National law firm, Parker Waichman LLP, and co-counsel just filed an objection to the passage of a proposed $7.25 billion settlement of a price-fixing case brought against Visa Inc. and MasterCard Inc. over credit card transaction fees. Co-counsel—both based in Little Rock, Arkansas—are Duncan Firm P.A. and Thrash Law Firm P.A.
The settlement has drawn criticism from trade associations and retailers that argue that the settlement grants credit card companies too much leeway to raise future rates, according to Bloomberg News.
Wal-Mart Stores Inc. revealed its dissatisfaction with the settlement last July and pledged to prompt other merchants to reject the settlement, as well, according to Bloomberg News. The state capital of Little Rock, which is also the base of department-store chain Dillard’s Inc., and the city of Oakland, California, also oppose the settlement. In fact, according to Bloomberg News, hundreds of objections have been filed by a broad array of retailers and merchants since U.S. District Judge John Gleeson gave his preliminary sign-off on the settlement agreement in November 2012.
According to court papers filed with the objection, the retailers and merchants opposing passage of the settlement agreement are the same as those originally named in the Retailers & Merchants Objection to Proposed Class Settlement Agreement [Document 1653], filed October 18, 2012 (“R&M Objectors”), as well as additional retailers and merchants that oppose final approval after receiving notice of the settlement.
Represented businesses are a diverse group, the court papers revealed, that includes restaurants, clothing stores, oil and gas companies, and convenience stores, among others, and are located in many states, including New York, Vermont, Maryland, Arkansas, Tennessee, Mississippi, Alabama, Georgia, Kansas, Missouri, Oklahoma, Texas and Louisiana. All sell goods to consumers in exchange for credit card payments and pay interchange or so-called “swipe” fees.
Objections have been raised because the settlement proposes to bind absent class members; releases future claims related to swipe fees; provides immunity to Visa/MasterCard and member banks for future anti-competitive behavior; releases Visa/MasterCard from liability for conduct unrelated to matters litigated in this case; and provides illusory, non-uniform, and class-wide relief via a surcharge, which many absent class members will not impose on customers, according to court documents.
The court papers also state that the settlement violates class members’ due process rights by not providing them with a legitimate right to opt out. The papers also note that on the Senate floor, United States Senator Richard Durbin (Illinois) said, “This proposed settlement does not make our credit card system better. Instead, it gives Visa and MasterCard free reign to carry on their anti-competitive swipe-fee system with no real constraints and no legal accountability to the millions of American businesses that are forced to pay their fees. This is a stunning giveaway to Visa and MasterCard, all for a payout of a mere two months’ worth of swipe fees. This is a bad deal.”
Jerrold S. Parker, Founding Partner of Parker Waichman LLP explained that, “This lawsuit is comprised of the objection of the small retailers that make up the backbone of the American mercantile system. It’s the store on the corner, the local car dealer, and the place where you buy the everyday items that make charge card use so easy and valuable. Even farmers and factory workers carry charge cards, just like the big city company executives. The difference is that the farmer and the factory worker pay those balances themselves, so any extra charges imposed on them directly impacts their lives.”
The objection was filed May 15, 2013 in the U.S. District Court for the Eastern District of New York; the related lawsuit against Visa and MasterCard (Case No. 1:05-md-1720) is In Re: Payment Card Interchange Fee and Merchant Discount Antitrust Litigation.