Retailers unhappy about a proposed $7.5 billion swipe-fee settlement in a case against Visa Inc. and MasterCard Inc. received a momentum boost this week when the Retail Industry Leaders Association chose to opt out of the settlement.
The association filed its opt-out statement with the district court in New York, where Judge John Gleeson is expected to make a final ruling on the settlement in September.
Several major retailers made it clear last year that they were not happy with the deal, with several filing formal objections to the proposed settlement. The RILA represents major retailers such as Walmart, Target and Home Depot, but its decision to opt out does not apply to its members.
"The association cannot make that decision for any of its members," says Doug Kantor, a lawyer representing the National Association of Convenience Stores, which has also spoken out against the settlement and encourages its members to object to or opt-out of it. "They are influential with their members, but the association's decision does not impact the rights of any of its members in any way."
The association, as a card-accepting entity, is opting out of the settlement, Kantor says, and "the RILA's decision to oppose the settlement is welcome and will provide momentum to opposition efforts … it's significant that a group with the experience that RILA has with swipe fees has decided to oppose the settlement."
As such, all of the associations named as class plaintiffs in the case are likely to oppose the settlement, Kantor says.
"Opting out" of the settlement means the merchant excludes itself from the past damages settlement class, but preserves the right to sue Visa and MasterCard for past damages for conduct that occurred before Nov. 27, 2012. The interchange fee litigation began in 2005 when U.S. merchants accused the card brands of artificially raising the interchange fees merchants pay to accept credit-card transactions.
Deborah White, general counsel for the RILA, said the settlement "undermines merchants' legal rights forever and fails to restrain the continued growth of swipe fee increases," according to a statement provided to Bloomberg News.
Trish Wexler, a spokeswoman for the Electronic Payments Coalition, which represents the payment card industry, told Bloomberg she remains "highly confident that this (settlement) will be approved, and that the interchange fee battle will finally come to an end."
The coalition did not immediately respond to PaymentsSource inquiries. Legal representatives of Visa, MasterCard and the plaintiffs did not immediately respond to inquiries.
When Judge Gleeson gave preliminary approval to the proposed settlement in November, he set May 28, 2013 as a deadline for merchants to either opt-out or object to the deal.
Lawyers representing some merchant associations appeared before Gleeson in court Thursday to resolve a complaint from plaintiff lawyers who crafted the settlement with card brand lawyers. The lawyers representing the merchants claim that some associations were misleading their members with inaccurate information on websites when encouraging members to opt-out. The judge ordered corrections to be made to those websites within a week.