Item 1. Business.
Item 1A.
Item 1A. Risk Factors.
Item 2. Properties.
Item 3. Legal Proceedings.
Item 4. Submission of Matters to a Vote of Security Holders.
Item 1B.
Item 1B. Unresolved Staff Comments.
Not Applicable.
Substitute information provided in accordance with General Instruction J to Form 10-K:
Item 1112(b) of Regulation AB. Significant Obligors of Pool Assets (Financial Information).
The assets of the Chase Issuance Trust include a collateral certificate, Series 2002-CC (the “First USA Collateral Certificate”), representing an undivided interest in the assets of the First USA Credit Card Master Trust (the “First USA Master Trust”), whose assets include credit card receivables arising in consumer revolving credit card accounts owned by Chase Bank USA, National Association (“Chase USA”). The First USA Collateral Certificate represents less than 20% of the Chase Issuance Trust asset pool. The First USA Master Trust should not be considered a significant obligor in relation to the Chase Issuance Trust under Item 1112(b) of Regulation AB. Nevertheless, the information required by General Instruction J to Form 10-K for an asset-backed issuer in respect of the First USA Master Trust has been disclosed in this report on Form 10-K. The assets of the Chase Issuance Trust included a collateral certificate, Series 2004-CC (the “Chase Collateral Certificate”), representing an undivided interest in the Chase Credit Card Master Trust (the “Chase Master Trust”), whose assets included credit card receivables arising in consumer revolving credit card accounts owned by Chase USA. The Chase Collateral Certificate was paid in full and terminated on December 15, 2009. The Chase Master Trust should not be considered a significant obligor in relation to the Chase Issuance Trust under Item 1112(b) of Regulation AB. Nonetheless, the information required by General Instruction J to Form 10-K for an asset-backed issuer in respect of the Chase Master Trust has been disclosed in this report on Form 10-K.
None of the pool assets held by the Chase Issuance Trust other than collateral certificates, and none of the pool assets relating to the First USA Master Trust or the Chase Master Trust include any significant obligors.
Item 1114(b)(2) of Regulation AB: Credit Enhancement and Other Support, Except for Certain Derivatives Instruments (Financial Information).
Not Applicable.
Item 1115(b) of Regulation AB: Certain Derivatives Instruments (Financial Information).
Not Applicable.
Item 1117 of Regulation AB: Legal Proceedings.
Industry Litigation
In 1996, Wal-Mart Stores, Inc. and several other retailers sued MasterCard International Incorporated, VISA U.S.A., Inc. and VISA International, Inc. in the U.S. District Court for the Eastern District of New York (the “District Court”). The action asserted that the rules of the foregoing associations regarding the uniform acceptance of all VISA and MasterCard cards, including debit VISA and MasterCard cards, constituted an illegal tying arrangement. In April 2003, MasterCard and VISA each agreed to settle the matter by among other things, reducing interchange rates for debit cards, allowing merchants to decline debit cards, and agreeing to pay into settlement funds as follows: MasterCard agreed to pay into a settlement fund approximately $1 billion over ten years and VISA agreed to pay approximately $2 billion over ten years.
On December 19, 2003, the District Court granted final approval of the settlement. The court interpreted the release provided by the merchant class as encompassing any possible suit by class members with respect to debit or credit card interchange fees or with respect to the exclusionary rules barring issuance of American Express or Discover cards by member banks and as prohibiting such suits against the member banks as well as against the associations. On January 4, 2005, the U.S. Court of Appeals for the Second Circuit affirmed the District Court’s order approving the settlement in all respects. Certain merchants that had previously opted out of the settlement filed separate lawsuits and the opt out actions have been resolved.
On June 22, 2005, a group of merchants filed a putative class action complaint in the U.S. District Court for the District of Connecticut. The complaint alleges that VISA, MasterCard and certain member banks including Bank of America, Chase USA, Capital One, Citibank and others, conspired to set the price of interchange in violation of Section 1 of the Sherman Act. The complaint further alleges tying/bundling and exclusive dealing. Since the filing of the Connecticut complaint, other complaints were filed in different U.S. District Courts challenging the setting of interchange, as well the associations’ respective rules. The Judicial Panel on Multidistrict Litigation consolidated the cases in the Eastern District of New York for pretrial proceedings. An amended consolidated complaint was filed on April 24, 2006. The consolidated complaint also added claims relating to off line debit transactions. Defendants filed a motion to dismiss all claims that pre-date January 1, 2004, based on the settlement and release of claims in the Wal-Mart case. On January 8, 2008, the Court granted that motion and those claims have been dismissed.
In May 2008, the plaintiffs filed a motion seeking class certification and the defendants opposed that motion in October 2008. The court has not yet ruled on the class certification motion.
In addition to the consolidated class action complaint, plaintiffs filed supplemental complaints challenging the MasterCard and Visa initial public offerings (each, an “IPO”). With respect to MasterCard, plaintiffs first filed a supplemental complaint in May 2006 alleging that the offering violated Section 7 of the Clayton Act, Section 1 of the Sherman Act and that the offering was a fraudulent conveyance. Defendants filed a motion to dismiss both of those claims. On November 25, 2008, the District Court dismissed the supplemental complaints with leave to replead.
In January 2009, the plaintiffs filed and served a Second Amended Consolidated Class Action Complaint against all defendants and an amended supplemental complaint against MasterCard again challenging the MasterCard IPO making antitrust claims similar to those that were set forth in the original supplemental complaint, as well as the fraudulent conveyance claim.
With respect to the Visa IPO, the plaintiffs filed a supplemental complaint challenging the Visa IPO on antitrust theories parallel to those articulated in the MasterCard IPO pleading.
On March 31, 2009, defendants filed a motion to dismiss the Second Amended Consolidated Class Action Complaint. Separate motions to dismiss each of the supplemental complaints challenging the MasterCard and Visa IPOs were also filed. Chase USA cannot predict with any degree of certainty the final outcome of the litigation described above, its effect on the credit card industry or its effect on Chase USA’s credit card business.
In February 2000, plaintiff Adam A. Schwartz filed a lawsuit in California Superior Court against VISA International Corp., VISA International Service Association, Inc., VISA U.S.A., Inc. and MasterCard International Incorporated alleging that VISA and MasterCard have unlawfully concealed the fact that each increases by 1% the rate at which it converts foreign currency to United States dollars for credit card purchases made in foreign currencies by United States cardholders. The case was brought under the California unfair business practices statute. On April 7, 2003, the court issued a decision in favor of the plaintiff and against VISA and MasterCard, holding that the networks’ disclosures of the 1% currency conversion fee were inadequate under California law. VISA and MasterCard appealed the decision. On September 28, 2005, the appellate court reversed the judgment and remanded the case to the trial court for further consideration. The reversal was based on the amendment to the California statute at issue in the case, which now requires the plaintiff to have suffered actual injury. The appellate court directed the trial court to exercise its discretion to determine whether to grant leave to amend the complaint to add a new plaintiff.
Beginning in or around February 2001, more than twenty individual credit cardholders filed putative class actions against VISA International Service Association, Inc., VISA U.S.A., Inc., MasterCard International Incorporated and seven credit card issuing banks and their parent companies, including Chase USA and JPMorgan Chase & Co., alleging that VISA and MasterCard, together with their members banks, had conspired to fix the price of currency conversion services for credit card purchases made in a foreign currency by United States cardholders. The plaintiffs also asserted that disclosure requirements of the Truth-in-Lending Act and regulations promulgated thereunder had not been observed. The cases were consolidated in the District Court for the Southern District of New York for pretrial purposes. On July 3, 2003, the court denied in principal part the defendants’ motion to dismiss the consolidated complaint. On November 12, 2003, the plaintiffs moved for an order certifying the action as a class action, and by Order dated October 15, 2004, the court granted class certification.
On July 20, 2006, the parties in the consolidated case entered into a nationwide settlement agreement, subject to court approval. The court held a final approval hearing on March 31, 2008 and took the matter under advisement. The defendants have denied any wrongdoing, and the court has not made any ruling on the merits of the case.
The settlement agreement includes provisions relating to disclosures on billing statements and other documents, and a settlement fund of $336,000,000 to pay monetary claims, the costs of administering the settlement and notice to cardholders, court-approved attorneys’ fees and expenses, and court-approved awards to the class representatives. Eligible cardholders will be able to make monetary claims. The settlement documents include agreements to settle certain related lawsuits, including the lawsuit filed by Adam A. Schwartz against the VISA and MasterCard entities as referenced above. The court granted final approval of the settlement on October 22, 2009. Objectors to the settlement filed appeals in the Second Circuit.
Other Litigation
On March 23, 2004, plaintiff James A. McCoy filed a lawsuit in California Superior Court against Chase Manhattan Bank, USA, N.A., the predecessor entity of Chase USA. On January 3, 2006, plaintiff McCoy filed a Second Amended Complaint, alleging that Chase USA violated the Truth-in-Lending Act and bringing state law claims for unconscionability, declaratory relief, illegal penalty, consumer fraud, breach of contract and breach of the implied covenant of good faith and fair dealing. Plaintiff brought suit on behalf of a putative class of Chase USA credit card customers who claim that their interest rates were increased without notice after they made a late payment to either Chase USA or another creditor. Chase USA removed the case to federal court and then moved to dismiss the complaint. On August 21, 2006, the court granted Chase USA’s motion and dismissed the case. Plaintiff McCoy appealed the dismissal to the Ninth Circuit Court of Appeals.
On March 16, 2009, the Ninth Circuit issued an opinion in which it found that Chase USA violated the Truth-in-Lending Act for failing to provide contemporaneous notice of the interest rate increases. The court reversed the dismissal of several of the state law claims (unconscionability, declaratory relief, illegal penalty and breach of contract) and remanded the case to the lower court. The Ninth Circuit affirmed the dismissal of the consumer fraud and implied covenant claims. On April 27, 2009, Chase USA filed a motion with the Ninth Circuit for rehearing en banc. On June 15, 2009, the Ninth Circuit denied Chase USA’s motion for rehearing en banc. On September 14, 2009, Chase USA filed a certiorari petition with the United States Supreme Court seeking review of the decision. Chase USA cannot predict with any degree of certainty the final outcome of the litigation described above, its effect on the credit card industry or its effect on Chase USA’s credit card business.
A number of lawsuits seeking class action certification have been filed in both state and federal courts against Chase USA. These lawsuits challenge certain policies and practices of Chase USA’s credit card business. A few of these lawsuits have been conditionally certified as class actions. Chase USA has defended itself against claims in the past and intends to continue to do so in the future. While it is impossible to predict the outcome of any of these lawsuits, Chase USA believes that any liability that might result from any of these lawsuits will not have a material adverse effect on the credit card receivables.
PART II
The following Items have been omitted in accordance with General Instruction J to Form 10-K:
Item 5.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Item 6.
Item 6. Selected Financial Data.
Item 7.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Item 7A.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
Item 8.
Item 8. Financial Statements and Supplementary Data.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
Item 9A.
Item 9A. Controls and Procedures.
Item 9B.
Item 9B. Other Information
None
PART III
The following Items have been omitted in accordance with General Instruction J to Form 10-K:
Item 10.
Item 10. Directors, Executive Officers and Corporate Governance.
Item 11.
Item 11. Executive Compensation.
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Item 13.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Item 14.
Item 14. Principal Accounting Fees and Services.
Substitute information provided in accordance with General Instruction J to Form 10-K:
Item 1119 of Regulation AB: Affiliations and Certain Relationships and Related Transactions.
Information required by Item 1119 of Regulation AB has been omitted from this report on Form 10-K in reliance on the Instruction to Item 1119.
Item 1122 of Regulation AB: Compliance with Applicable Servicing Criteria.
Each of Chase USA, as the servicer for each of the Chase Issuance Trust, the First USA Master Trust and the Chase Master Trust, and BNY Mellon Trust of Delaware, as the First USA Master Trust trustee, The Bank of New York Mellon, as the Chase Master Trust trustee and Wells Fargo Bank, National Association (“Wells Fargo”), as the indenture trustee for the Chase Issuance Trust (each, a “Servicing Participant”) was a party participating in the servicing function during the reporting period with respect to the pool assets held by the respective trust. Each of the Servicing Participants has completed a report on an assessment of compliance with the servicing criteria applicable to such Servicing Participant (each, a “Report on Assessment”) during the respective trust’s fiscal year ending December 31, 2009, which Reports on
Assessment are attached as exhibits to this Form 10-K. In addition, each of the Servicing Participants has provided an attestation report (each, an “Attestation Report”) by a registered independent public accounting firm regarding its related Report on Assessment. Each Attestation Report is attached as an exhibit to this Form 10-K.
Item 1123 of Regulation AB: Servicer Compliance Statement.
Chase USA is the servicer and has provided a statement of compliance (a “Compliance Statement”) for the period from and including January 1, 2009 through and including December 31, 2009 for each of the Chase Issuance Trust, the First USA Master Trust and the Chase Master Trust. Each such Compliance Statement has been signed by an authorized officer of the servicer for the respective issuing entity and is attached as an exhibit to this Form 10-K.
None of the Reports on Assessment or the related Attestation Reports has identified any material instances of noncompliance with the servicing criteria described in the related Report on Assessment as being applicable to such Servicing Participant except that the Report on Assessment provided by The Bank of New York Mellon, BNY Mellon Trust of Delaware and The Bank of New York Mellon Trust Company, N.A. (collectively “BNY”) describes a material instance of noncompliance with respect Item 1122(d)(2)(i) of Regulation AB that is not applicable to any of the Chase Issuance Trust, the First USA Credit Card Master Trust or the Chase Credit Card Master Trust.
The Report on Assessment provided by BNY was prepared on a platform basis. BNY defines such platform as publicly-issued (i.e., transaction-level reporting initially required under the Securities Exchange Act of 1934, as amended) asset-backed securities, issued on or after January 1, 2006 and like-kind transactions issued prior to January 1, 2006 that are subject to Regulation AB for which BNY provides trustee, securities administration or paying agent services, as defined and to the extent applicable in the transaction agreements, other than residential mortgage-backed securities and other mortgage-related asset backed securities. During the reporting period, certain payments on pool assets were not deposited into the appropriate segregated custodial bank account within the time frame required by the related transaction documents. The segregated account for each specified series of securities was in existence prior to the time the deposits were to be made into such account but such account was not utilized in all instances by BNY as stated above. However, payments related to each specified series of securities were timely remitted to the investors in such series. Existing procedures have been reviewed with staff to enable future payments to be deposited into the segregated account for each specified series within the applicable time frames.
PART IV
Item 15.
Item 15. Exhibits, Financial Statement Schedules.
(a)(1) Not Applicable.
(a)(2) Not Applicable.
(a)(3) See Item 15(b) below.
(b) Exhibits Required by Item 601 of Regulation S-K
34.1
Independent Accountants’ Attestation Report concerning servicing activities of Chase USA.
34.2
Independent Accountants’ Attestation Report concerning servicing activities of Wells Fargo Bank, National Association.
34.3
Independent Accountants’ Attestation Report concerning servicing activities of The Bank of New York Mellon and BNY Mellon Trust of Delaware.
35.1
Servicer Compliance Statement of Chase USA as servicer for the Chase Issuance Trust.
35.2
Servicer Compliance Statement of Chase USA as servicer for the First USA Master Trust.
35.3
Servicer Compliance Statement of Chase USA as servicer for the Chase Master Trust.
(c)
Not applicable
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT.
No annual report to security holders or proxy statement, form of proxy or other proxy soliciting material has been sent to security holders or is anticipated to be furnished to security holders subsequent to the filing of this annual report on Form 10-K.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
CHASE ISSUANCE TRUST/
FIRST USA CREDIT CARD MASTER TRUST/
CHASE CREDIT CARD MASTER TRUST
(Issuing entities)
Date: March 30, 2010
By:
CHASE BANK USA, NATIONAL ASSOCIATION,
as Depositor
/s/ Keith W. Schuck
Name:
Keith W. Schuck
Title:
President
(senior officer of Chase Bank USA, National Association in charge of securitization)