Card-Suit Proposal Irks NGA

“We think it is a bad deal. It’s good for the lawyers, and bad for the plaintiffs.” Peter Larkin, president and CEO, NGA

ARLINGTON, Va. — In what they themselves described as a “highly unusual” situation, the National Grocers Association here and other plaintiffs in a lawsuit against Visa, MasterCard and their card-issuing banks said they are not happy with a settlement that that was negotiated on retailers’ behalf by the law firms that represented them in the case.

“This settlement was crafted by class counsel without our input,” said Peter Larkin, president and chief executive officer, NGA, in a conference call on last week. “We think it is a bad deal. It’s good for the lawyers, and bad for the plaintiffs.”

He said the settlement, through which the credit card companies would pay merchants $7.25 billion, does not introduce enough structural reforms into the interchange-fee landscape. It also bars the merchants from additional litigation related to the settlement.

Doug Kantor, counsel to the National Association of Convenience Stores, which was also a plaintiff in the suit, said the settlement is opposed by a majority of the named plaintiffs.

“It is very unusual to say the least for lawyers representing a class to try to cram a settlement down the throats of their own clients and former clients against the wishes of those clients and try to make an agreement that most of the class that they purport to represent does not agree with,” he said.

K. Craig Wildfang, co-lead counsel for the merchants and partner at Robins, Kaplan, Miller & Ciresi, told SN last week that he thinks merchants oppose a settlement because it could be held against them if they pursue regulatory reform of credit-card interchange fees through Congress.

“The lawsuit has gotten wrapped up in Washington politics, which typically is dysfunctional, and it is dysfunctional in this respect as well,” he said. “The dissenters appear to have concluded that any settlement of the lawsuit is going to harm their efforts to persuade Congress to regulate interchange fees.

“Although they complain about the terms of the settlement, any settlement of any kind that doesn’t result in immediately reduced interchange fees is something that they oppose.”

NGA: 'Settlement Deficient'

Tom Wenning, executive vice president and general counsel at NGA, said the association’s opposition to the settlement “is a matter of substance — we find that the proposed settlement agreement is deficient.”

“The litigation is separate and distinct” from any potential legislative efforts to reform interchange fees, he said.

“The whole point is that the settlement does not meet the standard for being approved,” he said.

Read more: Card Issuers Settle Interchange Suit for $7.25B [4]

Wildfang also said he believes the attorneys representing merchants in the case had “no opportunity for a better outcome” than the one that was attained.

“We have achieved in this settlement everything we could have achieved in a trial for injunctive relief,” he said. “When [the merchants] say they want structural reform, they mean some limitation on interchange fees, and that’s just not something a federal judge can give them.”

A few retailers — including Kroger Co., Cincinnati — have stated that they support the settlement.

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