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Judge Preliminarily OKs Swipe Fee Settlement

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A federal judge has given preliminary approval to a controversial class-action settlement of an antitrust lawsuit over credit card swipe fees charged by Visa and MasterCard, but NRF is still exploring legal options to block the proposal.

“We respectfully disagree with the court’s assessment,” NRF senior vice president and general counsel Mallory Duncan says. “We do not believe the proposal meets the legal tests required to meet even preliminary approval. Retailers, their customers and competition would suffer irreparable harm if this one-sided deal is allowed to move forward. We will consult with our attorneys and act as soon as possible to correct this injustice.”

Despite hearing arguments from NRF attorneys who said the settlement would do nothing to keep skyrocketing fees from continuing to rise, U.S. District Court judge John Gleeson granted preliminary approval on November 9. Gleeson acknowledged the concerns, but said standards for preliminary approval are low and that the real decision will come when the settlement is up for final approval sometime in 2013.

Preliminary approval sets in motion a months-long process in which retailers will theoretically be able to opt out. But NRF argued in court that the settlement is legally flawed because it only allows retailers to reject payments offered as compensation for past price fixing while giving no mechanism to opt out of flawed injunctive relief that would allow card companies to continue price fixing and fee increases in the future.

The hearing came after NRF filed a brief opposing the settlement on behalf of itself and close to 20 retailers and trade groups. Included were Target, Macy’s, J.C. Penney, Gap, Limited Brands, Dillard’s, Big Lots Stores, Ascena Retail Group, Neiman Marcus Group, Abercrombie & Fitch Co., Saks, Chico’s FAS, Bob Evans Farms, Papa John’s International, CKE Restaurants, American Signature, Boscov’s, the American Booksellers Association and the National Association of College Stores.