Walmart is asking a federal judge to split a huge class of plaintiffs involved in card fee litigation against Visa and Mastercard to allow large merchants to pursue their own needs with regard to the card networks.
Walmart, the largest U.S. retailer by revenue, wants U.S. District Judge Brian Cogan to decertify the class of plaintiffs pursuing swipe fee changes, the company wrote Friday in its objection to a settlement proposed last month. Alternatively, the retailer said Cogan should give class members a chance “to opt out of the mandatory class or redefine the class so as to carve out large national merchants.”
The plaintiffs and their lawyers “are antagonistic to large national merchants’ interests because they are determined to sell out these interests to secure their preferred relief,” the Bentoville, Arkansas-based company wrote Friday, calling the proposed pact “nakedly inequitable to large national merchants.”
“This fundamental conflict of interest disqualifies them to represent a class that includes large merchants,” the retailer went on to say in explaining its opposition to the settlement in a filing with the court.
Walmart has been among the most active merchants in seeking ways to reduce interchange fees, incurred when a consumer pays with a credit or debit card. The retailer has explored pay-by-bank options and is seeking ways to enable instant payments, a company executive said earlier this year.
The proposed settlement’s change to the networks’ “honor all cards” rule – allowing merchants to decline some Visa and Mastercard-branded cards – is “useless” to a large merchant that must accept customers’ preferred payment type, Walmart said.
“Allowing large national merchants to reject certain card types, but not issuers, still precludes any competition between issuers for merchant acceptance,” the company said. “To achieve a market compliant with the antitrust laws, Walmart must be able to negotiate interchange rates directly with issuing banks, bargaining for lower rates in exchange for Walmart’s business.”
Additionally, the class lawyers’ “treatment of Walmart” in the negotiations with the card networks and the settlement terms show the class plaintiffs’ “persistent disregard for the interests of large national merchants and their eagerness to sell out these interests for their own benefit,” the company wrote in its objection.
A separate settlement objection by the National Retail Federation and the Retail Industry Leaders Association on Friday also raised to Cogan their members’ concerns about the varied needs and interests of the enormous plaintiff group.
The class covers “nearly every merchant in the country that exists today,” or about 20 million merchants, the retailers wrote. The class is represented by “five tiny businesses– a hair salon, pharmacy, dentist and like entities,” the retail associations said, with the small enterprises ill prepared to represent large national merchants.
“These businesses plainly lack the necessary experience or judgment to tie the entire merchant community’s hands,” the NRF and RILA wrote in their objection.
Named plaintiffs in the original complaint included Barry’s Cut Rate Stores; Boss Dental Care; CMP Consulting Services; Prescription Depot, a pharmacy; Run Central; Salon Pure; Town Kitchen & Bar.
The class in the antitrust case was certified in September 2021 to seek injunctive relief for merchants. It is likely the largest group ever certified in a class action antitrust case, according to Grant & Eisenhofer, one of the law firms representing plaintiffs.
The class plaintiffs and their lawyers also stand to “avoid a trial that their actions suggest they have no interest in pursuing while garnering a staggering $206 million attorney fee award,” the retail groups’ attorney, Debra Greenberger, wrote.
Walmart and the two retail groups also complained that plaintiffs’ attorneys froze them out of the settlement talks with defendants.
“Despite our unique position representing both large and small merchants which account for over $2.7 trillion in annual sales, extensive resources, and relationships to the merchant community, [the plaintiff lawyers] have effectively frozen us out,” the two retail groups wrote, adding that they learned of the proposed settlement only when it was announced.
Attorneys with four plaintiffs’ law firms listed in Walmart’s filings – Hilliard Shadowen; Freed, Kanner, London & Millen; Grant & Eisenhofer; and Nussbaum Law Group – did not respond to emails Monday seeking comment.
Spokespeople for Visa and Mastercard said the networks had no comment on Walmart’s filing.
“There is no reason to bind all merchants to one settlement when they do not want to be and don’t think they are being well represented by counsel in the case,” Doug Kantor, the general counsel of the National Association of Convenience Stores, wrote Monday in an email. That association also filed its objection to the proposed settlement on Friday.
