Visa, MasterCard Sue to Block Interchange Lawsuits as Merchants Opt Out of $7.25 B Settlement (May 29, 2013)
Several hundred U.S retailers this week formally opted out of the proposed settlement of U.S. merchants’ long-running antitrust case against Visa and MasterCard, four days after the payment networks filed a new complaint in federal court to block further interchange-related lawsuits. The $7.25 billion settlement, announced in July 2012, received preliminary approval from U.S. District Judge John Gleeson in Brooklyn, N.Y., but in recent months merchants have joined forces to oppose it. Merchants including Wal-Mart Stores Inc., Starbucks Corp. and Target Corp. met the court’s May 28 deadline to formally opt out of receiving financial damages from the agreement. If the number of merchants that opt out comprises more than 25 percent of Visa and MasterCard total credit card volume, the card companies and major banks have the option to abandon the agreement.
Separately, this week 17 merchants, including Gap Inc., Domino’s Pizza LLC and Neiman Marcus Inc., objected to the settlement in statements included in a 188-page brief the National Retail Federation filed May 28 with the court on behalf of its hundreds of members, complaining that even if they opt out of the financial side of the settlement, the settlement’s terms restrain their future legal options. “Without the ability to fully opt out, retailers would lose the right to file lawsuits over the fees and other restrictive rules if the settlement wins final approval,” the retail organization said in its brief. Though the settlement gives merchants the green light to impose surcharges on consumers paying with credit and debit cards, merchants said that option is unrealistic and, in many cases, impossible to execute, due to various state laws prohibiting surcharging.
Visa and MasterCard on May 24 filed a complaint in federal court in Brooklyn seeking to bar various trade groups including the National Association of Convenience Stores, the National Grocers Association, National Restaurant Association and other retailers from seeking further damages for interchange fees, insisting that the latest lawsuit is “necessary to prevent the continuation of endless, wasteful litigation between defendants and plaintiffs.” Judge Gleeson has set Sept. 12, 2013, as the date for a hearing before considering final approval of the settlement. If granted final approval, it would be the largest private antitrust settlement in U.S. history.