Court Rejects Bid for Expedited Appeal of Interchange Settlement (Dec. 13, 2012)
Dec. 13, 2012
The latest blow in the continuing court battle over interchange fees charged to merchants for accepting Visa and MasterCard credit cards was struck this week, when an appeals court declined a request by Home Depot to expedite the retailer’s appeal of a $7.25 billion settlement proposed in July. The agreement—which received preliminary approval last month—would be among the largest federal antitrust settlements in U.S. history, requiring Visa and MasterCard and some large issuing banks to pay out billions to merchants and earning retailers the right to impose surcharges for credit card use. But many retailers and merchant associations objected to the proposed deal, claiming the settlement would too broadly release the networks from future legal challenges over interchange rates and that the proposed payout was insufficient to make up for the $30 billion merchants pay each year in “swipe fees.”
Late last month, 10 merchants and trade groups, including The Home Depot, the National Association of Convenience Stores, the National Restaurant Association and D’Agostino Supermarkets, filed an official challenge to the settlement with the Second U.S. Circuit Court of Appeals in New York City. On Monday, the Court denied Home Depot’s request to speed up the appeal, and told the other objecting parties to hold off on filing their appeals until after the settlement is granted final approval by the U.S. District Court in Brooklyn. A hearing on final approval of the settlement is scheduled for some time next year.
“This decision comes as no surprise to me,” Terry Maher, partner at Baird Holm LLP, tells Paybefore. “Appeals courts do not like to hear cases piecemeal, so they refused to take this case until the trial judge has entered final orders regarding the settlement,” he explains. “I am confident the trial court’s final approval of a settlement will be appealed once an order has been entered.”
Overall, some 1,200 merchants and trade organizations—ranging from retail titans Wal-Mart Stores Inc. and Target Corp. to mom-and-pop merchant—have lodged opposition to the settlement. And while the deal was granted preliminary approval by U.S. District Judge John Gleeson, several issues remain that will “require significant scrutiny,” before final approval is granted, Gleeson said.
