ALEXANDRIA, Va. -- The U.S. Court of Appeals for the Second Court has ruled that an appeal of the proposed swipe fee settlement that was announced July 13, 2012, should wait until after objections to the settlement are filed and heard in Sept. 2013, NACS said.
The majority of named plaintiffs--including NACS--and approximately 1,200 additional merchants, oppose the proposed settlement, said the association, and retailer groups have filed papers objecting to preliminary approval of the proposed settlement.
"The court's decision to delay an appeal will motivate more retailers to oppose this proposed settlement," said NACS chairman Dave Carpenter, president and CEO of J.D. Carpenter Cos. Inc. "The proposed settlement does little to address the broken system and could, in fact, make it worse. The courts ultimately cannot let that stand against the will of retailers."
The court's decision means that settlement notices to retailers across the country can continue to be distributed, and that retailers will have the opportunity to opt out of the monetary portion of the case or object to the proposed settlement before it goes to a fairness hearing this fall. Unless the proposed settlement is rejected, retailers will be forced to accept the inadequate rules changes and give the credit-card industry the unbounded ability to abuse retailers in the future, said NACS.
As reported in a Raymond James/CSP Daily News Flash, NACS--with its board's approval--is both opting out and objecting to the proposed settlement because it offers class members money damages of only about two months' worth of interchange and, among other things, limited modifications to Visa's and MasterCard's surcharging rules. The proposed settlement also requires class members to release Visa and MasterCard from liability, forever, for any anticompetitive rules currently in place (including the interchange or swipe fee rules) and/or any "substantially similar rules" instituted at any time in the future.
Convenience retailers, including NACS member companies, are not covered by NACS' objection. Retailers must decide how to respond to the proposed settlement.
(NACS has posted "Your Options Regarding the Proposed Settlement" to help retailers understand their options.)
"It is important to note that if you do nothing, it will be presumed by the court that you accept the terms of the proposed settlement," said NACS president and CEO Hank Armour "Even if you submitted a declaration objecting to the proposed settlement last fall, you must respond to the notice and submit something in writing again if you want to opt-out of or object to the proposed settlement."
Notices will be sent to retailers who accepted Visa and/or MasterCard at any time between Jan. 1, 2004, and Nov. 27, 2012.
Part of the proposed settlement already has taken effect. Beginning, January 27, 2013, retailers are allowed to add fees to try to recover the swipe fees they pay for credit-card transactions; however, surcharges do not affect how swipe fees, the second-largest expense for most retailers, are set and "merely make retailers the collection agents for the banks," said NACS.
Objections to the proposed deal from more than 1,200 retailers demonstrate that this is not what retailers want, it added.
The named class plaintiffs opposing the proposed settlement of the case, which is known as In Re Payment Card Interchange Fee & Merchant Discount Antitrust Litigation are NACS, Affiliated Foods Midwest, Coborn's Inc., D'Agostino Supermarkets, Jetro Holdings LLC, NATSO (formerly the National Association of Truck Stop Operators), National Community Pharmacists Association (NCPA), National Cooperative Grocers Association (NCGA), National Grocers Association (NGA) and National Restaurant Association (NRA).
"It is clear that this battle is far from over, and we need retailers to once again make their voices heard," said Carpenter. "It is in our best interests to stop this flawed proposal from being finalized."
Founded in 1961 as the National Association of Convenience Stores, NACS is the international association for convenience and fuel retailing. The U.S. convenience store industry, with more than 149,000 stores across the country, posted $681 billion in total sales in 2011, of which $486 billion were motor fuels sales. NACS has 2,200 retail and 1,600 supplier member companies that do business in nearly 50 countries.
(Click here for previous CSP Daily News coverage of the swipe fee issue.)
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