On April 24, 2013, Judge John Gleeson of the Federal Eastern District of New York ordered six national retail trade associations to explain in writing by April 30, 2013, why he should not hold them in contempt and order the shut down of certain websites maintained by the retailers. The judge had deemed that the websites - which express opposition to the proposed $7.25 billion settlement of a class action claim that Visa Inc. and MasterCard Worldwide interchange rules violate antitrust law - contained misleading information.
On May 3, the judge ruled he would not hold in contempt the trade groups responsible for the websites in question. However, he also denied the groups' request that corrections be made to the court-approved settlement notice.
The judge's orders pertain to "the creators" of the Merchants Object! website, which "appear to include" the National Association of Convenience Stores, National Association of Truck Operators, National Community Pharmacists Association, National Cooperative Grocers Association, National Grocers Association and National Restaurant Association.
On April 19, 2013, plaintiff and trade association attorneys had separately informed the court they were unable to reach agreement on how to correct the information the court found to be misleading.
Judge Gleeson issued his order and contempt threat five days later, stating, "The merchantsobject.com site continues to this day to obfuscate the important differences between opting out and objecting, and it fails to adequately inform a visitor to the site of the consequences of opting out." (The consequences of opting out were covered in "(The $7.25 billion settlement proposal: What you need to know," The Green Sheet, April 22, 2013, issue 13:04:02.)
At that time, Gleeson ordered that corrective banners be posted on the Merchants Object! page and other websites run by the six trade associations where information about the settlement was determined to be misleading. Gleeson ruled that the banners must, among other things, inform retailers that the "persuasiveness of a merchant's objection" is the same whether or not the merchant who objects has opted out of the proposed settlement.
"I reject categorically the Trade Association Plaintiffs' claim that the First Amendment prevents the Court from ensuring that the class members are not further misled and misinformed about the proposed settlement," Gleeson said. "All parties remain free to express their views regarding the merits of the proposed settlement, but basic fairness to the class members requires that the communications with them contain neither false nor misleading information."
The trade associations identified in the order are part of a group of nearly 8 million merchant plaintiffs in the lawsuit. A court appointed group of attorneys negotiated the proposed settlement with the card companies on behalf of the merchant class. A number of large retailers and trade associations object to terms of the proposed settlement in part because card companies would receive immunity from future antitrust actions challenging interchange rules.
The trade associations in question are using the jointly sponsored Merchants Object! page and their own websites to encourage retailers to both object to and opt out of the proposed settlement. The sites claim these actions will encourage the court to reject the terms of the final settlement.
In his May 3 ruling, Judge Gleeson stated the trade groups' websites continued to mislead merchants, but he would not hold them in contempt because retailers who opt out of the settlement based on incorrect information will have a remedy if the settlement is approved.
"There will be a remedy for that, and that remedy will be here in this court," Gleeson said. He also noted that counsel for the plaintiff class were not requesting that the trade groups be held in contempt and that prior directions he had given for the trade groups to confer with class counsel "arguably blurred" his instructions for amending the sites in question. Preliminary approval of the settlement was given in November 2012. A hearing on final approval is scheduled for Sept. 12.
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