The sites contain “bad information” that may have caused some retailers to drop out of the settlement, U.S. District Judge John Gleeson said today in Brooklyn, New York. He gave the parties a week to decide on changes.
“I’m not going to belabor this with you,” Gleeson told Jeffrey Shinder, a lawyer representing retail trade associations that established the sites and have opposed the settlement. “I’m just talking about basic fairness.”
Sites at issue include Merchantsobject.com and home sites for the trade groups National Community Pharmacists Association, National Grocers Association and the National Association of Convenience Stores, among others, according to court filings submitted by the plaintiffs’ lawyers.
The sites provide one-sided information encouraging retailers to object and opt out and don’t fully explain consequences of those actions, the plaintiffs’ lawyers said. While opting out allows merchants to pursue their own lawsuits against the credit card firms, it deprives them of the ability to receive payments for damages under the settlement, the lawyers said.
The Merchantsobject site also fails to give prominent placement to a link to the official, court-approved source of information about the deal, paymentcardsettlement.com, the lawyers said.
“The non-court-approved websites appear to be causing actual confusion among class members,” said Bonny E. Sweeney, a lead lawyer for the plaintiffs, in a declaration filed with the court. Since the sites went live, dozens of form objections have been filed by merchants apparently using the sites, she said.
“It is currently difficult to know whether these class members intended to opt-out, but did not send the required letter or whether these class members only meant to object to the settlement, but picked the ’wrong’ sample document provided on the various websites,” she said.
Today’s hearing came after the Retail Industry Leaders Association announced it would opt out and object to the deal, which may be worth as much as $7.25 billion. The accord, estimated to be the largest-ever antitrust settlement, would end a case over claims that the card companies conspired with banks to fix the fees charged to merchants when customers pay with plastic.
Several retail groups have opposed the settlement since it was made public in July, alleging that it doesn’t provide enough benefit for merchants and gives card companies too much leeway to raise rates. Retailers including Target Corp. (TGT), Wal-Mart Stores Inc. (WMT), and Home Depot Inc. (HD) have spoken out against the accord.
“We do not think the sites were misleading or that they misled anyone to object or opt-out,” said Shinder, in an e- mailed statement following the hearing.
“We do care deeply about the integrity of this process, and per the court’s order, will endeavor to work with class counsel” to ensure it is “crystal clear that those who submitted objections from those sites did so because they believe the settlement is a bad deal,” he said.
Lyle Beckwith, a government relations representative for the National Association of Convenience Stores, one of the groups behind the Merchantsobject site, called the request for changes “not a big deal.”
“This is just unbelievable nit-picking,” he said. “We are standing between attorneys and their $700 million payday and they don’t like it.”
Courts have previously ruled that the First Amendment does not prevent judges from supervising communications with absent class members about proposed settlements, the plaintiffs said in court filings.
The settlement covers more than 7 million retailers. If a sizable percentage chooses to opt out, Visa and MasterCard could have an option to back out of the deal.
Gleeson granted preliminary approval to the deal in November. A hearing on final approval is scheduled for September.
The case is In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, 05-md-01720, U.S. District Court,
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