sending coupons from its processing facility to a Manufacturer Agent's processing facility, lOS has sought to impose on manufacturers shipping fees that many manufacturers deem excessive. Manufacturers may

chargeback at least a portion of lOS's shipping fees. lOS then seeks reimbursement for these fees from its own retail customers. 17. Manufacturer Agents compete for manufacturer processor contracts on the basis

of their ability to lower the amount manufacturers pay in connection with coupon redemption. Rather than simply lowering prices for their own processing services, Manufacturer Agents have sought to achieve this goal, at least in part, by maximizing chargebacks to retailers. 18. Retailers often disagree with the value of manufacturer chargebacks. A retailer

may believe, for instance, that a manufacturer is improperly withholding the value of properly redeemed coupons for which the retailer has given discounts to consumers. The retailer may then dispute the value of a chargeback. 19. Retailers have two mechanisms to dispute manufacturer chargebacks. First, a

retailer that purchases directly from a manufacturer may simply deduct the value of the chargeback from the amount the retailer owes the manufacturer in connection with the purchase of product. (These are referred to as "deducting retailers.") Some retailers - particularly small retailers - purchase product from wholesalers and not directly from manufacturers, and thus do not have the ability to deduct disputed chargeback values from manufacturers. referred to as "non-deducting retailers.")
6

(These are

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20.

Second, retailers rely on their Retail Agent to dispute chargebacks. Retail Agents

serve as the only practical mechanism available to non-deducting retailers to dispute chargebacks. 21. Manufacturer Agents recognize that non-deducting retailers lack one of the two the ability to deduct. Manufacturer As a result,

principal mechanisms to protect against chargebacks:

Agents have thus sought to maximize chargebacks for non-deducting retailers.

chargeback rates for small, non-deducting retailers tend to be higher than chargeback rates for deducting retailers. 22. Opportunities also exist for Manufacturer Agents to achieve their goal of lowering

manufacturer coupon redemption costs by imposing chargebacks on deducting retailers for which these retailers will not deduct. manufacturers vary by retailer. Methodologies by which retailers deduct from

For instance, some retailers may deduct for shipping fee

chargebacks, but other retailers may not. If a Manufacturer Agent could access each retailer's highly proprietary deduction methodology, it could easily discern chargebacks for which a retailer deducts and chargebacks for which a retailer does not deduct. 23. Retailers typically do not specify reasons for coupon-related deductions, beyond

denoting that deductions are "coupon related." This lack of specificity helps protect against Manufacturer Agents' efforts to impose chargebacks on deducting retailers. It is exceedingly difficult for Manufacturer Agents to reliably track each reason for a retailer's coupon-related deductions given the amount and complexity of the data that must be analyzed to discern this information. Accordingly, a Manufacturer Agent normally limits the number of chargebacks imposed on a deducting retailer because of these retailers' ability to deduct. 24. But if a Retail Agent were to provide a Manufacturer Agent with the proprietary
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deduction methodologies of its retailer clients - as Inmar paid lOS handsomely to do - the Manufacturer Agent would know precisely the chargebacks for which each retailer does not deduct. The Manufacturer Agent could then use this data to maximize chargebacks for which a retailer will not deduct.
IDS's Retail Processing Programs

25.

Since at least 1997, lOS has offered retailers two types of retail processing

programs. First, lOS has offered retailers "funded programs," in which lOS pays retailers a negotiated, discounted amount for the value of the coupons that the retailers send to lOS. The amount that lOS pays retailers for their coupons is based in large part on the manufacturers' chargeback rates for those retailers. (lOS will also subtract its own coupon processing fees from what it pays for the value of the coupons.) Thus, lOS will pay small, non-deducting retailers with high chargeback rates less than it will pay larger, deducting retailers. After paying retailers, lOS sends invoices for the coupon value and the coupons themselves to Manufacturer Agents (or manufacturers), which then send payments to lOS. 26. Second, lOS has offered retailers "unfunded" or "non-funded programs," in which

lOS receives coupons from retailers, sorts and counts the coupons, sends Manufacturer Agents invoices for the coupon value and the coupons themselves, and instructs manufacturers to remit payment directly to the retailer. In non-funded programs, lOS does not pay retailers a negotiated amount for their coupons and does not receive from manufacturers payments for the coupon value. Rather, lOS simply charges (or otherwise imposes on retailers) fees for its processing servIces.

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The Markets for Coupon Processing Services 27. Coupon processors compete in two separate and distinct markets, both of which

have high barriers to entry, including but not limited to high start-up costs, economies of scale, and exclusive contracts. The Market for Manufacturer Processing Services 28. Manufacturer Agents compete in the United States market for manufacturer

processing services. Manufacturer Agents contract with manufacturers and compete principally on the basis of: (a) the price to a manufacturer for performing processing services; and (b) the ability to lower a manufacturer's coupon-related costs through, for instance, realizing the maximum value of chargebacks. lnmar and NCB each have roughly 50 percent share of this market. lOS used to compete in this market, but in connection with various agreements with Inmar (discussed below), exited the market in or around 200l. The Market for Retail Processing Services 29. Retail Agents compete in the United States market for retail processing services.

Retail Agents contract (or otherwise agree) to perform processing services for retailers and compete principally on the basis of: (a) the amount and number of fees charged to (or otherwise imposed on) retailers; and (b) the ability to realize the maximum value of coupons a retailer invoices or otherwise submits to a manufacturer by, for instance, disputing chargebacks on behalf of the retailer. 30. lOS has historically dominated the market for retail processing services. Through

at least 2004, lOS had contracts for retail processing services with at least 75 percent of the retailers in the United States. Upon information and belief, lOS's share of this market has

declined marginally following the public disclosure of a government fraud investigation of lOS
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that resulted in lOS's indictment on March 6, 2007. Upon information and belief, lOS continues to have contracts with at least 60 percent of the retailers in the United States. Further, since at least 2001, lOS has had exclusive processing contracts with all retailers. 31. NCR and lnmar compete against lOS in the market for retail processing services.
~

or nearly all- non-deducting

NCR has traditionally performed retail processing services for large, deducting retailers (such as mass merchandisers) and has traditionally not competed for the business of small, non-deducting retailers. lnmar used to provide retail processing services to non-deducting retailers, but - in connection with agreements entered with lOS in or around 2001 - lnmar substantially limited or eliminated its competitive offering to non-deducting retailers. 32. lOS possesses market power in the United States market for retail processing

services. lOS and lnmar collectively possess market power in the United States market for retail processing services.
Excess Capacity Within the Coupon Processing Industry

33.

The number of coupons redeemed in the United States has steadily been declining

smce at least the late 1990s, creating excess capacity in the markets for coupon processing services, including excess installed processmg plant capacity. Notwithstanding this excess

capacity, Retail Agents have increased the amount and type of fees they impose on retailers. This increase in the amount and type of fees is a direct result of the anticompetitive and fraudulent scheme involving lOS and lnmar, discussed below.

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lOS's and Inmar's Anticompetitive and Fraudulent Scheme 34. In 2001, lOS and Inmar each faced a stark reality: they competed in manufacturer

and retail processing markets in which the number of coupons redeemed was on the decline. Faced with the prospect of competing vigorously for a declining number of coupons processed, the organizations - rather than competing on the merits - hatched a complex and secret scheme that enabled them to join forces, defraud retailers, raise and impose on retailers additional retail coupon processing fees, and avoid the type of vigorous competition that typically occurs in industries with declining volume and excess capacity. 35. The scheme was carried out - at least in part - through a "Proprietary Data

Transfer Agreement" entered on or around April 11, 2001 between lOS's retail coupon processing subsidiary International Data, L.L.C. ("ID") and Inmar's manufacturer coupon processing subsidiary, CMS. This agreement had three unlawful purposes and effects.

lOS's Sale ofRetail Deduction Methodologies to lnmar
36. The first unlawful purpose and effect of the Proprietary Data Transfer Agreement Under the

was lOS's secret sale of its retail clients' deduction methodologies to Inmar.

agreement, Inmar paid lOS up to ten million dollars annually to purchase the "confidential" and "proprietary" deduction data of the retailers for which lOS served as a Retail Agent, including the retailers' highly confidential deduction methodologies: International Data shall provide CMS continual, on-line internet and hard copy access (and access to other such supporting documentation as is reasonably necessary) to International Data's confidential proprietary retailer-specific chargeback and deduction data concerning International Data's Retail Customers, including methodology and calculations, as well as related master files and customer contract files[.] Proprietary Data Transfer Agreement, p. 2.
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37.

This Proprietary Data Transfer Agreement was intended and structured to provide

lnmar with precisely the type of deduction detail retailers purposely withhold from Manufacturing Agents as a means to prevent the imposition of chargebacks. Under the

agreement, for instance, lOS had to provide each retailer's reason for a deduction and whether a retailer had a formal policy in which it would not deduct for certain chargebacks, such as shipping fee chargebacks. Id. at Schedule 2(ii)(l). The agreement further mandates that lOS provide retailer specific data to lnmar for the express "purpose of resolving charge backs and deductions on behalf ofmanufacturers[.]" III 38. In effect, lnmar was secretly paying lOS to abdicate its fiduciary responsibilities

to its retail clients so that chargebacks and deductions could be resolved "on behalf of the manufacturers." lnmar could use the data supplied by lOS to pinpoint precisely the chargebacks to impose on deducting retailers for which the retailers would not deduct. lnmar could then increase these chargebacks on retailers and compete more effectively against NCH in the market for manufacturer processing services while protecting its own profit margins from low prices.
lOS and Inmar 's Agreement to Allocate Customers and Fix Prices

39.

The second unlawful purpose and effect of the Proprietary Data Transfer

Agreement was to restrict competition between lnmar and lOS in the retail processing services market. In return for accessing lOS's retail clients' proprietary deduction methodologies, lnmar agreed that it would not provide coupon services to any of lOS's retail clients or otherwise "call upon" any of these retailers for the purpose of providing such services:

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[D]uring the term of this Agreement, and for a period of one (1) year after the termination of this Agreement for any reason, none of the Inmar Entities or their Affiliates shall, directly or indirectly, on behalf of themselves or any other Person, provide Coupon Services to any ID Retail Customer, or solicit or call upon any ID Retail Customer for the purpose of providing Coupon Services to any such ID Retail Customer.

Id., p. 6.
40. This agreement to allocate customers has substantially restricted and/or

eliminated competition in the higWy-concentrated retail services market, enabling Retail Agents - including lOS and Inmar - to increase the amount and type of fees imposed on retailers during a time in which the number of coupons processed has declined and excess capacity for processing services has existed. Considering that, at the time of the lOS and lnmar customer allocation agreement, lOS provided processing services to at least 75 percent of retailers, securing a commitment on behalf of its principal competitor not to compete for lOS's retail accounts was of extraordinary value to lOS and has eliminated any incentive for the competitors to compete aggressively in the market for retail processing services. 41. This incentive not to compete has persisted, even as coupon processing volume

has continued to decline. For instance, in a January 23, 2008, 30(b)(6) deposition - when asked how lOS marketed its services to retailers - lOS's corporate representative testified: "We really don't do anything specific to call on customers that are not existing customers." See W. Freeman Tr. at 69: 1-4. Given that the amount and type of coupon processing fees have increased as a result of the lack of competition in the retail processing market, lOS has benefited simply by charging its clients more for its processing services to compensate for the decline in the number of coupons processed rather than "do[ing] anything specific to call on customers that are not existing customers."
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42.

Upon infonnation and belief, Inmar has also benefited by increasing the amount

and type of fees it has imposed on its retail clients. For instance, under the Proprietary Data Transfer Agreement, lOS agreed to share the types and amount of fees it charged (or otherwise imposed) on retailers, such as "chargebackJadjustment handling fees and other fees."
See

Proprietary Data Transfer Agreement at Schedule 2(ii)(l). After receiving this data, Inmar could then impose on its own retailers the types of fees imposed by lOS. Upon infonnation and belief, this price sharing agreement has enabled lOS and Inmar to fix and/or coordinate prices in the retail processing services market.
IDS and Inmar 's Fraud on Retailers Participating in IDS's Funded Programs

43.

The third unlawful purpose and effect of the Proprietary Data Transfer Agreement

was to enable lOS - with Inmar's complicity - to continue to defraud retailers participating in lOS's funded programs. Beginning by at least 1997, lOS implemented a scheme to defraud small, non-deducting retailers, which had chargeback rates that were greater than those of deducting retailers. The scheme was simple: under its funded programs, lOS would pay the small retailers for the value of their coupons an amount that reflected high chargeback rates for these retailers. lOS would then submit to Manufacturer Agents the coupons received from small retailers with the volume of coupons redeemed at larger retailers with lower chargeback rates. Manufacturers would pay lOS directly for the non-deducting retailers' coupons that were submitted with the deducting retailers' coupon volume, and lOS would keep for itself the chargeback rate difference between the non-deducting and deducting retailers. lOS was indicted for this scheme on March 6, 2007. 44. Under this scheme, lOS benefited from high chargeback rates for smaller

retailers: the higher the chargeback rates, the greater the spread between non-deducting and
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deducting retailers' chargebacks. lOS thus abdicated its responsibility to attempt to decrease chargeback rates for its smaller retailers. In 2000, for instance, lOS allowed chargeback rates to increase eight percent for retailers in lOS's "Rapid Pay" program, a funded program designed for lOS's small, non-deducting retailers. 45. A striking disparity in chargeback rates for lOS's deducting and non-deducting Between 2000 and 2001, for

retailers emerged as lOS perpetrated its fraudulent scheme.

instance, chargeback rates for small retailers participating in lOS's Rapid Pay program averaged between 60 to 68 percent of the value of coupons these retailers submitted to lOS. By contrast, chargeback rates for lOS's larger, deducting retailers were as low as one percent. 46. lOS's fraudulent scheme adversely affected deducting retailers in addition to non-

deducting retailers. For instance, lOS did not inform deducting retailers that it submitted non deducting retailers' coupons to manufacturers as part of the deducting retailers' coupons. To the contrary, lOS expressly denied having done so. As the volume of coupons increased that lOS submitted to manufacturers on behalf of deducting retailers, manufacturers began to question the legitimacy of these coupons, which resulted in increased chargeback rates for these deducting retailers. These increased chargeback rates reduced the amount deducting retailers received for coupons redeemed at their stores. 47. Also as part of its fraudulent scheme, lOS submitted to manufacturers

fraudulently obtained coupons (e.g., coupons that had never been properly redeemed in connection with the purchase of a product) with the volume of coupons redeemed at larger stores, which ultimately increased the chargeback rates for deducting retailers. Indictment, Us. v. Balsiger et al., 48.
~

Superseding

16(a), attached as Exhibit A.

Further, the fraudulently submitted coupons included "[cJoupons that lOS already
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had 'charged back' to retailers as having been denied by manufacturers."

Superseding

Indictment,-r 16(d). Submitting coupons that had already been charged back to retailers further increased the chargeback rates for deducting retailers. 49. lOS's scheme to defraud retailers depended on the elimination of competitive

alternatives available to small, non-deducting retailers, as vigorous competition would have lowered chargeback rates for (and fees imposed on) small retailers. Small retailers would simply have chosen processing programs with lower chargeback rates over processing program with higher chargeback rates, which - of course - would have defeated lOS's fraudulent scheme. 50.

In two ways, coupon processing programs for small, non-deducting retailers in

competition with lOS were eliminated. First, lOS purchased coupon programs in competition with Rapid Pay, such as the "DCCH" and "NCRS" programs referenced in the following statement from a former lOS executive named Lance FUIT, which was summarized by lOS's auditor: [International Data ("ID")] is the major player in the [Rapid Pay] type program arena. With the purchase of DCCH (Coupon Express) and NCRS programs, they have solidified their market share. Since these purchases, ID has kept the names in tact [sic] and has not advertised that they purchased these companies. Therefore, the smaller retailers don't have a clue that all of the programs are the same company (ID). Many retailers jump from program to program. If they leave one program and go to another, ID will try ... to transfer the chargebacks and deposits to the new program[.] International Data Audit Work Papers, p. 3. 51. As Mr. Furr described, small retailers tried to escape high chargeback rates in

lOS's processing programs by moving to what the retailers believed were competing programs. lOS would then transfer the high chargeback rates to the programs to which small retailers
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"jumped." 52. Second, through the Proprietary Data Transfer Agreement, lOS secured Inmar's

(and Inmar's subsidiary CMS's) agreement not to offer coupon services to lOS's customers. This agreement eliminated the "only other" competitive alternative to lOS in the "[Rapid Pay] market," as Lance Furr explained to lOS's auditor: ID's only major competitor is CMS which has two programs: Couponics and Millenium and per Lance [Furr], is the only other player in this [Rapid Pay] market. ID has entered into agreements in 2001 with CMS regarding other strategic marketing issues. Lance sees ID and CMS entering into an agreement to purchase CMS's programs or to sell chargebacks back and forth between the programs.

Id.
53.

Upon information and belief, Inmar and lOS entered into secret agreements that

eliminated any competition between Inmar's Couponics and Millenium programs (designed for small retailers) and lOS. For instance, David Howard - an lOS employee - stated that lOS and Inmar's subsidiary Carolina Coupon Clearing ("CCC") entered into an agreement by which lOS would serve as the coupon processor for a number of CCC's programs, including its Millenium program. See David Howard Interview Summary, p. 19. Inmar abruptly terminated these secret agreements when lOS was indicted because Inmar was "paranoid" that retailers would learn that lOS in fact served as the coupon processor for Inmar's processing programs: Howard said lOS was sub-processing coupons for CCC ... until the recent March 2007 indictment. He said after the indictment Inmar, the parent company for CCC, terminated their contract with lOS. Howard said Inmar was paranoid, that others, meaning manufacturers and other retail clients would know lOS was sub processing coupons for CCC clients.

Id. at 6.
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54.

In effect, by agreeing to refrain from competing for the business of small, non-

deducting retailers, Inmar facilitated IDS's scheme to defraud retailers participating in IDS's funded programs. Having secured a commitment not to compete from "the only other player" to offer coupon services to small retailers, lOS could continue to maximize chargebacks for non deducting retailers, which enabled IDS to perpetrate its fraudulent scheme. Absent Inmar's agreement not to compete for IDS's retail clients, competition between Inmar and lOS would have prevented lOS from continuing its scheme.
Other Agreements Between IDS and Inmar

55.

Upon information and belief, lOS and Inmar entered agreements in addition to the

Proprietary Data Transfer Agreement that restricted .competition, led to the increase in amount and type of fees charged or otherwise imposed on retailers, and/or fraudulently reduced the amount retailers received for coupons redeemed at their stores.
The Effects ofIDS's and Inmar 's Anticompetitive and Fraudulent Scheme

56.

lOS's and Inmar's anticompetitive and fraudulent scheme have adversely affected First, by paying for the

retailers, state associations, and wholesalers in at least three ways.

deduction methodologies of IDS's deducting retailers, Inmar has been able to maximize the chargebacks imposed on deducting retailers for which the retailers would not deduct. This has reduced the amount deducting retailers received for coupons redeemed at their stores. This, in tum, has reduced the amount state associations and wholesalers received from any deducting retailer that has secured coupon processing services through state association or wholesaler coupon programs. 57. Second, as a result of their agreement to allocate customers and fix and/or

coordinate prices, lOS and Inmar have been able to impose fees and chargeback rates on retailers
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that would not have prevailed had Defendants competed vigorously and not shared fee data. Upon information and belief, both the amount and type of fees lOS and Inmar charged, or otherwise imposed on, retailers has increased as a direct result of the coupon processors' Proprietary Data Transfer Agreement. This agreement has also resulted in inflated chargeback rates for lOS's and Inmar's retail clients. This, in turn, has reduced the amount state associations and wholesalers received from any retailer that has secured coupon processing services through state association or wholesaler coupon programs. 58. Third, aided by Inmar's agreement not to compete with lOS, lOS has increased

chargeback rates for its retail clients, as part of the processors' scheme to defraud retailers. This, in turn, has reduced the amount state associations and wholesalers received from any retailer that has secured coupon processing services through state association or wholesaler coupon programs.
Defendants' Fraudulent Concealment ofTheir Scheme and Acts in Furtherance ofthe Conspiracy

59.

Plaintiff had no knowledge of the secret, unlawful self-concealing conspiracy

alleged in this Complaint, and could not have discovered the combination or conspiracy at an earlier date by the exercise of due diligence because of the affirmative steps taken by Defendants to avoid detection of, and fraudulently conceal, their scheme and conspiracy until after January 16,2008. 60. For example, after the FBI executed search warrants at lOS facilities in February

2003, lOS executive Lance Furr directed lOS employees to take computer files and other information home each night to avoid seizure and possible detection of their fraudulent and anticompetitive actions. Superseding Indictment 19
~

53(a). Similarly, after February 2003, lOS

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executive Chris Balsiger ordered that certain documents be destroyed and attempted to have others destroy documents. Id. 61.
~

53(b).

lOS provided false and misleading information to retailers regarding the volume

of coupons billed in retailer's names as well as false information regarding lOS's couponprocessing and invoicing practices. Id. 62.
~~

24; 53(c).

In approximately October 2004, lOS executives Chris Balsiger, Bruce Furr, and

Lance Fur provided false and misleading information to Food Lion about the volume of coupons billed to manufacturers under Food Lion's name. Id. 63.
~

53(c).

To further conceal their scheme, lOS and its officers and agents took steps to keep

lOS's employees and others with knowledge of the scheme from cooperating with law enforcement officials and to retaliate against those who provided information to federal authorities, including attempting to condition severance benefits for departing employees on the employee's agreement not to speak to law enforcement officials and taking legal action or threatening legal action and/or financial harm to employees who cooperated with law enforcement efforts. . 64. For example, on or about February 15,2005, lOS reached a separation agreement

with the company's controller, Christine Peak, which called for payment of an additional year of salary in exchange for agreeing not to speak with anyone - including law enforcement - about lOS without lOS's written consent. Id. 65.
~

53(d).

When an lOS executive, Kari Costello, wanted to resign due to concerns about the

company's fraudulent invoicing and accounting practices, lOS drafted a separation agreement that prohibited Kari Costello from speaking to any government agency about lOS without lOS's written consent. Id.
~

53(e). In June 2005, lOS executive Bruce Furr and others accused Kari 20

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Costello of breaching a separation agreement by talking to law enforcement regarding the criminal investigation of lOS, and threatened litigation if Kari Costello continued to cooperate.
Id.
~

53(1). On February 17, 2006, Defendant lOS filed a civil lawsuit in Indiana against Kari

Costello to retaliate against Kari Costello for cooperating with law enforcement and to learn what information she had divulged to law enforcement. Id. 66.
~

53(m).

In approximately mid-August 2005, Lance Furr directed lOS to remove
~

documents from his office and to hide them in an employee's personal residence. Id. 67.

53(h).

On or about August 18, 2005, lOS executive Chris Balsiger presented false

information regarding lOS's coupon-invoicing practices to one ofIOS's attorneys, knowing and intending that the same false information would be presented to law enforcement. Id. 68.
~

530).

Between January and August 2006, lOS executive Chris Balsiger and others

prepared and revised a memorandum in which they described, documented, and revised a false "store tag" defense. Id.
~

53(1). The memorandum, which described lOS's historical invoicing

practices, falsely indicated that although coupons from independent stores were included on invoices that listed only a large, funded retailer, all of the coupons had accurate "store tags." The document, entitled "lOS Should Not Be Indicted for Mail/Wire Fraud" was intended to be disclosed and later was disclosed to law enforcement.

In March 2006, lOS executives and

employees Chris Balsiger, James Currey, Ovidio Enriquez, David Howard, and others attempted to create false invoices that could be used to support the "store tag" defense. Id. 69.
~

53(n).

lOS executives and employees Chris Balsiger, Ovidio Enriquez, and James

Currey persuaded two lOS employees - Nereo Castillo and Carlos Zapata - to provide materially false information regarding lOS's coupon-processing practices to law enforcement in April 2006.
Id.
~

53(s).
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70.

lOS Executives James Currey and Chris Balsiger developed computer programs

to conceal the accounting of various aspects of the scheme, including programs to shift manufacturer chargebacks from non-paying small retailers to stores that were submitting legitimate coupons to lOS. Id 71.
~

28(d); 53(0).

lnmar's abrupt termination of its subprocessing agreements with lOS in or around

March 2007 had the purpose and effect of concealing lnmar's role in the conspiracy. Plaintiff relied on and was misled by Defendants, who held positions of trust. Accordingly, the statute of limitations has been tolled and suspended with respect to any and all claims arising from the conspiracy until not earlier than January 16, 2008.
Class Action Allegations

72.

Plaintiff brings this action, pursuant to Fed. R. Civ. P. 23, on behalf of the

following class: All retailers, state associations, and wholesalers in the United States that have retained or engaged lOS or lnmar to provide coupon processing services from January 1, 1997 through the present (and continuing until the effects of lOS's and lnmar's fraudulent and anticompetitive scheme ceases). 73. Excluded from this class are the Court and its officers, employees, and relatives;

Defendants, their parents, subsidiaries, affiliates, shareholders, and co-conspirators. 74. The class is so numerous that joinder of all members is impracticable. Moreover,

with respect to the class, there are questions of law or fact common to Plaintiff and the other class members that are central to the adjudication of this action and predominate over any questions affecting only individual members. Among those common questions of law or fact are:

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a. Whether Defendants participated in, or committed, or are responsible for the conduct complained of; b. Whether Defendants' conduct constitutes violations of law alleged herein; c. Whether Defendants conspired to allocate customers or markets, fix prices, and/or otherwise not to compete; d. Whether Defendants conspired to share confidential information about retailers' policies and practices in breach of their fiduciary duties to those retailers; e. Whether Defendants conspired to conceal their unlawful activities;
f. The duration, extent, and success of the agreements between Defendants to conspire to defraud the Plaintiff class;

g. Whether Defendants' conduct constituted a breach of fiduciary agreement and/or duty or conspiracy to commit a breach or fiduciary agreement and/or duty; h. Whether Defendants' conduct violates the Federal Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1962;
1.

Whether Defendants' conduct violated the Sherman Act;

J. Whether Defendants' conduct constituted common law fraud or conspiracy to commit common law fraud;
k. Whether Defendants were unjustly enriched by their course of conduct with respect to their collection, processing, and submission of coupons to the Plaintiff class;

1. Whether Plaintiff and other class members have sustained or continue to sustain damages as a result of Defendants wrongful conduct, and, if so, the proper measure and appropriate formula to be applied in determining such damages;
m. Whether Plaintiff and the other class members are entitled to an award of compensatory, treble, and/or punitive damages, and, if so, in what amount; and n. Whether Plaintiff and the other class members are entitled to declaratory, injunctive, or other equitable relief.

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75.

With respect to the class, Plaintiffs claims are typical of the other class members'

claims because Plaintiff is a member of the proposed class, its claims have the same essential characteristics as the claims of other class members, its claims arise from the same general course of conduct that gives rise to claims of all class members, and its claims are based on the same legal theories as those of all other class members. 76. Plaintiff will fairly and adequately protect the interests of other class members

because it has no interest that is antagonistic to or which irrevocably conflicts with those of any other class member, and Plaintiff is committed to the vigorous prosecution of this action and has retained competent counsel experienced in litigation of this nature to represent Plaintiff and other members of the class. 77. The prosecution of separate actions by individual members of the class would

create the risk of inconsistent or varying adjudications with respect to individual members of the class, which would establish incompatible standards of conduct for Defendants; and adjudications with respect to individual class members would, as a practical matter, be dispositive of the interests of the other members of the class. 78. Defendants have acted or refused to act on grounds generally applicable to the

class, thereby rendering injunctive or declaratory relief with respect to the class as a whole appropriate. 79. This class action is the superior method for the fair and efficient adjudication of

this controversy. Class treatment will permit a large number of similarly-situated persons to prosecute their claims in a single forum simultaneously, efficiently, and without the unnecessary duplication of evidence, effort, and expense that numerous individual actions would produce. 80. The instant case will be eminently manageable as a class action. Notice of the
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pendency of this action can be given in a variety of ways, including by First Class U.S. Mail or trade journal publication. 81. The damages sustained by individual class members, although substantial, do not

rise to the level where they would have a significant interest in controlling the prosecution of separate actions against these well-financed corporate defendants.
CAUSES OF ACTION
Count I: Breach of Fiduciary Agreement and/or Duty


82. 83.

Plaintiff repeats and realleges the allegations in Paragraphs 1 - 81 above. By agreeing to serve as coupon processors on behalf of Plaintiff and class

members, Defendants were agents of Plaintiff and class members, and/or had a fiduciary duty to them. 84. Defendants breached their fiduciary agreements and/or duties to Plaintiff and

class members, and that breach proximately caused injury to Plaintiff and class members in an amount to be proven at trial.
Count II: Conspiring, Inducing, Participating in,
Aiding or Abetting a Breach of Fiduciary Agreement and/or Duty


85. 86.

Plaintiffs repeat and reallege the allegations in Paragraphs 1 - 84. By agreeing to serve as coupon processors on behalf of Plaintiff and class

members, Defendants were agents of Plaintiff and class members, and/or had a fiduciary duty to them. 87. Defendants knowingly induced, participated in, aided, and/or abetted the breach

of fiduciary agreement and/or duty to Plaintiff and class members, and/or Defendants combined and conspired to commit a breach of fiduciary agreement and/or duty, and committed overt acts
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in furtherance thereof. 88. Plaintiff and class members suffered damages as a result of the breach in an

amount to be determined at trial. Count III: Federal Racketeer Influenced and Corrupt
Organizations Act, 18 V.S.c. §1962 (c)
89. Plaintiffrepeats and realleges the allegations in Paragraphs 1- 88 above as if fully

set forth herein. 90. At all times relevant to this Complaint, the Defendants each constituted a

"person" within the meaning of 18 U.S.C. § 1961(3). 91. Defendants and others not named as defendants herein, were associated in fact

and constituted an "enterprise" within the meaning of 18 U.S.C. § 1961(4), engaging in and affecting interstate commerce. The RICO Enterprise is a continuing organization that consists of Defendants, their officers, agents, representatives, and other individuals who assisted in devising and implementing their schemes. 92. At all times relevant to this Complaint, Defendants agreed to and did conduct and

directly or indirectly participate in, or aided and abetted, the conduct of the enterprise's affairs through a pattern of racketeering activity in violation of 18 U.S.C. § 1962(c), committing multiple fraudulent and illegal racketeering acts, and for the unlawful purpose of intentionally defrauding Plaintiff, including: interstate mail fraud in violation of 18 U.S.C. § 1341 (all Defendants); interstate wire fraud in violation of 18 U.S.C. § 1343 (all Defendants); tampering with a witness or informant in violation of 18 U.S.C. § 1512(b)-(d) (Defendant lOS); retaliating against a witness or informant in violation of 18 U.S.C. § 1513(e) (Defendant lOS); interstate transportation of stolen, converted, or fraudulently obtained goods or money while knowing of

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the theft in violation of 18 U.S.C. § 2314 (all Defendants); interstate receipt of goods or money of the value of $5,000 or more, knowing the same to have been stolen, unlawfully converted, or taken in violation of 18 U.S.C. § 2315 (all Defendants). These violations included, but are not limited to the acts discussed in the prior paragraphs of this Complaint. Defendants engaged in this pattern of racketeering activity for the unlawful purpose of and with the effect of defrauding Plaintiffs and the class members. 93. On information and belief, on April 11,2001, CMS Executive Vice-President and

CFO Cynthia Tessien and lOS CEO Chris Balsiger exchanged signed copies of the Proprietary Data Transfer Agreement sent to and/or from Inmar's offices in Winston-Salem, North Carolina via a fax machine connected to (336) 770-1923, in violation of 18 U.S.C. § 1343. 94. On information and belief, in accordance with the Proprietary Data Transfer

Agreement, members oflOS's IT staff made data pertaining to coupons which are processed by lOS available to Inmar via an FTP site beginning in April 2001 or shortly thereafter, with updates on an almost daily basis thereafter. On days when no updates were made, lOS informed lnmar via e-mail that no updates were available. Using computers connected to the internet, various lnmar, CMS, and CS employees accessed the data provided by lOS via electronic FTP and e-mail transmission in violation of 18 U.S.C. § 1343. To facilitate their customer allocation agreement, lOS or Inmar provided each other with continuous updates to their customer lists via e-mail. 95. On information and belief, Defendants Inmar, CMS, and/or CS transmitted money

to lOS on the 15th day of each month via interstate electronic bank transfer, pursuant to the Proprietary Data Transfer Agreement. These communications violated 18 U.S.C. § 1343. 96. As part of the fraudulent scheme, and in violation of 18 U.S.C. § 1343, Defendant
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lOS used interstate wire communications to submit invoices to manufacturers for coupons that lOS falsely claimed had been redeemed at retail stores owned by Plaintiff and class members, including but not limited to the invoices detailed with specificity in the Superseding Indictment,

us.

v. Balsiger et a!., attached as Exhibit A, pp. 11-16 (alleging wire fraud).

In 2000, for

example, lOS sent invoices to manufacturers with a total value exceeding $49 million for smallstore coupons that were fraudulently submitted on behalf of larger retailers. In addition, lOS fraudulently submitted on behalf of larger retailers mass-cut coupons that had never been redeemed at any retail store. lOS hired a number of individuals, including Abdel Rahim Jebara, Dax Patel, B.K. Patel, and others to submit the mass-cut coupons to lOS, which lOS mixed in a cement mixer, and which lOS used as the basis for submitting fraudulent invoices to manufacturers. Superseding Indictment, p. 7. 97. As detailed above, Defendant lOS committed various acts of witness tampering

and retaliation, the purpose and effect of which was to further their scheme to defraud Plaintiff and the class members in violation of 18 U.S.C. § 1512(b), (d), (k) and 18 U.S.C. § 1513(b), (d), (e). Specifically, Defendant lOS knowingly used or conspired to knowingly use intimidation, threats, or corruptly persuaded, attempted to persuade, or conspired to corruptly persuade or attempt to persuade employees and former employees, or engaged in misleading conduct toward another person, with the intent to: hinder, delay, or prevent the communication to a federal law enforcement officer information relating to the commission or possible commission of a Federal offense in violation of 18 U.S.C. § 1512(b)(3) or 1512(k). Defendant lOS intentionally harassed or conspired to intentionally harass another person or persons and thereby hindered, delayed, prevented, or dissuaded them from reporting to a law enforcement officer the commission or possible commission of a federal offense in violation of 18 U.S.C. § 1512(d)(2) or 1512(k).
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Defendant lOS knowingly engaged or conspired to engage in conduct and thereby caused or attempted to cause damages to the tangible property of another person, or threatened to do so, with intent to retaliate against a person or persons for information relating to the commission or possible commission of a Federal offense; and/or knowingly, with intent to retaliate, took action or conspired to take action harmful to a person or persons, including interference with the lawful employment or livelihood of those persons, for providing to a law enforcement officer truthful information relating to the commission or possible commission of a federal offense, in violation of 18 U.S.C. § 1513(b)(2), (d), (e). 98. Defendant lOS transported coupons submitted by retailers in interstate commerce

to lOS's processing facilities in Texas and Mexico, and then, in some cases, sent them to manufacturers' agents, knowing the same to have been converted or taken by fraud, with a value in excess of $5,000, in violation of 18 U.S.C. § 2314. lnmar, as a manufacturer's agent, received coupons with a value in excess of $5,000, at its receiving office in Texas after having been transported in interstate commerce, knowing the same to have been converted or taken by fraud in violation of 18 U.S.C. § 2315. As part of Defendants' scheme, lOS falsely told the submitting retailers that manufacturers had charged back most of these coupons, thereby fraudulently obtaining the rights to payment for these coupons from manufacturers. Defendant lOS submitted invoices for these fraudulently obtained coupons to manufacturers. 99. After submitting invoices to manufacturers, Defendant lOS received from

manufacturers, possessed, concealed, stored, and/or disposed of payments of money, and disposed of coupons, of the value of $5,000 or more, which have crossed a State and/or United States boundary after being stolen, unlawfully converted, or taken, knowing the same to have been stolen, unlawfully converted, or taken, in violation of 18 U.S.C. § 2315. On information:

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and belief, manufacturers made periodic payments to lOS by means of electronic bank transfer, and lOS subsequently transferred the proceeds electronically to other accounts in violation of 18 U.S.C. §§ 2314 and 2315. 100. Defendants Inmar, CMS, and CS received, possessed, stored, and/or disposed of

coupons from lOS, and induced manufacturers to pay lOS for the value of those coupons in amounts of $5,000 or more, where those coupons had crossed a State and/or United States boundary. On information and belief, Defendants Inmar, CMS, and CS knew that the coupons had been stolen, unlawfully converted, or taken. These actions violated 18 U.S.C. § 2315. 101. As a direct and proximate result of Defendants' racketeering activities and

violations of 18 U.S.c. § 1962(c), Plaintiff has been injured in their business and property in an amount to be proven at trial. For example, Defendant lOS retained payments from

manufacturers that were intended for retailers, state associations, and wholesalers; manufacturers and/or their agents were able to increase chargebacks to retailers and decrease deductions because they had access to confidential and proprietary· deduction data and methodologies, and because Defendants had disincentives to limit or decrease chargebacks to their retailer clients; manufacturers increased chargebacks for valid coupons because Defendant lOS submitted invalid coupons along with the valid coupons; and Defendants imposed excess fees upon Plaintiff and class members because of Defendants' agreement to allocate customers and fix pnces. Such hanns are not remediable solely by the payment of damages and are continuing in nature. Count IV: Federal Racketeer Influenced and Corrupt
Organizations Act Conspiracy, 18 U.S.c. § 1962(d)
102. Plaintiff repeats and realleges the allegations in Paragraphs 1 - 101 above.
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103.

This count is brought against all Defendants. As set forth above, the Defendants

unlawfully and willfully combined, conspired and agreed to violate 18 U.S.C. § 1962(c). Specifically, Defendants committed overt acts in furtherance of the conspiracy as described above. 104. Defendants have intentionally conspired and agreed to directly and indirectly

participate in the conduct of the affairs of the enterprise through a pattern of racketeering activity. Defendants knew that their acts were part of a pattern of racketeering activity and agreed to the commission of those acts to further the schemes described above. That conduct constitutes a conspiracy to violate 18 U.S.C. § 1962(c), in violation of 18 U.S.C. § 1962(d). 105. As a direct and proximate result of Defendants' conspiracy, the overt acts taken in

furtherance of that conspiracy, and violations of 18 U.S.C. § 1962(d), Plaintiffs and class members have been injured in their business and property in an amount to be proven at trial by reason of Defendants' violation of 18 U.S.C. § 1962(d), in that: Defendant lOS retained payments from manufacturers that were intended for retailers; manufacturers and/or their agents were able to increase chargebacks to retailers and decrease deductions because they had access to confidential and proprietary deduction data and methodologies, and because Defendants had disincentives to limit or decrease chargebacks to their retailer clients; manufacturers increased chargebacks for valid coupons because Defendant lOS submitted invalid coupons along with the valid coupons; and Defendants imposed excess fees upon Plaintiff and class members because of Defendants' agreement to allocate customers and fix prices.
Count V: Conspiracy to Restrain Trade in Violation of Sherman Act § 1

106.

Plaintiff repeats and realleges the allegations in Paragraphs 1 - 105 above.
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107.

Defendants have engaged in a combination or conspiracy in restraint of trade and

commerce, the purpose and effect of which is to allocate markets and customers for, and unreasonably fix, raise, maintain, or stabilize prices for, coupon clearing and coupon processing services provided to retailers in the United States. The combination or conspiracy consisted of a continuing agreement, understanding, and concert of action among Defendants. 108. Defendants' actions lack any legitimate business justification, and any purported

business justifications are pretextual. 109. Defendants' conduct substantially and adversely affects interstate commerce in

the relevant markets. 110. Defendants by and through their anticompetitive actions as outlined herein, have

violated Section 1 of the Sherman Act, 15 U.S.c. § 1. 111. As a direct and proximate result of Defendants' violations of the Shemlan Act,

Plaintiffs and class members have been harmed in an amount to be established at trial.
Count VI: Monopolization in Violation of Sherman Act Section 2 (Defendant lOS)

112. 113.

Plaintiff repeats and realleges the allegations in Paragraphs 1 - 111 above. Throughout the relevant time period, Defendant lOS possessed monopoly power

in the market for providing coupon processing or clearing services to retailers. 114. Through the anticompetitive conduct described herein, lOS has willfully acquired

and/or maintained its monopoly power in this market. lOS has acted with an intent to illegally acquire and/or maintain its monopoly, and its anticompetitive conduct has enabled it to do so, in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2. 115. There are no legitimate business justifications for lOS's conduct, and any lOS's acquisition or

purported legitimate business justifications are merely pretextual.
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maintenance of its power is not the result of superior product, business acumen, or historic accident. 116. Plaintiff and class members were injured in their business or property as a direct

and foreseeable result of lOS's conduct in an amount to be proven at trial. For example, lOS's conduct caused a direct, substantial, and reasonably foreseeable increase in coupon processing fees imposed upon Plaintiff and class members, and otherwise decreased the net amounts that Plaintiff and class members received from manufacturers for their coupons.
Count VII: Conspiracy to Monopolize in Violation of Sherman Act Section 2

117. 118.

Plaintiff repeats and realleges the allegations in Paragraphs 1 - 116 above. During the relevant time period, Defendants combined or conspired to

monopolize trade in the market for providing coupon processing or clearing services to Plaintiff and class members. 119. Defendants have willfully and knowingly sought to acqUIre and maintain

monopoly power in the above-defined product market by the wrongful conduct alleged above. 120. Defendants engaged in acts and conduct in furtherance of the combination or

conspiracy that have diminished, and continue to diminish, competition in the relevant product market, to the detriment of Plaintiff and class members. 121. The necessary and direct result of Defendants' wrongful conduct has been the

expansion or maintenance of their combined monopoly position in the above-defined product market. Defendants' actions have affected an appreciable and substantial amount of interstate commerce. 122. Defendants' actions are not based on any lawful market dominance and have no

lawful business justification, and any purported business justifications are merely pretextual.
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123.

As a direct and proximate result of Defendants' violations of Section 2 of the

Shennan Act, Plaintiff and other members of the class have been harmed. Such hanns are not remediable solely by the payment of damages and are continuing in nature. Count VIII: Common Law Fraud 124. 125. Plaintiff repeats and realleges the allegations in Paragraphs 1 - 123123 above. Defendants knowingly misrepresented and omitted material facts with the

intention and effect of deceiving and causing actual and justifiable reliance by Plaintiffs and class members on these misrepresentations and omissions. 126. Although Defendants representations of fact were untrue, Plaintiff and class

members reasonably and justifiably believed the representations of Defendants to be true and relied upon their representations. 127. As a result of Plaintiffs and class members' reliance on Defendants' fraudulent

acts and omissions, Plaintiff and class members have been injured in an amount to be proven at trial. Count IX: Common Law Conspiracy to Defraud 128. 129. Plaintiff repeats and realleges the allegations in Paragraphs 1- 127 above. De