Merchants Want Card Networks’ Antitrust Settlements Tossed

Two separate antitrust cases made their way into the headlines yesterday (July 29), but they were both about the same subject: merchants protesting details of the cases.

The first case in question involves the the $6 billion card network antitrust settlement that involves Visa and MasterCard, which has found itself in the middle of a dispute that centers on a debate about email communication reportedly connected to the controversial case, The Wall Street Journal reported.

The lawyers who represent around 100 merchants informed MasterCard and Visa that the $6 billion class-action antitrust settlement case should be tossed out following the evidence that the opposing lawyers had allegedly exchanged information that was supposed to be confidential via email. If this dispute moves forward, those details could potentially unravel that case that has been moving forward after a federal judge approved it to in late 2013.

The lawyers representing the merchants are hoping that the lawyers reported conduct warrants the pact approved by that federal judge to be tossed out.

The communication that’s being disputed stems back to emails that were allegedly sent between Keila Ravelo, an attorney who had represented MasterCard while she was partner at Willkie Farr & Gallagher LLP. In November, she resigned and was later arrested in correlation with an unrelated federal credit card theft litigation case. What has been reported on that’s creating the controversy in the case is the alleged emails and documents that were said to be sent between Ravelo and attorney Gary Friedman, who is the attorney of merchants in the antitrust case.

During MasterCard’s second quarter earnings call, MasterCard CEO Ajay Banga took the time to share the company’s position on the legal proceedings, suggesting that the lawyer’s behavior shouldn’t play a role in the case’s outcome.

“We’ve been aware of the article, we are aware of the underlying issues. If those allegations are true, clearly these lawyers have displayed conduct that’s pretty disappointing. But to be clear, they were not the principals only involved in that whole settlement,” Banga said. “There were lots of regulatory people involved. There was great close involvement by the judge at that time. I don’t think that the behavior of two lawyers disrupts all that. But you know what, the court is going to decide that. We’re pretty confident the settlement will stand. We’ll see how it goes. But we’ve been aware of this for a little while now.”

This particular antitrust case dates back to 2005 when the suits were filed against MasterCard and Visa from a group of major retailers — including Kroger, Safeway and Walgreens. The lawsuit claims that Visa and MasterCard’s practices don’t allow for the merchants to charge their own fee for customers who want to use a credit card for a purchase.

Merchants Dispute Emails In Amex Antitrust Settlement

In the other antitrust case that made headlines in the day, the lawyers in the $79 million American Express antitrust case also filed papers in court. Amex said none of the lawyers’ communication “detracts from the conclusion that this settlement represents the best feasible settlement for the merchant class, and is fair and adequate by any measure,” according to WSJ.

As for the merchants that support the antitrust settlement, they are arguing the claims from the major retailers about alleged unauthorized emails should be reason enough to toss out the settlement deal. Major retailers that include Target, Walmart and Home Depot argue that Visa and MasterCard should fork over more than the $5.7 billion that was agreed upon in the case stemming from credit card swipe fees.

The emails in question were reportedly used to pressure the opposition and the retailers argued that that form of communication should be evidence enough that the deals between the payment networks were rigged, Bloomberg reported. A court filing obtained by Bloomberg said that Gary Friedman, an attorney representing merchants, “contain no suggestion,” that he “ever took any actions to the detriment” for his clients during the email conversations with the other attorney involved in the case.

While the notice was sent to lawyers in the Visa and MasterCard case yesterday that indicated the retailers would toss the settlements, the court papers filed in the Amex case have not been made available yet for the public to view.

According to the retailers’ appeal, Attorney Gary Friedman has a role in both the Amex case and the Visa and MasterCard case, exchanged thousands of emails with a friend, Keila Ravelo, who had also had a stake in a MasterCard case. The emails were brought into the case after Ravelo was arrested.

“There is not a single reference in any of the communications to any understanding or arrangement between Friedman and [Keila] Ravelo regarding settlement terms in the two cases,” the merchants said in the filling.

And that’s where the dispute stands — whether or not the email communication shows some sort of agreement was made. But the lead lawyer for the plaintiffs in the Visa and MasterCard case, K. Craig Wildfang, said the email dispute was unlikely to impact the case. Lawyers for Friedman and Ravelo declined to comment on the case.

“I can’t imagine circumstances under which the court would disturb the settlement based on this,” Wildfang said yesterday in a phone interview with Bloomberg. “The objectors are grasping at straws.”