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NEW YORK -- NACS, the Association for Convenience & Fuel Retailing, seems to have found an ally in its opposition to the proposed $7.5-billion swipe fee settlement even as the lead lawyers in the case seek to drop the trade association as a client.
According to a report by TheStreet.com, Minneapolis-based big-box retailer Target has come out against the proposed settlement, which was reached in Brooklyn federal court on July 13.
"Target believes the proposed interchange fee settlement is bad for both retailers and consumers. The proposed settlement would perpetuate a broken system, restrict retailers from any future legal action and offer no long-term relief for retailers or consumers. In addition, Target has no interest in surcharging guests who use credit and debit cards in order to allow Visa and MasterCard to continue charging unfair fees,” the company said in a statement. “We will continue to explore our options while working toward a solution that represents true reform.” Target was not a named plaintiff in the lawsuit, but would be impacted by the settlement, the news outlet noted.
The class action suit dates back to 2005. The proposed settlement involves a payment to a class of stores of $6 billion from Visa Inc., MasterCard Inc. and more than a dozen of the country's largest banks that issue the companies' cards. The card companies have also agreed to reduce swipe fees by the equivalent of 10 basis points for eight months, for a total consideration to stores valued at about $1.2 billion, as CSNews Online previously reported.
The deal also calls for merchants to be allowed to negotiate collectively over the swipe fees. Additionally, merchants would be required to disclose information about card fees to customers, and credit card surcharges would be subject to a cap, according to the settlement papers. Surcharge rules would not affect the 10 states that currently prohibit that practice, which include California, New York and Texas.
An additional $525 million would be paid to stores suing individually, according to court documents.
Target's statement came one day after the lead lawyers who negotiated the settlement with Visa and MasterCard filed a motion in U.S. District Court in Brooklyn seeking to withdraw as counsel for NACS -- one of 19 plaintiffs in the legal action. According to the motion, the attorneys representing the plaintiffs say they can't protect the interests of the other clients, which include the National Community Pharmacists Association and National Grocers Association, while also representing the "divergent objectives" of NACS, Fox Business reported.
NACS has until tomorrow, July 24, to respond to the lawyers' motion seeking to withdraw as counsel for the trade group. The law firms serving as co-lead counsel for the proposed class are Robins, Kaplan, Miller & Ciresi LLP; Berger & Montague PC; and Robbins Geller Rudman & Dowd LLP. Craig Wildfang of Robins Kaplan and Merrill Davidoff of Berger & Montague declined to comment on the Fox Business report.
Jeffrey Shinder, a managing partner with Constantine Cannon who is representing NACS, also declined to comment for the report. In addition, Doug Kantor, a partner with Steptoe & Johnson LLP which serves as general counsel to NACS, also declined to comment, according to Fox Business.
Despite the motion, NACS reported on its website today that it continues to hear from retailers and associations that agree with the association's rejection of the deal. "It's a bad deal and the growing backlash against the terms of the proposed settlement that we are hearing from retailers confirms that this is far from a done deal," said Lyle Beckwith, NACS’ senior vice president of government relations.
Beckwith advised convenience store retailers to proceed with caution during the next few weeks, especially if they get unsolicited calls that offer a cut of the settlement funds.