Home Depot (NYSE:HD)
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5 Years : From Jul 2011 to Jul 2016
By Andrew R. Johnson
A U.S. appeals court on Monday denied a request by Home Depot Inc. (HD) and other merchants to expedite the appeals process in an ongoing battle over a class-action settlement potentially worth $7.25 billion with Visa Inc. (V), MasterCard Inc. (MA) and several large banks.
The Second Circuit Court of Appeals said it was deferring briefing for an appeal of the settlement until the deal receives final approval from the U.S. District Court in Brooklyn, where the litigation is currently pending. A ruling on final approval is expected next year.
A spokesman for Home Depot said in a statement Monday that the settlement is a bad deal for consumers and merchants.
"It offers little change to the anticompetitive practices of Visa and MasterCard, while it grants virtual immunity from future antitrust challenges for these financial-services companies and their banking partners," the spokesman said. "With that in mind, we have filed our objections with the court and continue to weigh our options with regard to the settlement."
Monday's decision is the latest development in a legal battle between some of the country's largest merchants and credit-card companies over fees retailers pay each time a customer pays with a card, known as interchange or swipe fees.
The litigation, filed in 2005, alleged Visa and MasterCard conspired with large banks that issue credit cards, including Bank of America Corp. (BAC) and J.P. Morgan Chase & Co. (JPM), to set the fees at arbitrarily high levels. Visa and MasterCard set the fees, which are collected by the banks as revenue.
The companies reached a settlement in July that would result in payments totaling $6.05 billion going to a class that could include up to eight million merchants as well as a temporary reduction in the fees worth $1.2 billion. Visa and MasterCard have also agreed to change rules that merchants have long argued are unfair, including a ban against surcharging customers who pay with credit cards.
The rule changes are set to take effect in January as a result of receiving preliminary approval in November by U.S. District Court Judge John Gleeson. Large retailers, including Home Depot, Wal-Mart Stores Inc. (WMT), Target Corp. (TGT) and several trade groups, including the National Retail Federation, have lobbied against the settlement, though, arguing it grants overly broad releases from future litigation to Visa and MasterCard and will do little to stop swipe fees from increasing in the future.
Last month, some plaintiffs who have since objected to the deal, including the National Association of Convenience Stores and National Grocers Association, and retailers like Home Depot, which is not a named plaintiff in the case, filed notices of appeal of preliminary approval.
"While we are disappointed with the ruling, we are very confident in our position and will be prepared to show at the final approval hearing that the settlement both violates due process and is plainly inadequate as a solution to the market failures that plague this industry," said Jeff Shinder, a managing partner with Constantine Cannon LLP, which is representing several of the named plaintiffs who object to the deal and joined in Home Depot's request for an expedited appeals process.
The decision to deny the request was included in a letter filed in district court Monday by attorneys representing the class of merchants.
Proponents of the deal say the settlement will help merchants better control their costs of accepting credit cards and have argued that critics are trying to mount a smear campaign to drum up support for legislation that would permanently lower credit-card swipe fees.
Rules that cut in half debit-card swipe fees took effect in October 2011 per a provision of 2010's Dodd-Frank Act, though they did not affect credit-card fees.
Write to Andrew R. Johnson at email@example.com
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