NEW YORK (11/29/12)--True to their word, some retailers and merchant trade associations filed a notice of appeal in federal court in New York Tuesday to request a stay of a proposed class action $7.5 billion settlement offer in the antitrust lawsuit against Visa and MasterCard over credit card interchange fees.
The National Association of Convenience Stores, National Cooperative Grocers Association, National Grocers Association, the National Restaurant Association, D'Agostino Supermarkets Inc. and six others filed a notice of appeal in the U.S. Court of Appeals for the Second Circuit.
Home Depot separately filed a similar appeal in the same court.
Also on Tuesday, U.S. District Judge John Gleeson gave preapproval to the settlement.
In a letter to the judge, the plaintiffs requesting the stay wrote: "The appeal addresses that portion of the order that 'enjoins the members of … the Rule 23(b)(2) Settlement Class … from challenging in any action or proceeding any matter covered by this Class Settlement Agreement or its release and covenant not to sue provisions'…"
The plaintiffs added that the court "committed reversible error by imposing an immediate and facially overbroad injunction on a provisional mandatory (b)(2) class without engaging in the required heightened scrutiny as to whether such a class can be certified without violating the due process rights of absent class members."
Credit unions are not involved in the lawsuit, but they and other financial institutions would be affected by the settlement's terms. The $7.5 billion settlement would require a reduced interchange rate fee (IRF) of 10 basis points for an eight-month period, likely beginning in mid-2013, and would apply to all card issuers, including credit unions (News Now Nov. 1).
If the total credit IRF reduction is $1.2 billion, credit unions with credit card programs would lose about $50 million in total revenues, or about 0.5 basis points on their total assets, Credit Union National Association (CUNA) said. The loss would be concentrated among a relatively small number of credit unions with very active credit card programs.
Interchange revenue enables credit unions to provide "essential and cost-effective credit card services" to members, CUNA President/CEO Bill Cheney has said. "We also know that the temporary reduction in interchange revenue that credit unions will experience will not likely find its way into the pockets of consumers, but will more likely into those of merchants," Cheney said.