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NRF asks judge to reject Swipe Fee Settlement
29
May '13
The National Retail Federation and a broad cross-section of retailers asked a federal judge to reject a proposed settlement of an antitrust lawsuit over credit card swipe fees that drive up prices for consumers by $30 billion a year, calling the proposal a “surrender” that does nothing to address the “evil” of price fixing by Visa, MasterCard and their banks.

“This is an empty settlement,” NRF Senior Vice President and General Counsel Mallory Duncan said. “It fails to address the price fixing that harms merchants and their customers, it takes away retailers’ legal rights to ever try again, and it offers virtually nothing in return. It should be tossed out of court as the failure that it is.”

“What the class plaintiffs have agreed to is not a settlement – it is surrender,” NRF said in a brief filed with U.S. District Judge John Gleeson in Brooklyn, N.Y. “The settlement fails to address the core evil that motivated this class action and that continues to plague the industry: the outsized economic power of and the manipulation of interchange rates by Visa, MasterCard and their constituent banks.”

NRF and retailers who supported the brief have opted out of money offered under the settlement because of accompanying restrictions on future legal action.

But the unusual structure of the settlement does not give retailers the opportunity to opt out of proposed injunctive relief that would come with additional onerous restrictions including restraints on legal action. Without the ability to fully opt out, retailers would lose the right to file lawsuits over the fees and other restrictive rules if the settlement wins final approval at a hearing set for September.

“Retailers simply cannot understand how the American system of justice can permit class action lawyers whom they have never met and who know nothing about their business to craft a ‘settlement’ that will preclude them forevermore from seeking redress on future losses without so much as offering them the opportunity to opt out,” NRF said.

“It gives the credit card networks carte blanche to set and manipulate interchange rates going forward without fear of future private suits. There is nothing that the credit card networks could give that is worth this unbridled loss of control.”

NRF members filing statements as part of the brief represent a small fraction of U.S. retailers opposed to the settlement. Included are luxury retailers such as Neiman Marcus and Tiffany, apparel stores J. Crew and The Gap, specialty retailers Crate & Barrel and Brookstone, restaurants Domino’s Pizza and Sonic Drive-In, and independent stores Dave’s Soda and Pet city in Agawam, Mass., and the Keith Lipert Gallery gift shop in Washington, D.C.

In addition, Saks Chairman and CEO Stephen I. Sadove filed a statement in his capacity as chairman of the NRF Board of Directors.

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