Despite recent setbacks in the retailer settlement with Visa and MasterCard, the settlement is still seen as viable and likely to receive preliminary approval from a federal judge by some.
“The settlement is on track and proceeding precisely as predicted from the beginning,” Robert Stolebarger, a partner at Bryan Cave LLP and the antitrust counsel for the Electronic Payments Coalition, said.
A majority of plaintiffs, including the National Association of Convenience Stores, the National Community Pharmacists Association, the National Cooperative Grocer Association, the National Grocers Association and the National Restaurant Association, opposed the settlement.
“It was always predicted that there would be opposition, objections and opt-outs,” Stolebarger said. “Legally, there is no requirement of any kind in a class action that a majority of the original plaintiffs agree to the settlement—particularly given that the volume represented by these objectors is proportionately insignificant…[G]iven that these recent ‘objections’ are not new in any way, nothing that hasn’t already been considered—it is difficult to imagine that the Court would deny preliminary approval based on old, tired arguments that have already been given due weight or not based on merit or the lack thereof.”
U.S. District Judge John Gleeson, who presided over the 2003 Wal-Mart settlement, said on Wednesday that the settlement “appears to satisfy the requirements for preliminary approval,” adding that he will hear arguments against the motion on Nov. 9, according to BusinessWeek.
Stolebarger said that plaintiffs who oppose the settlement “are likely doing so because they fear that if they continued to support the settlement—a settlement they themselves helped to create—they would essentially be putting themselves out of a job in Washington.”
“Their primary role is to lobby Congress in an effort to gain even greater political windfalls than what they’ve achieved with the $8 billion Durbin Amendment windfall last year,” Stolebarger said. “When this settlement is final, they understand that they will no longer be able to lobby Congress for further handouts.”
Retailers party to the suit alleged that the settlement was crafted in favor of lawyers’ interests. Stolebarger said that the idea that retailers were forced into the settlement “is simply wrong.”
“This settlement was the result of a proposal from the two highly regarded mediators in this case,” Stolebarger said, pointing to the two-year time period necessary to arrange the settlement. “The Court made class counsels’ letter of August 7, 2012, public, which details that trade associations…’participated in all aspects of the extensive negotiations, mediation and settlement conferences…’ In any settlement, by design, no one is entirely happy.”
The settlement, valued at $7.25 billion, includes $6 billion in damages payments, and both Visa and MasterCard agreed to lower interchange, or swipe fees, for eight months. Additionally, the settlement would allow merchants to charge a “checkout fee” to consumers who pay with plastic, a practice banned by Visa and MasterCard.
The National Retail Federation said that the surcharge provision is evidence that the settlement was “written by lawyers clueless that retailers brought the suit to lower prices for consumers, not raise them.” Stolebarger said, however, that though the industry opposes surcharging, plaintiffs in the suit negotiated for the right to surcharge.
“The National Retail Federation’s supposed desire to lower prices for consumers is laughable,” Stolebarger said, pointing to the lack of evidence to support the claim that the Durbin Amendment passed savings to consumers. “What some retailers really want—via lawsuits, lobbying or any other means—is to pay zero to accept cards and to make their customers pay for this valuable service instead. These recent ‘objections,’ combined with further calls on Congress and a corresponding lawsuit against the Federal Reserve, prove that there is no settlement, no concession, that will make all of these retail trade associations happy.”