Lawyers representing retail trade organizations in the class action over card swipe fees are preparing "a strong response" to allegations that they are misleading in how they urge their members to oppose the proposed settlement in the eight-year-long case.
Attorneys representing merchants and pushing for them to accept the proposed $7.25 billion settlement are asking federal Judge John Gleeson to stop trade organizations from posting information that lays out the options of objecting to and opting out of the settlement.
"Unlike the court-approved website, these sites omit a neutral discussion of the settlement's terms and benefits, in places misstate them, and fail to fully and fairly apprise class members of their alternatives and the consequences of those alternatives," the attorneys state in a letter to the judge filed last week. The firms filing the complaint are Robbins Geller Rudman & Dowd LLP; Robins, Kaplan, Miller & Ciresi LLP; and Berger & Montague PC, which helped negotiate the settlement and serve as co-counsel for the proposed class.
The lawyers cited the creation of the merchantsobject.com website as an example of exhorting members to "both object and opt-out based on the highly dubious assertion that doing so will enhance the persuasiveness of these boilerplate objections with the court without prominently and proximately stating the adverse consequences of such actions."
Doug Kantor, a lawyer representing the National Association of Convenience Stores, which is one of the trade organizations under fire, says the attorneys representing other merchants "don't like the fact that we are giving advice to our members, as opposed to them doing it."
Kantor says he is working with Jeff Shinder, a managing partner with the law firm Constantine Cannon LLP, to meet Judge Gleeson's deadline of filing a response this week. "We intend to file a strong response to this complaint, and then let the judge decide," Kantor says.
Lawyers who filed the complaint would have a chance to respond to the trade organizations' response, prior to Gleeson conducting a hearing on April 11 in his New York district court, Kantor says.
Kantor says the merchant website provides answers to frequently asked questions and also a link to the court-approved website. "We provide the information, but the merchants have to make their own decisions," he says.
In addition to citing the National Association of Convenience Stores, the letter also names the National Cooperative Grocers Association, National Grocers Association, National Community Pharmacists Association, and the National Restaurant Association as the trade association plaintiffs in the litigation.
The merchantsobject.com website tells merchants "opting out and objecting is the most complete way to express your opposition to the proposed settlement."
Among other details, the website states that by "objecting," the merchant informs the court of opposition to the terms of the settlement. "Opting out" means the merchant excludes himself 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 letter asks that the court require the trade association plaintiffs to "immediately modify merchantsobject.com and their individual websites," state that they do not represent a court-approve site and also communicate with the class attorneys about any future planned communications.
The original settlement announced last summer triggered opposition from various large retail merchants late in 2012, but the U.S. Court of Appeals for the Second Circuit in Washington, D.C. ruled that an appeal to the settlement should wait until objections are filed and heard leading up to the Sept. 12 final ruling in the New York District Court.
Merchants objecting to the settlement say it does not stop the card brands from charging higher fees in the future and it also takes away any right to sue the brands in the future.
Neither attorneys who filed the complaint for the class of merchants last week nor legal representatives of Visa and MasterCard responded to inquiries by deadline.