The lead lawyers who negotiated a $7.25 billion settlement with
Visa Inc. (V) and MasterCard Inc. (MA) want to drop as a client a
key trade group that opposes the pending deal.
The National Association of Convenience Stores says it doesn't
like the settlement, which would put to bed more than 50 lawsuits
filed since 2005 against the payment networks and numerous large
banks over the fees merchants pay to accept credit cards.
The trade group has until Tuesday to respond to the lawyers'
motion seeking to withdraw as counsel for the trade group.
Visa and MasterCard set the fees, known as interchange or
"swipe" fees, that merchants pay on each card transaction, but they
are collected by card-issuing banks as revenue.
NACS, which represents more than 3,700 convenience stores and
other companies, has said the pending deal doesn't adequately
address problems it sees in how Visa, MasterCard and those banks
set the fees. The trade group is one of 19 plaintiffs that brought
class-action lawsuits against the companies.
The attorneys representing those plaintiffs say they can't
protect the interests of the other clients, which include the
National Community Pharmacists Association and National Grocers
Association, while also representing the "divergent objectives" of
NACS, according to a motion filed Thursday in U.S. District Court
in Brooklyn by the attorneys.
The law firms serving as co-lead counsel for the proposed class
are Robins, Kaplan, Miller & Ciresi LLP; Berger & Montague
PC; and Robbins Geller Rudman & Dowd LLP.
Craig Wildfang of Robins Kaplan and Merrill Davidoff of Berger
& Montague declined to comment Friday.
Shortly before the settlement was announced July 13, NACS hired
a separate law firm, Constantine Cannon LLP, to also represent it
in the case. Constantine Cannon has a long history pursuing cases
against Visa and MasterCard, and in 2003 helped win a $3 billion
settlement from the payment networks over separate issues merchants
had complained about.
Jeffrey Shinder, a managing partner with Constantine Cannon who
is representing the trade group, declined to comment Friday.
Doug Kantor, a partner with Steptoe & Johnson LLP, which
serves as general counsel to NACS, also declined to comment.
Under the settlement, Visa, MasterCard and their client banks
agreed to pay $6.05 billion to a proposed class of merchants that
could encompass millions of retailers.
The deal, which requires court approval, would also result in
Visa and MasterCard refunding about $1.2 billion in interchange
fees and changing their rules to allow merchants to surcharge
customers who pay with credit cards.
At least two large merchants--Hyatt Hotels Corp. (H) and Target
Corp. (TGT)--have said they have no plans to surcharge their
customers.
Merchants who accept Visa and MasterCard cards between January
2004 and the date it receives preliminary approval would have the
ability to opt in or out of the settlement. The settlement includes
a provision that could cancel the deal if too many retailers opt
out.
Target on Friday criticized the settlement, calling it a bad
deal for retailers and consumers.
"The proposed settlement would perpetuate a broken system,
restrict retailers from any future legal action and offer no
long-term relief for retailers or consumers," the Minneapolis-based
retailer said in a statement.
Others have supported the deal, though.
Javier Palomarez, president and chief executive officer of the
U.S. Hispanic Chamber of Commerce, called the "end result
beneficial to businesses and consumers alike" in a letter to Sen.
Harry Reid (D-Nev.).
--Robin Sidel contributed to this story.
-Write to Andrew R. Johnson at andrew.r.johnson@dowjones.com
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