Swipe-Fee Settlement Plot Thickens
NACS due to respond to lawyers' motion to withdraw as counsel; SIGMA opposes settlement
ALEXANDRIA, Va. -- The lead lawyers who negotiated a $7.25 billion settlement with Visa Inc. and MasterCard Inc. want to drop NACS as a client because opposes the pending deal, according to a Dow Jones report.
The National Association of Convenience Stores says it doesn't like the settlement, which would end more than 50 lawsuits filed since 2005 against the payment networks and numerous large banks over the interchange fees merchants pay to accept credit cards.
NACS has until today, July 24, to respond to the lawyers' motion seeking to withdraw as counsel for the trade group.
NACS, which represents more than 3,700 convenience stores and other companies, has said the pending deal doesn't adequately address problems it sees in how Visa, MasterCard and those banks set the swipe fees. The trade group is one of 19 plaintiffs that brought class-action lawsuits against the companies.
The attorneys representing those plaintiffs say they can't protect the interests of the other clients, which include the National Community Pharmacists Association and National Grocers Association, while also representing the "divergent objectives" of NACS, according to a motion filed Thursday in U.S. District Court in Brooklyn by the attorneys.
The law firms serving as co-lead counsel for the proposed class are Robins, Kaplan, Miller & Ciresi LLP; Berger & Montague PC; and Robbins Geller Rudman & Dowd LLP.
Craig Wildfang of Robins Kaplan and Merrill Davidoff of Berger & Montague declined to comment to Dow Jones.
Shortly before the settlement was announced July 13, NACS hired a separate law firm, Constantine Cannon LLP, to also represent it in the case. Constantine Cannon has a history pursuing cases against Visa and MasterCard, and in 2003 helped win a $3 billion settlement from the payment networks over separate issues merchants had complained about, said the news agency.
Jeffrey Shinder, a managing partner with Constantine Cannon who is representing the trade group, declined to comment to Dow Jones, as did Doug Kantor, a partner with Steptoe & Johnson LLP, which serves as general counsel to NACS.
Under the settlement, Visa, MasterCard and their client banks agreed to pay $6.05 billion to a proposed class of merchants that could encompass millions of retailers.
The deal, which requires court approval, would also result in Visa and MasterCard refunding about $1.2 billion in interchange fees and changing their rules to allow merchants to surcharge customers who pay with credit cards.
Merchants who accept Visa and MasterCard cards between January 2004 and the date it receives preliminary approval would have the ability to opt in or out of the settlement. The settlement includes a provision that could cancel the deal if too many retailers opt out.
Meanwhile, the Society of Independent Gasoline Marketers of America (SIGMA) said that it also does not support the proposed settlement.
"Although not a member of the class that filed the suit, SIGMA does not support the proposed settlement because it would do nothing to address the fundamental problems with the swipe-fee market--lack of competition and transparency and the inability of merchants to negotiate and determine their own payment card practices," the group said in its most recent SIGMA Weekly Report.
"SIGMA does not support any settlement that fails to make meaningful, fundamental changes to the swipe fee market and will continue to fight for real competition and transparency for both merchants and consumers." it said.
Click here to read SIGMA's full statement.