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ALEXANDRIA, Va. -- NACS, the Association for Convenience & Fuel Retailing, and other plaintiffs in a 2005 swipe fee lawsuit are prepping a legal challenge of Friday's ruling granting preliminary approval of a $7.2-billion settlement.
The plaintiffs who oppose the deal are filing a notice of appeal to challenge U.S. District Court Judge John Gleeson's ruling handed down Nov. 9 in U.S. District Court for the Eastern District of New York in Brooklyn, N.Y. The proposed settlement -- which was reached in July -- would bring to a close an antitrust class action lawsuit filed by merchants against Visa Inc., MasterCard Inc., and several financial institutions, as CSNews Online previously reported.
A majority of the 19 named plaintiffs have indicated that they will ask the U.S. Court of Appeals for the Second Circuit to deny preliminary approval due to the legal defects in the proposed settlement, according to NACS.
"We will ask the U.S. Court of Appeals for the Second Circuit to deny preliminary approval due to the legal defects in the proposed settlement," said NACS President and CEO Hank Armour. "It is unclear whether a stay will be issued to prevent notices of the settlement going to the millions of merchants who accept credit cards."
The majority of named plaintiffs have rejected the proposed settlement, and approximately 1,200 additional merchants and retailer groups have filed papers objecting to preliminary approval of the proposed settlement. NACS was the first to raise objections to the deal when it was announced July 13.
In addition, the National Federation of Independent Businesses (NFIB) and the Public Interest Research Group (PIRG) each filed Amicus briefs in support of the opposition, NACS said.
"This settlement has fatal legal defects. We look forward to presenting the problems we see in this proposal to the Second Circuit Court of Appeals," said Jeffrey Shinder, managing partner, Constantine Cannon LLC, counsel to the merchants objecting to the proposed settlement.
The named class plaintiffs opposing the proposed settlement of the case, which is known as "In Re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation," are NACS, Affiliated Foods Midwest, Coborn's Inc., D'Agostino Supermarkets, Jetro Holdings LLC, NATSO, National Community Pharmacists Association (NCPA), National Cooperative Grocers Association (NCGA), National Grocers Association (NGA) and National Restaurant Association (NRA).
"The merchant community is deeply committed to reforms that bring transparency and competition to the broken electronic payments market. The volume and diversity of those objecting to this flawed proposal are remarkable and continues to grow," Shinder added.
According to NACS, the only issues considered at the preliminary approval hearing were whether there are legal defects in the proposal -- the overall fairness of the proposal will not be fully considered until later.
"This battle is not close to being over, and NACS and the other objectors will fight at every opportunity to either scuttle this flawed settlement and begin earnest negotiations, or take the case to court," Armour added.
If the proposed settlement gets final approval, it would be the largest federal antitrust settlement in U.S. history, offering nearly eight million merchants $7.2 billion in cash and temporary reductions in interchange, or swipe fees, which stores must pay to process credit and debit transactions.