The Green Sheet Online Edition
April 22, 2013 • Issue 13:04:02
Websites under fire for urging settlement rejection
Plaintiff attorneys, who negotiated for approximately 8 million retailers in a proposed antitrust settlement of claims that major card companies unfairly set interchange rates, asked a federal judge March 29, 2013, to direct the website Merchants Object! (http://merchantsobject.com) and similar sites run by retail trade associations to modify their content to eliminate "unauthorized and misleading" communications about the proposed settlement.
The retail trade associations responsible for the websites in question are members of the plaintiff class but object to the terms of the proposed settlement. In an April 1 order, Federal Eastern District of New York Judge John Gleeson claimed the authority to require the websites to correct content if he finds it to be misleading or erroneous. He set oral arguments for April 11.
Negotiators cry foul
In their request for the order, the negotiating attorneys - led by K. Craig Wildfang of Robins, Kaplan, Miller & Ciresi; H. Laddie Montague, Jr. of Berger & Montague, P.C.; and Bonny Sweeney of Robbins Geller Rudman & Dowd LLP - told the court, "these sites omit a neutral discussion of the settlement's terms and benefits, in places misstate them, and fail to fully and fairly apprise class members of their alternatives and the consequences of those alternatives."
The attorneys claimed the websites' content is slanted to support the argument that merchants should opt out of the proposed settlement. They believe the sites offer merchants the opportunity to download "ambiguous boilerplate objections and opt-out requests" but fail to state that the information is not part of the court-approved notice program.
The plaintiff negotiators said their clients are encouraged by the websites to both object to the settlement and opt-out. They claimed their clients do not fully understand following those directions could lead to needlessly forfeiting the right of recovery if the settlement is approved.
"Class members have a right to receive accurate and impartial information about the case and proposed settlement, their options and the consequences of their options to inform their decisions," the negotiators stated. "These unauthorized and misleading communications from the trade association plaintiffs pose a real threat of confusing class members and undermining the court-approved notice processes."
The trade associations specifically attached to the Merchants Object! website and named by the plaintiff negotiators in the order request are the National Association of Convenience Stores, National Association of Truck Store Operators, National Cooperative Grocers Association, National Community Pharmacists Association, National Grocers Association and National Restaurant Association.
On trade association websites, plaintiff class members are directed to contact lawyers at Constantine Cannon LLP, the firm that negotiated a settlement in a previous antitrust complaint brought against the card companies alleging anti-competitive interchange rate setting practices. The current settlement attorneys object to this. They stated that Constantine Cannon "appears to be advising the content of the sites as well as the use of this program to solicit opt-outs as it represents each of the trade association plaintiffs."
Merchants Object! Undeterred
On April 2, Merchants Object! issued a press release urging nonprofit organizations to join the effort to stop the settlement. Merchants Object! urged nonprofits to notify the court of the "problems" with the proposed settlement by objecting and opting out of the settlement through a link on the website. The website states that the settlement is "one-sided" because it allows Visa Inc. and MasterCard Worldwide to "price-fix swipe fees" for their banks.
"Organizers also feel the settlement is minuscule considering the defendants are accused of price-fixing in order to secure fees that now are more than $50 billion a year," Merchants Object! stated, adding that published reports estimate banks and card networks make about $250 million a year from charitable donations placed on credit or debit cards.
In addition, Merchants Object! repudiated the proposed settlement's releasing card companies from future liability for anti-competitive rules currently in place.
Judge orders website modifications
After listening to arguments presented by plaintiffs and defendants in this matter on April 11, Judge Gleeson agreed the anti-settlement websites in question contain misleading content. He reportedly said at the hearing that the websites contain erroneous information that may cause retailers to drop out of the settlement. The objecting retailers, however, believe the settlement does not stop the card companies' alleged anti-competitive behavior.
The judge issued an order directing both sides of the dispute about the websites' content to confer and submit a joint agreement on or before April 19. His order also stated both sides will be allowed on April 19 to submit arguments identifying items on which they disagree and their proposals for settling those issues.
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