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MarketScreener Homepage  >  Equities  >  Nyse  >  Visa    V

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Attorneys Tussle Over Merchant Swipe-Fee Settlement

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08/22/2012 | 05:36pm EST
   By Andrew R. Johnson 
 

Attorneys involved in a class-action settlement over Visa Inc. (V) and MasterCard Inc. (>> Mastercard Inc) transaction-processing fees are tussling over whether merchants who oppose the deal should have access to certain court documents.

Jeff Shinder, a managing partner with law firm Constantine Cannon LLP, said during a status conference in U.S. District Court in Brooklyn on Wednesday that merchant trade groups, whom he represents and who oppose the settlement, have been shut out of discussions with other attorneys involved in structuring the deal.

"We have not had any access to the record," Mr. Shinder told Magistrate Judge James Orenstein, adding that he does not have access to expert reports and other documents that could help support his clients' arguments.

Attorneys for some parties, including Visa, have raised concerns about allowing access to certain documents given Shinder's clients oppose the deal, according to a court filing.

Mr. Orenstein said Mr. Shinder should make a formal filing with the court outlining his arguments in order to determine whether his access has been blocked.

The spat stems from a $7.25 billion settlement Visa, MasterCard and numerous banks announced in July that would put to bed litigation filed in 2005 in which retailers accused the card networks and banks of conspiring to set the fees charged on each credit-card transaction at unfairly high levels.

As part of the deal, the defendants agreed to pay more than $6 billion and temporarily reduce the fees, called interchange fees, by an amount equal to $1.2 billion. Visa and MasterCard also agreed to drop rules prohibiting merchants from surcharging customers who pay with credit cards.

Critics of the deal include some large merchants, including Wal-Mart Stores Inc. (>> Wal-Mart Stores, Inc.) and Target Corp. (>> Target Corporation), and several trade groups, including four that were among 19 proposed class plaintiffs. They argue it doesn't address problems they see in how interchange fees are set. They also call too broad the releases that the deal would grant defendants from future litigation.

The settlement includes a provision allowing Visa and MasterCard to cancel the deal if a certain number of merchants formally opt out, though analysts have said they don't expect that to happen.

Attorneys for the proposed class of merchants and those representing the payments networks and banks have said the settlement represents a good deal for all parties involved.

"We continue to believe that this is an outstanding settlement to a big and difficult case," Craig Wildfang, a partner with law firm Robins, Kaplan, Miller & Ciresi LLP who is co-lead counsel for the plaintiffs, said in an interview after the status conference Wednesday. "The opposition that we've heard" to the settlement has been driven by a "serious misunderstanding of some of the aspects of the settlement."

Mr. Shinder represents the National Association of Convenience Stores, National Grocers Association, National Community Pharmacists Association and National Cooperative Grocers Association, which previously were represented by Mr. Wildfang and other co-lead counsel. Mr. Shinder said he plans to raise issues regarding the "fundamental unfairness about the way" the settlement "is structured" in a formal objection to the deal.

The timing for potential objections has also been a sticking point for attorneys. Mr. Orenstein has set an Oct. 12 deadline for attorneys to file a motion seeking preliminary approval of the settlement.

Mr. Shinder had wanted 90 days following the filing of that motion to file an objection, though Mr. Orenstein said he would give him 30 days to do so.

-Write to Andrew R. Johnson at andrew.r.johnson@dowjones.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

Stocks mentioned in the article : Mastercard Inc, Target Corporation, Wal-Mart Stores, Inc.
Stocks mentioned in the article
ChangeLast1st jan.
MASTERCARD 1.05% 289.85 Delayed Quote.53.64%
TARGET CORPORATION 0.13% 124.68 Delayed Quote.88.65%
VISA 0.71% 181.89 Delayed Quote.37.86%
WALMART INC. 0.42% 118.66 Delayed Quote.27.39%
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EBIT 2020 17 224 M
Net income 2020 13 775 M
Debt 2020 3 803 M
Yield 2020 0,62%
P/E ratio 2020 29,3x
P/E ratio 2021 25,1x
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