By Jessica Dye
NEW YORK, Nov 27 (Reuters) - A group of retailers on Tuesday
appealed a court order preliminarily approving a $7.2 billion
settlement between Visa Inc, Mastercard Inc and merchants over
credit card fees, saying it violated their rights by preventing
them from opting out of the pact.
U.S. District Judge John Gleeson in Brooklyn federal court
gave the settlement his initial stamp of approval earlier this
month. If the deal receives final approval, it would be the
largest federal antitrust settlement in U.S. history, offering
nearly 8 million merchants $7.2 billion in cash and temporary
reductions in the interchange, or swipe fees, they pay to
process credit and debit transactions.
Ten of the 19 stores and trade groups that brought the
proposed class action have come out in opposition to the pact.
Those 10 stores and trade groups - which include the National
Association of Convenience Stores, the National Restaurant
Association and D'Agostino Supermarkets Inc - filed notice
Tuesday that they would appeal Gleeson's order to the 2nd U.S.
Circuit Court of Appeals.
Hundreds of merchants, including the world's largest
retailer, Wal-Mart Stores Inc, also have objected to the
proposed settlement, claiming it offers meaningless relief for
merchants saddled with an estimated $30 billion in annual swipe
fees.
In their appeal, the 10 objecting merchant plaintiffs are
challenging a portion of the order that would release Visa and
Mastercard from new legal claims over related interchange
issues. The proposed settlement does not allow stores to opt out
of these litigation releases - even while final approval is
pending - and therefore it robs stores of their legal rights,
said Jeff Shinder, a lawyer who represents the objecting
plaintiffs.
"The proposed settlement violates the due process rights of
millions of merchants by denying them the ability to opt out of
the injunction, and this fundamental issue of law should be
addressed now before notice goes out to merchants," Shinder said
Tuesday.
Craig Wildfang, a lawyer for the merchants that support the
deal, said in an e-mail: "We are confident that the Court of
Appeals will sustain Judge Gleeson's decision to grant
preliminary approval."
Visa could not be immediately reached for comment. A
spokesman for Mastercard said the company remains confident that
the deal will receive final approval.
Trish Wexler, a spokeswoman for the Electronic Payments
Coalition, an industry group that represents Visa and
Mastercard, called the appeal "a badly under-thrown legal 'Hail
Mary' that shouldn't give anyone any concern."
A hearing on final approval is expected to be scheduled for
sometime next year.
The case is In re Payment Interchange Fee and
Merchant Discount Antitrust Litigation, in the U.S. District
Court for the Eastern District of New York, No. 05-1720.
For the plaintiffs (co-lead class counsel): Laddie Montague,
Merrill Davidoff, Bart Cohen and Michael Kane of Berger &
Montague; Craig Wildfang, Thomas Undlin and Ryan Marth of Robins
Kaplan Miller & Ciresi; Patrick Coughlin, Bonny Sweeney, David
Mitchell, Alexandra Bernay and Carmen Medici of Robbins Geller
Rudman & Dowd.
For objecting plaintiffs: Jeffrey Shinder and Kerin Coughlin
of Constantine Cannon.
For Visa: Robert Vizas, Robert Mason and Mark Merley of
Arnold & Porter.
For Mastercard: Keila Ravelo, Wesley Powell and Matthew
Freimuth of Willkie Farr & Gallagher; Kenneth Gallo, Joseph
Simons, Andrew Finch and Gary Carney of Paul Weiss Rifkind
Wharton & Garrison.
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