Merchants seek to void $6 billion Visa, MasterCard, AmEx settlements

Wed Jul 29, 2015 5:33pm EDT
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By Jonathan Stempel

NEW YORK (Reuters) - Dozens of retailers are seeking to void nearly $6 billion of U.S. antitrust settlements with Visa Inc (V.N: Quote), MasterCard Inc (MA.N: Quote) and American Express Co (AXP.N: Quote) after learning that opposing lawyers exchanged confidential information, potentially tainting the accords.

A group of retailers filed papers that remain under seal in the Brooklyn, New York federal court to scuttle their $5.7 billion accord with Visa and MasterCard, which won court approval in 2013, the retailers' lawyer Owen Glist said in an email.

Similar papers were made public in the American Express case on Wednesday in the same court, where retailers opposing the $79 million accord include Wal-Mart Stores Inc (WMT.N: Quote), Target Corp (TGT.N: Quote) and Home Depot Inc (HD.N: Quote) among others.

Retailers claimed that the settlements were rigged in light of the discovery of an exchange of emails and other documents between Gary Friedman, a lawyer who represented them, and Keila Ravelo, a lawyer who represented MasterCard while she was a partner at Willkie Farr & Gallagher.

Friedman and Ravelo had previously been associates at another law firm and become close friends. Their alleged improper communications were discovered by Willkie after Ravelo and her husband were criminally charged in December with stealing from that firm, another law firm and MasterCard.

Roy Simon, a Hofstra University legal ethics professor, in a court filing supporting the objecting retailers, said Friedman crossed a line by passing important information to Ravelo, whose firm should in turn have been disqualified.

"In my three decades studying professional responsibility for lawyers," Simon wrote, "I cannot recall ever seeing such repeated and serious violations of professional duties by an attorney representing a class, or such willing participation in those violations by an attorney for a defendant in a class action."

The settlements were meant to resolve claims that the card networks overcharged merchants on interchange fees, or swipe fees, whenever shoppers paid with debit or credit cards.   Continued...

MasterCard and VISA credit cards are seen in this illustrative photograph taken in Hong Kong December 8, 2010.   REUTERS/Bobby Yip