Trade Groups Avoid Contempt Charges Over Swipe Fee Sites

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Trade Groups Avoid Contempt Charges Over Swipe Fee Sites


NEW YORK -- U.S. District Court Judge John Gleeson decided not to hold trade groups in contempt over websites they launched voicing opposition to a proposed $7.25-billion credit card swipe fee settlement.

During today’s hearing in District Court, Eastern District of New York in Brooklyn, N.Y., Gleeson said that while he felt information presented on the opposition websites was misleading, he would not sanction them because previous directions he gave the parties to confer with class counsel "arguably blurred" his instructions for how they should amend the sites, according to Dow Jones Newswires.

He also noted that class counsel, which supports the settlement, were not advocating to have the trade groups held in contempt.

As CSNews Online previously reported, Gleeson said on April 11 that the wording of the websites could prompt merchants to think that accepting the settlement is not an option. He specifically singled out the website launched by NACS, the Association for Convenience & Fuel Retailing, which tells merchants to "take action" and says their options are to "opt out" or "object."

At the time, Gleeson gave the lawyers -- for both pro- and anti-settlement retailers -- one week to submit proposals on appropriate relief. He said he would not order the sites be taken down, but would be willing to consider such relief as a website banner telling visitors that information previously posted could be misleading.

That deadline passed and Gleeson threatened to hold the trade groups in contempt of court -- slating a meeting for May 3 to hear arguments on the issue.

On Thursday, the swipe fee settlement sites featured messages on their banners in line with Gleeson's ruling.

In today's hearing, Gleeson said it appeared the trade groups used the time following the April 11 hearing to do as he ordered, which was to correct the sites to "continue to obfuscate the difference between opting out and objecting" to the settlement, according to Dow Jones.

He also stressed that the trade groups have a "powerful incentive" to ensure the information they present is accurate because merchants who have opted out of the deal based on incorrect information will have a "remedy" if the settlement receives final approval.

"There will be a remedy for that and that remedy will be here in this court," Gleeson said.

In November, Gleeson gave preliminary approval to the deal, which would bring an end to the 2005 legal action. Approximately 8 million merchants have until May 28 to opt out or object to the deal. A fairness hearing to determine whether the settlement should be granted final approval is scheduled for Sept. 12.