The Retail Industry Leaders Association and the National Retail Federation (NRF) have asked the United States Supreme Court to uphold an appeals court ruling that struck down a controversial 2012 class action lawsuit settlement.
The class action lawsuit had initially been filed in 2005 and had been brought by a group of retailers and trade associations. The suit alleged Visa and Mastercard’s swipe fees violated antitrust rules. Plaintiffs and Defendants reached an agreement, and U.S. District Court Judge John Gleeson approved a $7.25 billion settlement, which the 2nd U.S. Circuit Court of Appeals later struck down.
“This alleged ‘settlement’ was a backroom deal that would have done nothing to end price fixing or keep swipe fees from soaring in the future,” NRF Senior Vice President and General Counsel Mallory Duncan said. “Even worse, it includes a provision that would keep merchants from ever suing over this issue again. The Circuit Court did the right thing in tossing this case out and it should not be revived. There are ways to bring swipe fees under control but this settlement is not one of them.”
Judge Gleeson had approved the settlement, even though the NRF and others had argued it would not reform the current card fee system. Plaintiffs had alleged that Visa and MasterCard use a price-fixing system to set fees for credit cards. Instead of lowering these fees, card companies had proposed passing along the cost of the fees to consumers in the form of surcharges. Major retailers rejected this proposal, saying this is not what they were seeking.
Of further concern to the NRF, retailers who rejected this settlement would have been bound by the restrictions in the settlement document. Namely, they could not file future lawsuits over card processing fees.
NRF urged the 2nd Circuit to overturn the settlement in 2014, as a number of retailers opposed the settlement. The court ruled in the NRF’s favor in 2016 and said merchants “were inadequately represented.” The original plaintiffs have appealed this decision to the Supreme Court.
“The settlement itself achieved nothing important for merchants that accept credit cards, which is why every prominent group that represents merchants has opposed it,” NRF and RILA said in a joint brief filed with the Supreme Court. “This deal is a bad one, unworthy of resuscitation.”