Mpls. Law Firm Leads 7M Retailers to $7.25B Settlement
A Minneapolis-based law firm representing millions of people and businesses in a lawsuit against credit card companies and banks said Friday that it reached a historic $7.25 billion settlement in the seven-year case.
Robins, Kaplan, Miller & Ciresi L.L.P., was one of three law firms appointed by the U.S. District Court in New York to represent approximately 7 million individuals and businesses in the class-action lawsuit.
The plaintiffs include people and companies that accept Visa and MasterCard credit and debit cards as payment for goods or services. They accused the two credit card companies of engaging in anti-competitive practices and of fixing prices when setting interchange fees—the fees retailers pay to banks to process the credit card transactions made by their customers.
In addition to Visa and MasterCard, the lawsuit named among its defendants 14 card-issuing banks and bank-holding companies: Bank of America, Barclays Financial Corporation, Capital One Financial Corporation, JPMorgan Chase & Company, Citigroup, Inc., Fifth Third Bancorp, First National Bank of Omaha, HSBC Finance Corporation, National City Corporation, SunTrust Banks, Inc., Texas Independent Bancshares, Inc., Wachovia Corporation, Washington Mutual, Inc., and Wells Fargo & Company.
St. Louis Park-based Traditions Classic Home Furnishings was among the original plaintiffs in the lawsuit, which grew to encompass millions of retailers. Other Minnesota companies named as plaintiffs in the suit include Coborn’s, Inc., and CHS, Inc.
According to Robins, Kaplan, Miller & Ciresi, the $7.25 billion settlement is believed to be the largest-ever settlement in a private, class-action antitrust case. It comprises $6.05 billion in damages, as well as about $1.2 billion in relief that retailers will experience as the credit card companies are required to temporarily reduce their interchange fees.
The settlement also requires the defendants to modify their practices. For example, Visa and MasterCard must negotiate with groups of retailers to establish interchange fees—a move that enables businesses to pressure them to reduce fees.
The changes will “provide additional value to merchants of many billions of dollars” and will allow retailers to make more transparent to consumers the cost of accepting various payment methods, according to Robins, Kaplan, Miller & Ciresi.
“The reforms achieved by this case and in this settlement will help shift the competitive balance from one formerly dominated by the banks, which controlled the card networks, to the side of merchants and consumers,” K. Craig Wildfang, co-lead counsel in the case and a Robins, Kaplan, Miller & Ciresi partner, said in a statement. “Over time, the reforms induced by this case and in this settlement should help reduce card-acceptance costs to merchants, which in turn, will result in lower prices for all consumers.”
The 113-page settlement agreement can be downloaded here.
While the settlement represents a victory for retailers, the controversy surrounding interchange fees appears far from over, according to a report by the Star Tribune. The defendants are expected to appeal the case, and the National Association of Convenience Stores, one of the plaintiffs, is rejecting the settlement as one that doesn’t go far enough, the Minneapolis newspaper reported.
In addition to Robins, Kaplan, Miller & Ciresi, law firms Berger & Montague, P.C., of Philadelphia, and Robbins Geller Rudman & Dowd LLP, which is based in San Diego, represented the plaintiffs in the case.
Robins, Kaplan, Miller & Ciresi is among Minnesota’s 10 largest law firms based on licensed Minnesota attorneys, of which there were 167 as of mid 2011.