Long-Awaited Fairness Hearing Arrives for Swipe Fee Deal
BROOKLYN, N.Y. -- Representatives for all players in the eight-year swipe fee battle between retailers, Visa, Mastercard and some of the country's largest banks are headed to court tomorrow for the highly anticipated fairness hearing on the proposed settlement.
U.S. District Judge John Gleeson will preside over the hearing in the Eastern District of New York in Brooklyn. However, a final decision on the deal, which would bring to an end a class-action lawsuit, could still be weeks away. According to the Minneapolis StarTribune, Gleeson will probably make a decision in 30 to 120 days.
The legal battle dates back to 2005 when retailers alleged Visa, MasterCard and several other financial institutions violated antitrust law by fixing swipe fees, which averaged 2 percent of the purchase price. The proceeds went to card-issuing banks and generated more than $40 billion a year for U.S. lenders.
The fairness hearing comes as many retailers have opted out of the $7.25-billion settlement deal that has been on the table since July 2012. As CSNews Online reported last month, 25 percent of retailers opted out of the settlement. Visa and MasterCard had the ability to walk away from the deal once that opt-out threshold was hit, but the financial services companies decided to stick with it.
Despite objections raised to the deal, class co-counsel K. Craig Wildfang, as well as the defendants, remain confident Gleeson will ultimately approve the settlement, according to the StarTribune.
"I think we're likely to make some history," said Wildfang, a Minneapolis lawyer.
For the past eight years, Wildfang has been helping represent the class of more than 7 million U.S. businesses covered by the pact. It's estimated to be the largest private cash settlement in an antitrust class-action in U.S. history, although it has decreased since so many retailers walked away from it, the report said.
With retailers opting out of the deal, the total cash recovery has been reduced to approximately $5.74 billion, he told the newspaper. Even that figure, though, still qualifies as the largest private antitrust class-action settlement "by far."
Lawyers for Target Corp. and Home Depot Inc. are reportedly on the speaking list for tomorrow's hearing. Also addressing the court will be Jeffrey Shinder from Constantine Cannon in New York, which represents the 10 named plaintiffs in the class-action lawsuit and 53 absent class members who objected.
It remains to be seen whether the opt-outs and objections will affect Gleeson's ruling. Gil Luria, managing director of Wedbush Securities in Los Angeles, said he doesn't think it will have a big impact. The settlement was negotiated under Gleeson's supervision and guidance, he said.
"The judge and the settlement have been going in a certain direction for a long time," Luria told the newspaper.
As CSNews Online previously reported, several major retailers -- including 7-Eleven Inc., Alon Brands Inc., Wal-Mart Stores Inc. and Starbucks Corp. -- opted out. Multiple trade associations -- such as NACS, the Association for Convenience & Fuel Retailing, and the National Retail Federation -- also chose to opt out.